First published June 7th, 2022
Paper and Forest Products:
Restoring Our Forests
The production of paper products accounts for 14% of global deforestation. This is equivalent to 4.1 million hectares of forest annually, an area the size of the Netherlands. Despite ongoing efforts to restore forests after their degradation, research shows that it is more cost-effective to prevent the degradation of forests than restore them.
Investors, whether returns-focused or impact-focused, may want to take note of the following issue areas:
- Carbon Emissions
- Biodiversity
- Water Contamination
Carbon Emissions
The carbon cycle is the biogeochemical cycle referring to the constant movement of carbon from land/water through the atmosphere and living organisms. The cycle is critical to sustaining life on earth. Forests are a fundamental component of the carbon cycle, and they can act as a carbon sink by absorbing more carbon from the atmosphere than they release.
While reducing deforestation can not halt climate change alone, it can significantly lower global warming emissions.
Relevant YvesBlue ToolsYvesBlue clients can access the Current & Projected CO2 Emissions tool, which illustrates the Current CO2 Emissions and Projected CO2 Emissions trajectory to 2050 in addition to the Budget CO2 Emissions, which is what its emissions would need to be if the company were to operate within the global carbon budget.
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The Budget CO2 emissions used in the Current & Projected CO2 Emissions are informed by the Science-Based Target Initiative (SBTI) reports. Companies that have set greenhouse gas emission targets in line with what the latest climate science says is necessary to limit warming to well below 2°C above pre-industrial levels and pursue efforts to limit warming to 1.5°C are highlighted by the SBTI badge.
Waning Biodiversity80% of the world’s known land-based animal species reside in forests. This includes 60,000 tree species, 80% of amphibian species, 75% of bird species, and 68% of mammal species. Despite this, approximately 10 million hectares of forests are destroyed each year. Without the shelter, food, and water supplied by forests, thousands of species that coexist in forests may soon vanish.
Relevant YvesBlue ToolsYvesBlue highlights 500 of the most influential companies and financial institutions in key forest-risk supply chains. In the Research Center, companies can be filtered by the Forest 500 badge to view these companies and the score they received.
Water ContaminationApproximately 31% of the world’s watershed area is covered by forests which supply 75% of the world’s accessible freshwater. Forests also control the water cycle by regulating precipitation, evaporation, and flows. Additionally, forests prevent erosion and act as a filter to keep pollution out of water.
Relevant YvesBlue ToolsYvesBlue displays the alignment of a company or portfolio to the UN Sustainable Development Goals (SDG), including UN SDG 6- Clean Water. The Peers Analysis widget presents the alignment of a company with UN SDG 6 in comparison with its peer companies which a user can interchange.
YvesBlue also displays the UN SDGs applicable to a portfolio in the SDG Exposures widget. This shows the percent alignment of the portfolio relative to a benchmark in addition to the Top 10 Model Holdings in the portfolio with their respective UN SDGs.
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