Two of Europe’s largest asset managers have pledged to support efforts to halt deforestation and adopt sustainable land management practices in the Cerrado region of Brazil.

Dutch asset manager APG and Legal & General Investment Management (LGIM), who have more than €1.5trn in assets under management between them, have signed a statement of support for the “Cerrado Manifesto”.

Robeco and Green Century Capital Management, a US investor, have also put their names to the statement.

Produced in September last year by a number of Brazilian civil society organisations, the “manifesto” described the scale and nature of the deforestation and native vegetation conversion in the Cerrado, and called for action by companies that buy soy and meat from within the area and by “investors active in these sectors”.

Having originated with global food companies, the statement supports the objectives set out in the Cerrado Manifesto and a commitment “to working with local and international stakeholders to halt deforestation and native vegetation loss in the Cerrado”.

Lucian Peppelenbos, senior responsible investment and governance specialist at the €480bn Dutch asset manager APG, said: “Companies that directly or indirectly cause deforestation, especially in sensitive conservation areas such as the Cerrado, face physical, regulatory and reputation risk – and that translates into the potential for tangible capital loss for investors.

“The investor statement on Cerrado is a powerful statement to the wider market that institutional investors like APG favour agricultural production on existing arable land over supply chains that threaten international climate goals and global biodiversity.”

ABP, the Netherlands’ biggest pension fund and APG’s main client, recently announced it would sell a stake in a South Korean company because a subsidiary was involved in chopping down rainforests for palm oil plantations in Indonesia. 

Meryam Omi, head of sustainability and responsible investment strategy at LGIM, said deforestation needed to become a more important issue for the boards of large food retailers and producers given the role it played in greenhouse gas emissions.

“Ensuring responsible sourcing and land use for commodities such as soy and cattle is a key component of risk mitigation,” she added.

More than 70 large corporate buyers – including McDonalds, Tesco, Walmart and Unilever – have signed the statement of support since it was first produced in October last year, shortly after the Cerrado Manifesto itself.

The involvement of investors such as APG and LGIM comes after a steering group for the companies recently approached FAIRR, a non-profit organisation that focuses on the risks posed by intensive livestock production, to drum up investor backing.   

In August drafting is to start on an agreement between producers, industry, consumer organisations and civil society on an action plan for eradicating deforestation in the Cerrado area.

What is the Cerrado? 

According to The Nature Conservancy, a US-based charitable environmental organisation, the Cerrado is the world’s most biologically rich savanna, stretching across an area nearly three times the size of Texas.

It is also one of the most unprotected savannas in the world, with less than 2% of its region protected in national parks and conservation areas. According to the manifesto, an area of the Cerrado the size of greater London was destroyed every two months between 2013 and 2015, with deforestation rates exceeding those in the Amazon for over 10 years.

The expansion of agribusiness was the main cause of the conversion of native vegetation in the Cerrado, The Nature Conservancy said.

The conservation organisation said the expansion of large scale agriculture across the Cerrado began in the 1960s.

The area is one of the largest producers of soy beans in the world. China has imposed tariffs on US soybeans as part of a response to the US imposing tariffs of its own.