US$4 trillion fund holders tell Brazil to halt deforestation

Investment funds managing close to $4 trillion (RM17.1 trillion) in assets called on Brazil to halt the deforestation of the Amazon in an open letter warning that biodiversity loss and carbon emissions from the practice posed a “systemic risk” to their portfolios.

Managers from countries across Europe, Asia and South America expressed their fears that the government in Brasilia was using the Covid-19 crisis to push through environmental deregulation that could “jeopardise the survival of the Amazon”.

“We are concerned about the financial impact that deforestation and the violation of the rights of indigenous peoples may have on our clients and investee companies, by potentially increasing reputational, operational and regulatory risks,” yesterday’s letter said.

While lockdowns linked to the pandemic are likely to see the world’s carbon emissions fall several percentage points, increased deforestation in the Amazon could actually increase Brazil’s annual contribution to global warming.

Environmentalists warn that 2020 is on track to becoming the most destructive year ever for the world’s biggest rainforest, with even more losses than from the devastating fires that triggered a global outcry last year.

A total of 829sq km in the Brazilian Amazon – 14 times the area of Manhattan – was lost to deforestation in May alone, according to satellite data from Brazil’s National Space Research Institute.

That was a 12% increase from last year and the worst May since records began in August 2015.

Activists accuse Brazil’s President Jair Bolsonaro, a far-right climate change sceptic, of emboldening those responsible for deforestation with calls to legalise farming and mining on protected lands.