Graham Stock, Senior Emerging Markets Sovereign Strategist, BlueBay Fixed Income Team, discusses his travels to Brazil, outlining the serious risks presented by the loss of natural forests; and why engagement as a founder and co-chair of the IPDD is crucial in the goal to enhance the protection of the Brazilian environment and economic development.
The Investor Policy Dialogue on Deforestation (IPDD) is an investor-led engagement initiative established to coordinate a public policy dialogue on halting deforestation and protecting the most vulnerable biomes in the world.
As an institutional investor, the BlueBay Fixed Income Team wants to continue to invest in countries affected by deforestation, contributing to their economic development and challenging the systemic risk posed by the significant loss of natural forests. As a founder and co-chair of the IPDD, we want to show that economic development and protection of the environment need not be mutually exclusive.
Brazil was the first country to be engaged in the IPDD initiative, and after three years of mostly virtual IPDD meetings with the government and civil society, an IPDD delegation from Europe and the local investment community we spent a week in Sao Paolo, Brasilia and the Amazon.
This marked an important milestone in our engagement with the Brazilian authorities on deforestation. The new Lula government is committed to tackling deforestation as the centrepiece of its climate agenda and has re-engaged with the international community on the topic. There are short-term gains to be had from simply undoing some of the neglect of recent years. More sustained progress will depend on the political will to tackle vested interests by forcing transparency on supply chains.
Milestone engagement with Brazilian authorities on deforestation
For the BlueBay fixed income investment team, spending time on the ground in Brazil with other IPDD members and government representatives of Brazil itself was invaluable. In recent years Brazil has suffered sustained deforestation, despite promising dialogue dating back several years. Our latest discussions in Brazil left us feeling somewhat more positive about the prospects for action to address deforestation. Deforestation affects economic prosperity and represents a systemic risk to investment portfolios. Many investors are exposed to deforestation through global supply chains. Sovereign and fixed income investors increasingly consider deforestation in their analysis.