Taking root

How can investors protect the world's plants and forests?

What are the UN SDGs?

The UN wants to make the world a better place by 2030. It's doing this through 17 Sustainable Development Goals (SDGs), covering everything from clean energy and gender equality to zero hunger and human rights for all. The international community, including 193 governments, adopted the SDGs in 2015.

Achieving these goals will require an estimated investment of between five and seven trillion dollars each year until 2030. Around $1 trillion comes from the UN and member countries annually, while private investors must fund the remaining $6 trillion every year.

Without plants, life on earth simply couldn't survive. Forests cover 30% of the planet, providing clean air, water and habitats for all life. And plants make up 80% of human diets while agriculture provides livelihoods for 2.6 billion people.

But human activity, such as deforestation, unsustainable agriculture and pesticide use, is destroying plants and wildlife worldwide. Humans are clearing 13 million hectares of forests each year. And the world is losing 12 million hectares of land annually through unsustainable use – equating to 20 million tonnes of lost grain.

What can the world do to halt the destruction? There is a ray of hope. And it comes from investors.

Protecting life on land

The United Nations (UN) wants to protect, restore and promote our planet's plants, insects and animals. It's doing this through Sustainable Development Goal (SDG) 15 (Life On Land). This goal is all about managing forests sustainably, combatting desertification (where useful land becomes desert), reversing land degradation and stopping biodiversity loss.

What can businesses do?

To support SDG 15, companies can measure, manage and reduce their impact on land and ecosystems. And there's a lot that businesses, relying on the land (like extraction, forest and agriculture companies) can do to help. For example, they can commit to using land and forests sustainably, invest more in innovation and natural infrastructure, and source materials responsibly. Even better, all this can boost their bottom line.

Companies also face strict regulations on managing and disposing of waste – not just within their factory gates, but across their suppliers. Businesses that aren't already complying with the rules risk suffering big fines and damaged reputations.

How can investors help?

There are many ways investors can put their money to work and encourage businesses and countries to do better for the planet. To build a sustainable investment portfolio, they can invest in companies and governments that do a good job of protecting life on land.

At UBS, we consider companies with good environmental and biodiversity management policies and systems; site closure and rehabilitation plans; and those that manage hazardous waste and limit toxic emissions. We also look at governments that manage their air and land resources well.

We include SDG 15 in a broad environmental topic: pollution and waste. This captures environment management, biodiversity management, used of recycled materials, air pollution, waste and hazardous waste management, and other toxic emissions.

How can I make a difference?

Investors today have a wide choice of investment approaches that drive sustainability.

To build a sustainable investment portfolio, investors can look for companies and governments that manage these issues well. We look at companies that have good governance through environmental management policies and systems, reduce packaging, recycle materials, manage hazardous waste, limit toxic emissions, and governments that manage their air and land resources well.

An example of how this helps Life on Land, a World Bank project is helping the development of systems to prevent forest fires that have a direct impact on global warming and monitor vegetation cover in the Brazilian Cerrado. The Brazilian Cerrado is wooded grassland covering more than two million square kilometres (sixfold size of Germany) and is the country’s second largest biome.

With this project the Worldbank is enhancing Brazil's capacity to monitor deforestation, to improve quality of information about fire risks, and monitor greenhouse gas emissions in the Cerrado.

Smurfit Kappa, a leading provider of paper-based packaging based in Ireland is focused on managing forest resources. Because their products are 100% renewable and produced sustainably, they help their customers reduce their environmental footprint. Smurfit Kappa owns approximately 103,000 hectares of forest globally. Their forest estate management is based on sustainable development principles, promoting economic growth, a responsible use of natural resources and fostering social equity.

Since 2011, higher demand for natural rubber has made farmers to rush into this market with the consequence of destroying forests in a very large scale creating space for rubber tree plants.

Increasingly, companies using rubber in their production process are being held responsible for addressing sustainability issues in their supply chains, such as poverty among smallholder farmers and their contribution to deforestation.

Trelleborg produces rubber-related products which are critical components in aircraft landing gears, hydraulics and medical equipment, and also produces tyres for use in the agriculture and construction sectors.

Trelleborg is aligning its corporate practices more closely with the SDGs to develop, adopt and cascade a sustainable natural-rubber policy. This will help them to adopt a circular approach to production and encourage them to establish an ambitious group-level target for renewable energy.

The outcome can potentially deliver positive impacts by reducing deforestation. Additionally they can improve farmers’ incomes and working conditions throughout the value chain. Further they could impact positively the renewal or prolonging life of rubber products and the reduction of GHG emissions.

Let's get started

To find out more about supporting SDG 15 through your investments, contact your UBS client advisor or find one today.

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