Amazon Fires Provoke $120 Billion Activist to Target Companies

The lead manager behind a global investor campaign to help save the Amazon is redirecting its activism and targeting corporations after Brazil moved “further away” from protecting its forests.

Storebrand Asset Management, which oversees $120 billion in assets, has been steering a group of like-minded funds which manage a total of $3.7 trillion. But a year of lobbying Brazil’s government has failed to stop illegal logging, and that means a new strategy is needed, Chief Executive Officer Jan Erik Saugestad said in an interview.

“Over the coming weeks we will contact more than 50 companies in order to push this harder,” Saugestad said. He declined to identify the firms by name, but said Storebrand is singling out those whose businesses are likely to benefit from illegal logging.

“We’ve undertaken a comprehensive risk analysis of our own investments and identified companies with high exposure to deforestation risk,” Saugestad said.

The shift in strategy underscores the dilemma that institutional investors face when trying to leverage their financial heft for environmental and social change: deciding when to apply more pressure and when to pull out.

The answer isn’t always clear. Another big Nordic asset managers, Nordea Bank Abp, last year divested from Brazil’s JBS SA after a report found evidence that the world’s top meat producer was getting supplies from ranches set up on illegally deforested land.

But some argue that pulling out just leaves room for other investors to step in. After Nordea exited JBS, the company’s stock rose more than 30% in value as shareholders including Vanguard Group Inc. and Banco Santander SA built stakes, according to data compiled by Bloomberg.

Applying Pressure

Saugestad says Storebrand isn’t ready to exit Brazil because it would mean losing the ability to apply pressure. He also says there are signs that the country’s central bank and some business leaders are starting to pay attention to investor concerns.

“We want to keep that pressure and the momentum going,” he said.

Well over half the entire Amazon is in Brazil, giving the government of President Jair Bolsonaro control of most of the world’s largest rainforest. The trees have historically absorbed huge amounts of carbon, but fires and deforestation have severely impaired the process.

Earlier this year, scientists found that the Amazon may already have passed a critical threshold, becoming a net contributor to climate change, instead of a brake on global warming. At U.S. President Joe Biden’s climate summit in April, Bolsonaro vowed to end illegal deforestation by 2030. A month later, deforestation hit a record, according to Saugestad.

“It’s a split picture between ambition and what we register on the ground,” with the gap widening between the government’s stated goals and what it’s actually doing, Saugestad said.

“There is lack of policy over the last couple of years” and that “has moved Brazil further away from the goal of reducing illegal deforestation,” he said.

Meanwhile, fires continue to ravage the area as deforestation dries out large parts of the Amazon.

Storebrand last year brought together more than two dozen institutional investors from around the world, including the Church of England, to try to save the Amazon through their activism. Some have already warned they’re prepared to pull out their money, because of the lack of results.

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.