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Deforestation in Brazil poses growing investment risks

. Jun 26, 2020
Deforestation in Brazil poses growing investment risks Photo: Marcos Vergueiro/SECOMMT

According to Norwegian investment fund Storebrand Asset Management, the Brazilian government’s handling of environmental issues is hurting the country’s ability to secure investments from increasingly environmentally conscious investors. Deforestation in Brazil has increased during the Covid-19 pandemic.

Storebrand CEO Jan Erik Saugestad pointed out that the government’s environmental policies seem to facilitate deforestation in Brazil and the exploitation of natural resources in the Amazon rainforest, such as President Jair Bolsonaro’s decree authorizing mining activities within indigenous territories — seen as an illegal circumvention of article 231 of the Brazilian Constitution.

President Bolsonaro’s administration has come under intense scrutiny from the international community for its lax attitude toward deforestation, which empowers loggers and miners to further exploit Brazil’s natural resources, adding to the already widespread sense of impunity among land grabbers. As previously covered by The Brazilian Report, land-grabbing and deforestation have risen during the Covid-19 pandemic, staying true to Environment Minister Ricardo Salles’ attempt to use the pandemic to “run the cattle herd” through the Amazon.

“As investors, we all want to continue investing and contributing to the economic development of Brazil. Yet, if we do not see a clear change of course [by the government] — with the risk of continuing [harmful practices to the environment] getting bigger — we will reach a point when we will have to leave,” Mr. Saugestad told newspaper Folha de São Paulo.

Earlier in the week, Storebrand joined 28 other investment groups in an open letter to Brazilian embassies criticizing the lack of commitment by Mr. Bolsonaro’s administration to environmental protection policies. In total, the co-signers of the letter represent USD 4.1 trillion worth of investment funds. Currently, Brazilian companies receive USD 117 million in investments from the Storebrand group alone, a figure that is likely to dwindle if deforestation rates continue.

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Rafael Lima

Rafael is a Communication student at Wake Forest University, and a student fellow of the Pulitzer Center on Crisis Reporting.

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