Publication: Planted forests in emerging economies: Best practices for sustainable and responsible investments
Planted forests in emerging economies: Best practices for sustainable and responsible investments
| dc.contributor.author | Brotto, L. | |
| dc.contributor.author | Pettenella, D. | |
| dc.contributor.author | Cerutti, P.O. | |
| dc.contributor.author | Pirard, R. | |
| dc.date.accessioned | 2022-01-23T18:56:59Z | |
| dc.date.available | 2022-01-23T18:56:59Z | |
| dc.identifier.uri | https://open.fsc.org/handle/resource/863 | |
| dc.title | Planted forests in emerging economies: Best practices for sustainable and responsible investments | en |
| dcterms.abstract | Investments in industrial-scale planted forests have grown exponentially in recent years and are included into investment portfolios for various reasons (e.g. diversification, risk mitigation, attractive returns). The rapid growth of planted forests may incur negative social and environmental impacts. Thus, investment companies and fund managers are increasingly interested in using sustainable and responsible investment (SRI) tools (e.g. standards, guidelines, and codes of conduct). However, a classification system for SRI tools in the field of planted forests still lacks consensus.The present study therefore identifies, describes and analyzes SRI tools for planted forests and suggests a framework for the evaluation of their capacity to address environmental, social and governance (ESG) issues.Four key findings emerged: • More than 50 SRI tools are used to categorize investments in planted forest. The most common SRI tools used are management standards, bank investment policies and investment rating systems.• An ESG Reference Document allows a quality assessment of the SRI tools to be undertaken. The most important issues highlighted in SRI tools are: legality, environmental impact and third-party certification. Conversely, issues such as poverty alleviation, minimum percentage of protected areas and prevention of encroachment are not properly addressed.• SRI tools with the highest overall performance originate from the Forest Stewardship Council (FSC), Gold Standard, RepRisk, Certified B Corporation and FairForest and also include the WWF Responsible Investment Guide and the FTSE4Good Index Series.• It is important that planted forests are evaluated either through specific SRI tools, or at least with appropriate consideration in order to properly address risk factors such as improvement of livelihoods and the prevention of encroachment and conflicts.. Cerutti, Paolo and Brotto, Lucio and Pettenella, Davide and Pirard, Romain. (2016). Planted forests in emerging economies: Best practices for sustainable and responsible investments. 10.17528/cifor/006136. Investments in industrial-scale planted forests have grown exponentially in recent years and are included into investment portfolios for various reasons (e.g. diversification, risk mitigation, attractive returns). The rapid growth of planted forests may incur negative social and environmental impacts. Thus, investment companies and fund managers are increasingly interested in using sustainable and responsible investment (SRI) tools (e.g. standards, guidelines, and codes of conduct). However, a classification system for SRI tools in the field of planted forests still lacks consensus.The present study therefore identifies, describes and analyzes SRI tools for planted forests and suggests a framework for the evaluation of their capacity to address environmental, social and governance (ESG) issues.Four key findings emerged: • More than 50 SRI tools are used to categorize investments in planted forest. The most common SRI tools used are management standards, bank investment policies and investment rating systems.• An ESG Reference Document allows a quality assessment of the SRI tools to be undertaken. The most important issues highlighted in SRI tools are: legality, environmental impact and third-party certification. Conversely, issues such as poverty alleviation, minimum percentage of protected areas and prevention of encroachment are not properly addressed.• SRI tools with the highest overall performance originate from the Forest Stewardship Council (FSC), Gold Standard, RepRisk, Certified B Corporation and FairForest and also include the WWF Responsible Investment Guide and the FTSE4Good Index Series.• It is important that planted forests are evaluated either through specific SRI tools, or at least with appropriate consideration in order to properly address risk factors such as improvement of livelihoods and the prevention of encroachment and conflicts. | en |
| dcterms.accessRights | Public | |
| dcterms.accessRights | Open access | |
| dcterms.bibliographicCitation | Brotto, L., Pettenella, D., Cerutti, P., and Pirard, R., 2016. Planted forests in emerging economies: Best practices for sustainable and responsible investments. Occasional Paper 151. Bogor, Indonesia: CIFOR | en |
| dcterms.issued | 2016 | |
| dcterms.language | en | |
| dcterms.license | CC-BY-4.0 | en |
| dcterms.publisher | Center for International Forestry Research | |
| dcterms.type | Working Paper | |
| dspace.entity.type | Publication | |
| fsc.evidenceCategory | FSC impact-related | |
| fsc.focus.forestType | Plantation | |
| fsc.focus.forestZone | Tropical | |
| fsc.focus.sustainDimension | Political, legal, systemic | |
| fsc.focus.sustainDimension | Economic | |
| fsc.issue.economic | Demand and supply | |
| fsc.issue.economic | Stakeholder preferences | |
| fsc.subject | Forests | |
| fsc.subject | Certification | |
| is.availability.fullText | Full text available | |
| is.contributor.funderType | Public funds (government, EU funding, public research grants) | |
| is.contributor.member | Forest Stewardship Council | |
| is.evaluation.collection | Mixed methods | |
| is.evaluation.counterfacts | No | |
| is.evaluation.notes | The present studytherefore has two objectives: first, to identify,describe and analyze the tools that have beendesigned in order to promote SRIs in plantedforests; and second, to suggest a framework forthe evaluation of SRI tools vis-à-vis their capacityto address ESG issues in relation to investmentsin planted forests, with a longer-term aim ofimproving the SRI tools of the future.' | |
| is.evaluation.quotes | Results indicate that the most common SRItools used to date are management standards(e.g. the Forest Stewardship Council'sstandards, called the FSC Forest CertificationScheme), bank investment policies (e.g. ABNAMRO Forest and Plantation Policy) andinvestment rating systems (e.g. RepRisk).SRI tools usually have a broad sectoral scope.Only a few tools are specific to planted forests.Business-oriented organizations produce andmanage about 60% of the SRI tools assessed,followed by NGOs (16%), which in recentyears have played a more relevant role in thedevelopment of management standards. | |
| is.evaluation.quotes | Today, 30% of all industrial roundwoodproduction is sourced from these planted forests(Jürgensen et al. 2014). Planted forests areexpected to overtake natural forests in productionto reach 75–100% of industrial timber productionby 2050 (Sohngen et al. 1999; Evans and Turnbull2004; Carle and Holmgren 2008). Warman (2013)convincingly describes how the peak of productionfrom natural forests occurred in 1989 worldwide. | |
| is.evaluation.quotes | The concerns about the negative impacts ofplanted forests are all the more critical because:• retail investors look to increase their marketshare and are less likely to care aboutsocial and environmental impacts than areinstitutional investors (Simula 2008)• planted forests are mostly expanding incountries (often tropical and subtropical)characterized by fragile social situations andrelatively poor law enforcement comparedwith conventional areas of investmentsuch as the USA (Voegtlin et al. 2011;Zhanget al. 2014)• productive planted forests will be prioritizedover protective ones and will entail highersocial and environmental risks. | |
| is.evaluation.quotes | The focus of this study is on productive plantedforests, where investments are massive. Productiveplanted forests produce either or both nontimberforest products (rubber) and wood (e.g.timber). Fast growing and high yielding (FGHY)plantations cover an area of 54.3 million haworldwide, excluding rubber and nonindustrialfuelwood plantations (Indufor 2012). The USA,China and Brazil are the countries with thelargest areas of planted forests, each having over 5million ha of FGHY plantations (Indufor 2012).Productive planted forests are intensively managedin order to generate high financial returns, andthus are usually based on mono-specific and exoticspecies (e.g. Pinus spp. and Eucalyptus spp.). Yet,they are also associated with greater negativeenvironmental impacts compared with protectiveplanted forests. | |
| is.evaluation.quotes | green and social credentials – investment riskscan increasingly be reduced, while brand andreputational values can be increased throughcertification and other SRI tools that can provideevidence that the forests are managed sustainably | |
| is.evaluation.quotes | Second, the investment could face aspects that arenot covered even by high-quality SRI tools. Forexample, this is the case for FSC certification asregards climate change, REDD projects, supplychain analysis of goods causing deforestation (e.g.soy beans, palm oil, etc.) and large biomass energyplants. In these cases, even high-quality SRI toolsneed to be merged with other dedicated SRI toolscharacterized by lower total performance buthigher sector specificity. | |
| is.evidenceSubType | Synthesis paper - literature review | |
| is.evidenceType | Synthesis paper | |
| is.focus.products | Forestry products | |
| is.focus.sdg | SDG 17 - Partnerships for the Goals | |
| is.focus.sectors | Agriculture | |
| is.focus.sectors | Forestry | |
| is.focus.sustainDimension | Economic | |
| is.focus.sustainDimension | Environmental | |
| is.focus.sustainDimension | Social | |
| is.focus.sustainIssue | Forests and other ecosystems | |
| is.focus.sustainIssue | Consumers and supply chains | |
| is.focus.sustainIssue | Livelihoods | |
| is.focus.sustainIssue | Wages and workers' rights | |
| is.focus.sustainIssue | Rights of indigenous peoples and local communities | |
| is.focus.sustainLens | Multiple certification | |
| is.focus.sustainLens | Transnational governance | |
| is.focus.sustainLens | Ecosystem | |
| is.focus.sustainLens | Finance | |
| is.focus.sustainOutcome | Deforestation and forest protection | |
| is.focus.sustainOutcome | Ecosystem quality | |
| is.focus.sustainOutcome | Sustainable sourcing | |
| is.focus.sustainOutcome | Market access | |
| is.focus.sustainOutcome | Land tenure | |
| is.focus.sustainOutcome | Occupational health and safety | |
| is.focus.sustainOutcome | Governance mechanisms | |
| is.focus.systemElement | MandE outcomes and impacts | |
| is.focus.systemElement | MandE performance monitoring | |
| is.identifier.code | Impacts | |
| is.identifier.doi | https://doi.org/10.17528/cifor/006136 | |
| is.identifier.fscdoi | http://dx.doi.org/10.34800/fsc-international789 | |
| is.identifier.schemeName | Forest Stewardship Council | |
| is.identifier.schemeType | Voluntary Sustainability Standards | |
| is.item.reviewStatus | Peer reviewed |