September 23, 2020
Forests are a fundamental part of all our lives. While you may not take notice of them every day, if they were to suddenly disappear, how would you feel? Imagine never again having the opportunity to hike through the green understory or the loss of the annual changing of the colors of the leaves every fall.
Without forests, we will lose products we use every day, homes for many people and animals, climate regulation services, and the intrinsic value that trees bring to all the living beings of this world.
So, why are we destroying them? Why are we as consumers, investors, and members of this planet so uncommitted to ending deforestation? In Indonesia, the Islands of Borneo and Sumatra have already lost 85% of their forest cover – in fact, every minute, an area of forest equivalent to 27 soccer fields is lost globally. 1 Facts like these are hard to believe, and they’ve driven us at Domini to dedicate ourselves to search not only for answers to these questions, but also for solutions.
Why focus on forests? For the last eighteen months, we’ve committed ourselves to understanding the drivers of forest destruction, its impact on our investment decisions and the long-term performance of our investments, and how we can encourage stakeholders, such as ourselves, corporations and governments, to become Forest Value Creators .
Important Forest Facts
The total loss of forests will be felt by everybody. If tropical deforestation were a country, it would be ranked third in the world for carbon emissions. 2 Simultaneously, forests could play a big role in combating climate change: it is estimated that protecting and restoring forests has three-quarters as much climate mitigation potential as all renewable energy technologies combined. 3 Preservation is key as reforested areas can require more than a century to recapture the same amount of carbon that was stored in a primary forest. 4
300 million people, including 60 million indigenous inhabitants, and 80% of global terrestrial biodiversity live on forests and forest ecosystems. 5,6,7 As a result, biodiversity on land stands to be severely diminished if forests are gone . 8 Biodiversity loss would also mean forests could not provide many of the ecosystem services we have come to rely on, including production of food, pollination, and medicinal plants used in pharmaceuticals, among others. 9
Right now, forest destruction is driven by unchecked industry producing commodities like palm oil, cattle, soy, wood pulp and paper products, as well as cocoa and rubber. 10 Large corporations are major producers and purchasers of these forest-dependent resources, which are used in everyday products, including food, cosmetics, and animal feed. 11 For example, as of 2020, palm oil made up over 40% of global vegetable oil production and consumption. 12
What is Domini’s Perspective? Our Plan of Action
As we looked deeper into forest value, the effects of its destruction, and its impacts on our investments, we quickly realized we could not move forward without a set of beliefs to guide our actions. The following Forest Beliefs spell out why it’s essential that we address forest work urgently and why we see ourselves as a necessary part of the solution.
With our beliefs set, we began to ask ourselves: what will it take for us to break free from these bad habits? The answer to this challenging question lies in harnessing the combined power of all the stakeholders involved, from long-term investors like ourselves to corporations and governments, all the way down to consumers. With Domini’s history of engaging with companies, civil society organizations and policymakers, we find ourselves with an opportunity to drive change for forests.
- Societies and economies, and therefore businesses and investments, are built on stable environmental and climate systems.
- Forests provide significant value to investors and corporations, including as a crucial part of the climate system.
- Investors’ policies and practices can impact forests both positively and negatively.
- Corporations and investors must act to measure, preserve, and enhance the value they receive from forests.
How Larger Companies Are Taking Action
Some companies have taken steps to encourage sustainable forest management practices, including reforestation and direct work with the famers in their supply chains, but those that do so right now are the exception, rather than the rule. Promoting these and other scalable actions on forest protection with a full range of stakeholders will be key in preserving forests and their value.
Without question, forests are threatened. The chance to make real change and preserve their value for society at large is slowly dwindling. All living organisms rely on switching our impact on forests from that of value destruction to value creation . Investors, as well as corporations and governments, can only do something about it if we all collectively choose to act now. Join Domini as we continue our journey in becoming better investors and better stewards – the future of forests depends on it.
- “Forest Habitat.” https://www.worldwildlife.org/habitats/forest-habitat. WWF (webpage). Accessed at https://www.worldwildlife.org/habitats/forest-habitat on September 11, 2020.
- Seymour, F. and Busch, J.,Why Forests? Why Now?: The Science, Economics and Politics of Tropical Forests and Climate Change, Center for Global Development. (Washington, D.C.) (2016):40. Accessed at https://www.cgdev.org/publication/why-forests-why-now-science-economics-and-politics-tropical-forests-and-climate-change on September 11, 2020.
- Ceres “The Investor Guide to Deforestation and Climate Change.” (Boston, MA: Ceres), 2020:7. Accessed at https://www.ceres.org/sites/default/files/reports/2020-06/Ceres%20Investor%20Guide%20FINAL%20June%2029.pdf on September 11, 2020
- TST Issues Brief: Forests.” Accessed at https://sustainabledevelopment.un.org/content/documents/2291Forest%20Issues%20Brief_FINAL.pdf on September 16, 2020.
- “Forests and climate change.” IUCN (webpage). Accessed at https://www.iucn.org/resources/issues-briefs/forests-and-climate-change on September 11,2020.
- Shaw, J. “Why is biodiversity important?” Conservation International, 2018. (Webpage) Accessed at https://www.conservation.org/blog/why-is-biodiversity-important on September 11, 2020
- “Palm oil in the North American consumer market.” Friends of the Earth. Issue Brief. Accessed at https://1bps6437gg8c169i0y1drtgz-wpengine.netdna-ssl.com/wp-content/uploads/2017/legacy/Issue_Brief_2_-_Palm_oil_in_the_North_American_consumer_market.pdf on September 11, 2020.
- WWF Palm Oil Buyers Scorecard. (Gland, Switzerland: WWF), 2020:9. Accessed at https://palmoilscorecard.panda.org/file/WWF_Palm_Oil_Scorecard_2020.pdf on September 11, 2020.