The commitments made by world leaders at COP26 to halt and reverse global deforestation have been welcomed by institutional fund managers for timber and natural capital.
Martin Davies, President and CEO of Westchester, said: “We welcome today’s commitments on deforestation, which build on the combined efforts of more than 100 countries and companies to tackle to a global problem.
“The evidence for the devastating effects of deforestation on the environment could not be clearer, and finding nature-based solutions to this problem will be a key part of any agreement to protect the planet.
“More than 10 GT of carbon emissions can be saved each year by protecting our forests and pastures, restoring wetlands, and adapting and improving the management of commercial agricultural and forest lands. “
Davies, who is to lead Nuveen’s “natural capital” business, said the signing by 100 world leaders of the Glasgow Leaders’ Declaration on Forest and Land Use was “a good start, but hopefully the, the first of many similar commitments “.
He added: “Based on today’s announcement, research shows that an additional land area twice the size of India will be needed for growing crops by 2050. More measures must be taken to maintain and improve soils, landscapes, water quality and biodiversity in our agricultural practices. both to adapt and mitigate the risks of climate change.
“At Nuveen, our goal is to provide opportunities for investors to participate in the restoration, adaptation and protection of the environment, while delivering compelling traditional performance characteristics that have attracted investors to land assets.
Ladislas Smia, responsible for research on sustainable development at Mirova, declared: “The commitment against deforestation of the COP26 is a first positive signal. In particular, it is reassuring to see that countries like Brazil and Indonesia, which account for almost half of tropical deforestation, have participated in this initiative.
“This will have positive consequences for the climate but also for biodiversity and local communities. It is a first step. We must go even further if we want not only to avoid the negative impacts of deforestation but for forests to become an ally in the face of major environmental challenges.
Smia added: “To avoid the most serious consequences of climate change, we must achieve carbon neutrality by 2050. This objective implies above all a drastic reduction in the use of fossil fuels.
“It also requires reversing the trend in forestry by stopping deforestation as soon as possible and increasing forest cover instead. Achieving this objective implies commitments from the State. It also questions our eating habits: beef is responsible for more than 40% of deforestation, and oilseeds such as palm oil for nearly 20%.
Mirova operates a Land Degradation Neutrality fund that invests in regenerative and sustainable agroforestry, agriculture and forestry on degraded lands in developing economies. Fund manager Gautier Quéru told IPE Real Assets earlier this year that he expected natural capital to become a mainstream institutional asset class in the same way as renewables over the course of the year. the last decade.
Meanwhile, a number of investors and asset management companies have pledged to help tackle deforestation by using active ownership and stewardship to “catalyze actions to end deforestation in chains. supply ”.
The companies include Aviva, Storebrand Asset Management, Generation Investment Management, JGP Asset Management, NEI Investments, Impax Asset Management, Church Commissioners for England and Boston Common Asset Management.