Parrots
Partner Content by Fidelity

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.

 
Important information
For investment professionals only. The views expressed may no longer be current and may have already been acted upon. Reference to specific securities is included for illustration only, not a buy or sell recommendation. The value of investments and the income from them can go down as well as up and clients may get back less than they invest. Overseas investments will be affected by movements in currency exchange rates. Investments in emerging markets can be more volatile than other more developed markets. There is a risk that the issuers of bonds may not be able to repay the money they have borrowed or make interest payments. When interest rates rise, bonds may fall in value. Rising interest rates may cause the value of your investment to fall. A focus on securities of companies which maintain strong environmental, social and governance (“ESG”) credentials may result in a return that at times compares unfavourably to similar products without such focus. No representation nor warranty is made with respect to the fairness, accuracy or completeness of such credentials. The status of a security’s ESG credentials can change over time. Issued by Financial Administration Services Limited and FIL Pensions Management, authorised and regulated by the Financial Conduct Authority. Fidelity, Fidelity International, the Fidelity International logo and F symbol are trademarks of FIL Limited. UKM1121/37255/SSO/NA