Forestry as one of the climate solutions
Here’s the intro to this piece by CFA Society United Kingdom:
The latest report by the Intergovernmental Panel on Climate Change (IPCC), published in August, left no doubt that rapid and deep reductions in greenhouse gas emissions are required in the coming decade to avoid catastrophic impacts. The risk of climate change is driving strategic asset allocation decisions of the world’s largest investors, an increasing number of whom are committing to net zero emissions by mid-century. In fact, the members of the Net Zero Asset Owners Alliance and Net Zero Asset Managers Initiative now collectively represent $50 trillion in assets under management. As these investors search for opportunities to invest in climate solutions and decarbonise portfolios, they will invariably look for technological transformations in energy, industry, and transport. But what is less understood by investors is that there is no credible pathway to net zero without an investment transformation in forestry and land use.
All climatic modelling that limits global warming to under 2°C requires improvements in land use, with some models showing a requirement of over 1 billion hectares of reforestation by 2050 relative to 2010 to remove carbon from the atmosphere. This is a staggering figure—particularly when we imagine a world where we need to meet the food, feed, fuel, timber, and energy needs of 10 billion people. This transformation in land use will require the mobilisation of hundreds of billions of dollars of investment in Natural Climate Solutions—the protection of threatened forests, improved management of productive forests and agriculture, and reforestation of landscapes. Investment must be channelled into strategies and companies that protect and restore ecosystems and improve working lands as a part of their investment thesis and long-term value creation approach.