Planted forests in emerging economies: Best practices for sustainable and responsible investments

Investments in industrial-scale planted forests have grown exponentially in recent years, and current assets under management total USD 70-80 billion, up from about USD 1 billion in 1980. Once almost exclusively focused on timber production, investments are now rapidly broadening their scope to embrace products and services that include ecosystem services, bioenergy and certified forest products. Concurrently, the rapid growth of investments in plantations, notably in the tropics, has fostered controversies that are becoming more prominent and critical and that need to be faced by investors. These are major reasons why investment companies and fund managers are increasingly interested in using sustainable and responsible investment (SRI) tools (e.g. standards, guidelines, and codes of conduct) that help them ascertain whether planted forests assets are 'safe' or 'risk-free' as far as environmental, social and governance (ESG) issues are concerned. However, a classification system for SRI tools in the field of planted forests still lacks consensus. The present study therefore has two objectives: first, to identify, describe and analyze the tools that have been designed in order to promote SRIs in planted forests; and second, to suggest a framework for the evaluation of SRI tools vis- à-vis their capacity to address ESG issues in relation to investments in planted forests, with a longer-term aim of improving the SRI tools of the future. An analysis of 121 investments in emerging economies enabled us to identify 339 organizations (i.e. stakeholders involved in the SRI process) and 50 SRI tools. The classification of the 50 SRI tools based on the above mentioned set of variables allowed us to define an ESG Reference Document for quality assessment of the SRI tools. Overall, findings indicate that very few SRI tools are designed in ways that take adequate account of the specific social and environmental sustainability issues relevant to planted forests