The Investor Participant Voices series highlights the expertise and experiences of Nature Action 100 Investor Participants. 

Emine Isciel, Head of Climate and Environment at Storebrand Asset and Nature Action 100 Steering Group member, Elina Niiranen, Senior Responsible Investment Analyst at Evli PLC, and Arild Skedsmo, Senior Analyst – Responsible Investments at KLP Asset Management are investor participants engaging companies in the forestry and packaging sector. Below, they answer questions about the increasing importance of boreal forests and their experience conducting engagements with companies in this sector. 

Why are boreal forests such a focus of your work on biodiversity and nature? 

In recent years, investors have started to engage companies to address material risks from deforestation and degradation of forest ecosystems. So far, tropical forests have received the most attention, but investors are increasingly recognizing the importance of boreal forests, through engagement initiatives such as Nature Action 100. The Boreal (or Taiga) includes a third of the world’s forests, stretching across Russia, Canada, Alaska, and the Nordic countries. It is also the world’s largest carbon store. 

The Nordic countries, as well as Europe more broadly, have lost most primary and old-growth forests. What little remains hosts a high number of endangered species, stores carbon and contributes to ecosystem resilience in the surrounding areas.  

What threats are boreal forests facing and what issues do they raise for industry? 

Most of the Nordic boreal forest is managed as production forest, degraded from its natural condition to be homogenous in tree composition with less richness in biodiversity. Clear-cutting, the dominant logging style is not classified as deforestation, but has clear negative impacts on biodiversity. 

For investors, the main opportunity is to work with forestry companies to improve management practices in production forests. When clear-cutting is applied, it is important to carefully consider site-specific ecological values, leave enough dead wood, and increase the mix of tree species as the forest regrows. Alternative harvesting methods, such as selective logging or continuous cover forestry, should be considered and are generally encouraged in forest areas that still resemble their natural state. 

What have your engagements focused on and which companies have you engaged? 

Nature Action 100 Investor Participants regularly engage companies in the forestry and packaging sector, which includes forest management, timber, wood, and pulp and paper products, along with forest products for bioenergy. 

Finland-based Stora Enso and UPM are two Nature Action 100 companies in this sector that investor participants are having regular and constructive dialogues as part of their engagements. Although most meetings take place virtually, several investor participants had the opportunity to visit their sites in person and discuss key challenges for the sector with company experts.  

Did any key issues come to light through the engagement? 

One critical issue that was discussed is corporate commitments to best practice certification systems – both from directly managed forests and their supply chains. Investors have raised concerns over some Swedish companies increasing logging volumes at the expense of sustainability standards. Investors expect that companies actively engage in best practice market certification systems, both internationally and nationally, with the aim of improving the ecological condition of the production forest.  

We see that most companies are following good practices in managing forests under their direct control. At the same time most of the companies depend on additional sourcing from smallholders or privately held forests where companies have less direct influence, and where incentives and priorities may be different. We recognize it can be challenging for individual companies to place additional requirements on the independent private smallholders, particularly when there is competition for limited resources. To address this issue, Nature Action 100 Investor Participants are in dialogue with companies to encourage sector-wide progress.