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Storebrand leads investor initiative to stop the deforestation of Brazil's Amazon

Brazilian ambassadors will be receiving a letter from a group of major asset managers and pension funds encouraging the country put a halt to the deforestation currently happening at a record-high pace.

Jan Erik Saugestad, CEO of Storebrand Asset Management. Photo: PR/Storebrand

Storebrand Asset Management is heading a group of 29 investors in a public policy dialogue with Brazilian embassies in ten countries to stop the rapid deforestation of Brazil's Amazon rainforest.

In each country, they invite the ambassadors to a video call to discuss their concerns about the increasing deforestation of the Amazon.

To get their message out, the investors – representing EUR 3,342.79 billion (USD 3,746.45 billion) in AUM – have also reached out to media in a press release embargoed until 7.00 CET Tuesday morning.

Recent statements from the Brazilian Environment Minister Ricardo Salles has raised concerns that the government will use the covid-19 pandemic to push through environmental deregulation.

"Brazil's political rhetoric remains unchanged, and the dismantling of governance structures and lack of enforcement continues. New rules that facilitate privatization of land and the invasion of indigenous territories pose grave threats to the Brazilian rainforest and increased reputational risks for investors," the investors write in the press release attached to the open letter to the Brazilian ambassadors.

Besides Storebrand, the group of investors includes large UK, Japanese and Nordic asset managers like LGIM, Sumi Trust, and Nordea Asset Management and SEB Investment Management.

In addition, pension funds such as AP2 and AP4 from Sweden, KLP from Norway and AP Penson and MP Pension from Denmark are part of the initiative.

At record highs

In the letter, the investors express their concerns about the Brazilian government working to legalize the private occupation of land in the Amazon rainforest and a provisional measure to undermine the status of indigenous territories.

"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 meeting the targets of the Paris Climate Change Agreement and undermine the rights of indigenous and traditional communities," the investors write in the open letter.

So far in 2020, the deforestation rates and invasions of indigenous territories in Brazil are already at record highs.

"As financial institutions, we see deforestation and the associated impacts on biodiversity and climate change as systemic risks, that have the potential to negatively impact long term returns," Jan Erik Saugestad, CEO of Storebrand Asset Management, says in the press release.

According to an article in the Economist, the world’s emissions of carbon dioxide may fall by 7 percent this year due to lockdowns in response to the covid-19 pandemic. But here Brazil is a glaring exception with expected increases in emissions by 10-20 percent from 2018 – with deforestation at the main culprit.

So far 29 investors have signed the letter, but more are expected to join.

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