If you know anything about IKEA Group, the giant Scandinavian furniture company, you know that most of their products are made of wood, and you may even know that they're one of the "good" companies that tries to buy only products that are sustainably harvested.
They've pledged that, by 2020, 100 percent of their wood, pulp, and paper will either be recycled or certified by the Forest Stewardship Council as sustainably produced. So far, they're on track to achieve that, according to the Forest Trends Supply Change initiative -- which tracks the progress companies report towards achieving environmental commitments. The Supply Change entry for IKEA shows the company was 61 percent of the way towards achieving its 2020 goal as of March of this year.
Two months earlier, my colleague Kelley Hamrick at Ecosystem Marketplace published a report called "State of Private Investment in Conservation 2016", which I was flipping through this morning while researching today's show. In so doing, learned that IKEA has also started investing in forests all across Europe -- explicitly to make sure those forests are managed in ways that serve a larger public good, and in so doing help the company meet its sustainability commitments.
As of January, when the report came out, IKEA had purchased about 100,000 hectares of forest in Romania, Bulgaria, and the Baltics, and it had earmarked more than 1 billion more dollars for investing in sustainable forestry.
Make no mistake: they're doing this to make money, but do do so in a sustainable way, and that means this qualifies as "impact investing", which is any investment that's designed to generate both a profit and a larger public good.
The Global Impact Investing Network has identified more than $30 billion of impact investments in the last three years, and Kelley's report, which I alluded to above, identified about $8 billion earmarked for impact investments specifically involving forests, farms, and fields -- all of which need to be better managed if our civilization is to survive the climate challenge.
Now, $8 billion is nothing to sneeze at, but it really is just a sneeze in a hurricane compared to the $55 trillion global economy. What's more, on top of that $8 billion, another $5 billion was allocated, but went uninvested.
Today we speak with Noelle-Claire LeCann and Richard Fronapfel, who run impact investment group AlphaSource Advisors and see big opportunities for people who want to make money by helping the world better manage its forests, farms, and fields in the Anthropocene
Hint: JBS is named after "Jose Batista Sobrinho", a Brazilian rancher who's something like the Oscar Meyer of Brazil, only much bigger.Yes, JBS and Marfrig are two of the world’s largest meatpackers, and you’ll find their products in Walmart and McDonald’s in the United States, Marks & Spencer in the United Kingdom, Albert Hein in the Netherlands… but usually with someone else's name on it.
Both companies grew at the expense of the Amazon Biome, which which farmers have been chopping to grow soy and graze cattle. That started in the 1950s, and it accelerated for decades -- until about ten years ago, when consumer-facing companies like the ones I just mentioned started getting pressure from their customers, thanks to environmental groups like Greenpeace and others - and that led to something called the “Cattle Agreements”, which are a set of voluntary commitments to stop buying from any farms that either chop forest to graze cattle, use slave labor, or graze on indigenous or protected lands.
The Cattle Agreements came three years after grain companies like Cargill and Louis Dreyfuss agreed to a similar moratorium on soy products from the Amazon. More recently, something like that started happening in Indonesia as well. There companies like Wilmar and Asia Pulp & Paper started changing the way they buy their pulp, paper, and palm - often in cooperation with competitors.
All of these initiatives have two things in common: they involve the big four commodities that drive most of the world's deforestation – namely, cattle and soy in Brazil and palm and pulp & paper in Indonesia – and they’re largely led by the private sector, usually in response to NGO pressure, and only rarely in coordination with government agencies. Indeed, about 500 companies have pledged to reduce their impact on forests, according to the Forest Trends Supply Change initiative, which tracks corporate deforestation commitments relevant to the big four commodities.
But what about the governments? After all, both Indonesia and Brazil have created detailed climate action plans, and both of those efforts involve saving forests. That matters, because deforestation generates between 15 and 20 percent of the greenhouse gasses that man is responsible for emitting, and these two countries account for about 40 percent of the world's deforestation, according to a new report called “Collaboration Toward Zero Deforestation: Aligning Corporate and National Commitments in Brazil and Indonesia”, which looks at the ways government and the private sector are – and are not – cooperating to reduce greenhouse gasses from deforestation.
Created jointly by Forest Trends and the Environmental Defense Fund, the report identifies more than a dozen initiatives, some led by NGOs or the private sector, others led by governmental agencies, and most existing in their own silos instead of working together in unison. Today’s guests: the authors of that report: Brian Schaap of Forest Trends and Breanna Lujan of Environmental Defense Fund.