Investor meeting with Brazils Vice-President Hamilton Mourão on deforestation

We, the investors involved in the Investor Policy Dialogue on Deforestation (IPDD), would like to express our gratitude to the Vice President. We are encouraged by his willingness to continue constructive and informative dialogue with us and look forward to its continuation.

As financial institutions, we have a fiduciary duty to act in the best long-term interests of our beneficiaries. We recognize that tropical forests are essential to prevent climate change, protect biodiversity and maintain ecosystem services, and that indigenous peoples play a crucial role in protecting forests. In order to promote a more sustainable and favorable business environment, the government of Brazil must demonstrate clear commitment to eliminating deforestation and protecting the rights of indigenous peoples. We are concerned about the financial impact that deforestation may have on our clients and investee companies, by potentially increasing reputational, operational and regulatory risks.

We will continue to follow developments in Brazil to assess our exposure to financial risks arising from deforestation.

We were interested in understanding progress against the five expected outcomes which we raised to the government last year.

• Significant reduction in deforestation rates.
• Enforcement of Brazil’s Forest Code.
• The ability of Brazil’s agencies tasked with enforcing environmental and human rights legislation to carry out their mandates effectively, and any legislative developments that may impact forest protection.
• Prevention of fires in or near forest areas.
• Public access to data on deforestation, forest cover, tenure and traceability of commodity supply chains.

During our meeting today with Vice President Mourão, we raised our concerns about the increased deforestation and forest fires in the Amazon and how developments are not yet sufficient to meet our desired outcomes. At the same time we are encouraged to hear that the Amazon Council shares the objectives of the IPDD and wants to continue the dialogue with the investor coalition. The conversation covered topics linked to the IPDD outcome areas, and identified some practical areas where investors could contribute to the government’s efforts. Ensuring our engagement with other stakeholders also supports the shared agenda to achieve sustainable development and nature conservation is also a priority for the IPDD. We also welcome Vice President Mourão’s strong commitment to combatting illegal deforestation, and the ending of the ongoing military-led operations in the Amazon. It is very positive that IBAMA is scheduled to take back responsibility in April. 

“Data on forest fires and deforestation in the Amazon region in 2020 showed that the situation is getting worse. We welcome Vice President Mourão’s focus on this issue, and the opportunity to restate our concerns, but also hope to see more concrete progress in 2021.” Graham Stock, Partner, BlueBay Asset Management.

"We would like to continue support Brazilian economic growth as investors, but the trend of rising deforestation in Brazil makes it increasingly difficult for companies and investors to meet their environmental, social and governance ambitions. The development in 2020 underscores the urgency in this matter and we trust we will see firm political commitment from the Brazilian government to reduce deforestation being reflected in real action over the coming months", Jan Erik Saugestad, CEO, Storebrand Asset Management.

Background: The Investors Policy Dialogue on Deforestation (IPDD) is a collaborative investor initiative set up in July 2020 to engage with public agencies and industry associations in selected countries on the issue of deforestation. The goal of the initiative is to coordinate a public policy dialogue on halting deforestation. The IPDD seeks to ensure long-term financial sustainability of investments in the countries they are invested in by promoting sustainable land use and forest management and respect for human rights, with an initial focus on tropical forests and natural vegetation. It will work with key stakeholders to encourage adoption and implementation of regulatory frameworks that ensure protection of such natural assets and human rights.

IPDD is governed through an Advisory Committee, currently co-chaired by Storebrand Asset Management and BlueBay Asset Management. The IPDD is supported by a membership of 55 financial institutions with approximately US$7 trillion in assets under management. Institutional investors (investment managers or asset owners) are welcome to join the IPDD. For more information please see here: https://www.tropicalforestalliance.org/en/collective-action-agenda/investors-policy-dialogue-on-deforestation-ipdd-initiative/