Forests play a key role in global climate stability. Each year they absorb about one third of the carbon dioxide that is released from the burning of fossil fuels. This is equivalent to 2.6 billion metric tons of the gas.
The United Nations states that if we do not take action now, the world's average surface temperature is likely to rise by 3 degrees Celsius this century — affecting weather patterns, ecosystems, agriculture, industry and the wellbeing of every person on the planet.
"Sustainable investment is the fastest-growing segment of the investment universe," according to Michael Baldinger, head of sustainable and impact investing at UBS Asset Management.
He reports that sustainable assets under management almost doubled from $14 trillion to $22 trillion between 2012 and 2016.
"This is not a niche anymore. It is a large-scale business and it is something in which investors the world over have become extremely interested in," he says.
"Investors are now setting explicit targets for reducing the carbon footprint of entire portfolios, and looking at ways to measure the impact of investments. Climate has become more and more important to financial analysis, and contributes to identifying long term investment opportunities and risks."
Lauren Fletcher, CEO of BioCarbon Engineering and former NASA engineer, has pioneered an innovative solution using drones, which he believes, with investment support, can reverse the trend.
"My team and I have a really great chance to change the world 1 billion trees at a time," he explains.
"The only option we've had previously has been hand-planting, which is slow and really expensive and just can't keep up with industrial-scale deforestation. We're hoping our technology is going to provide opportunities to really scale up the reforestation and replanting rates."
Drones are equipped with onboard sensors to determine the land's topography and existing biodiversity. They are able to scan an impressive 140 hectares in 50 minutes.
The data collected is used to create an optimized planting pattern which ensures the drones avoid any obstructions or unplantable soil areas. Each planting drone can cover an area of one hectare with 300 biodegradable seedpods in just 18 minutes or up to 100 hectares over a 36 hour period.
The ongoing health of the newly-planted ecosystem is later assessed by the drones, while simultaneously collecting extra data that feeds back to improve future plantings.
By reducing human and logistical costs, BioCarbon Engineering's seeding program is quicker and more cost-effective than traditional methods. They estimate that their system saves around $150k per 100 hectares of reforesting.
Having planted over 20,000 trees so far, BioCarbon Engineering has the bold ambition to plant 1 billion each year. If they are able to achieve this, it could have a significant global effect in supporting action against climate change.
The appetite for investors to get behind companies like Fletcher's has been building rapidly and UBS has a strong commitment to helping clients decarbonize their portfolios. In 2015, the board of directors made the strategic decision to bring sustainable investing into the mainstream of the bank's client offering across its different businesses.
"It can be very powerful for investors, knowing the impacts of their investment portfolios," Baldinger adds.
With almost 80% of asset owners now considering ESG (environmental, social and governance) criteria to be one of their top five issues when choosing an asset manager, the potential for connecting private wealth with opportunities that help mitigate climate change appears promising.
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