Deforestation

JULY 2023 Deforestation: getting to the root of the problem The statement “there is no net zero without nature” has become a rallying cry for greater action against deforestation. The 2021 COP 26 pledge to end deforestation, and the 2022 COP 15 1 agreement on a Global Biodiversity Framework, have given greater focus to natural capital. Now, investors need to dig deeper, taking an active role to mitigate the risks of deforestation. KEY TAKEAWAYS Guirec Thouement • Covering 30% of the Earth’s landmass,2 forests are critical to sustaining world biodiversity Sustainability Analyst and protecting local areas, while ensuring their economic viability. • Deforestation and forest degradation reduce biodiversity and damage a vital element in the removal of carbon from the atmosphere. • The monetary contribution of forests to the economies of the developing world has been estimated at USD 250 billion.3 • An average loss of 10 million hectares of forest per year in the last decade4 is prompting a greater recognition of biodiversity impact, resulting in greater inclusion into investment approaches. • Investors can play a role by managing the risks related to deforestation and reducing the biodiversity footprint of investments. Deforestation is de昀椀ned as the conversion of Data shows the scale of this quickening pace of forest to another land use. While the rate of deforestation. Roughly 10,000 years ago there deforestation has accelerated over thousands were approximately 6 billion hectares (ha) of of years, the 20th century was a notable period forest, equal to 60,000,000 km2. By 1900, this had when farmland and urban sprawl encroached reduced to 5 billion ha and by 2018 it had fallen 5 on forests at a rapid pace to provide for booming to 4 billion ha. Forests are critical to sustaining populations. global biodiversity, yet they are currently ALLIANZGI.COM