Biodiversity bond raises the stakes for paper firms

Kris Atkinson, Fixed Income Portfolio Manager, Fidelity International

Spix’s macaw, the cryptic treehunter and Alagoas Foliage-gleaner birds sound like the product of an active imagination. Unfortunately our imagination is the only place they live on, after being driven to extinction from Brazilian forests - just three of the many species lost since 2000. The devastation caused by human encroachment into natural habitats, exacerbated by climate change, has become a critical issue for investors and is a key theme for Fidelity this year.

Paper and pulp production is just one such encroachment, and we recently engaged with a paper and pulp manufacturer, Suzano, on how it is addressing biodiversity and reducing carbon emissions. All this in the wake of the world’s first ‘transition’ bond linked explicitly to rewilding. Our aim was to use the platform we have as fixed income investors to persuade the company to introduce sustainable practices.

Gain an insight

Watch the video to benefit from an insight into how Fidelity’s engagement with Suzano encouraged the company to be bolder on carbon emissions and to set an ambitious biodiversity target, both of which should help it improve its external ESG ratings over time. You can also read the full account of Fidelity’s engagement with Suzano here.

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