Investors representing almost $4 trillion in assets have written to Brazilian authorities urging them to halt deforestation, warning they may divest from the country if policies are not changed.
The open letter is signed by 30 investors from nine countries, led by the 786 Norwegian kroner ($81.3 billion) Storebrand Asset Management. Signatories include the 381.3 billion ($40.8 billion) Swedish kroner AP2, Gothenburg; Border to Coast Pensions Partnership, a pool representing £45 billion ($56.4 billion) in assets; and £1.2 trillion money manager Legal & General Investment Management.
While Brazil has a "good record of combating deforestation," and provides favorable conditions as a business and investment destination, "the escalating deforestation in recent years, combined with reports of a dismantling of environmental and human rights policies and enforcement agencies, are creating widespread uncertainty about the conditions for investors in or providing financial services to Brazil," the letter said.
Signatories are concerned in particular about a proposed rule to legalize the private occupation of public land, which is largely concentrated in the Amazon rainforest. "Should the measure pass, it would encourage further illegal occupation of public lands and widespread deforestation which would jeopardize the survival of the Amazon" and the meeting of targets under the Paris Climate Change Agreement. The rule, which has been submitted to the Brazilian congress for a vote, would also "undermine the rights of Indigenous and traditional communities," the letter said.
Investors are concerned about the impact of such deforestation and the violation of human rights on their clients and companies, since it would potentially increase reputational, operational and regulatory risks. Companies exposed to potential deforestation in their Brazilian operations and supply chains may face increasing difficulty in accessing international markets, while Brazilian sovereign bonds are also likely to be "deemed high risk if deforestation continues," the letter warned.
Signatories want the Brazilian government, which is led by President Jair Bolsonaro, to "demonstrate clear commitment to eliminating deforestation and protecting the rights of Indigenous peoples."
Investors want to meet with representatives from Brazilian embassies in their respective countries to discuss the matter as soon as possible.
Greenhouse gas emissions in Brazil are set to increase by 10% to 20% this year vs. figures in 2018, attributed largely to deforestation. On a global scale, however, greenhouse gas emissions are expected to fall by 7%, according to a separate statement by Storebrand.