De-Silo’ing our investment in forests for better returns

Apr 12, 2023 | Steve Hounsell

As the Oracle of Omaha, Warren Buffet, once said, it is “…only when the tide goes out, [that] you discover who’s been swimming naked.” Buffet was speaking about making money in a strong market, but I think a case can be made for another type of investment scenario.  

Consider this:  You can only discuss reducing the Earth’s greenhouse gas emissions by discussing healthy forests. And you can only speak about healthy forests if you talk about biodiversity. 

They are not, and never were, reducible or separate. We just treat them this way.

For example, many corporate and government leaders are eager to invest in tree planting to reduce their carbon footprint while demonstrating to their stakeholders and citizens that they are socially and environmentally responsible. 

These are all good, admirable intentions, but I would suggest that without a more comprehensive strategic forest-building approach, we’re all just swimming naked.

Let me elaborate.

The right trees: Planting the right native trees are those sourced from regionally appropriate genetic stock and matched to the local site, and moisture conditions are more capable of surviving the predicted future climate. Moreover, those native trees are capable of supporting and sustaining the range of native forest-dependent species that ought to be found in such forests.

The right places: Where we plant a tree is as important as what we plant and how we do it. At the most basic level, we should be planting forests where they occurred historically and where the climate favours their survival in the future. Attempts to convert native grasslands, prairies, or other non-forest ecosystems into forests have proven as disastrous to biodiversity as clearing the land for farming or housing development. Some direct drivers of global biodiversity loss are habitat loss from land- and sea-use change, overexploitation of species, climate change, pollution, and invasive species.

The right reasons: Strategic restoration and maintenance of forests can achieve multiple wins and benefits across various outcomes. In business terms, we call it the triple bottom line or transition to a green economy. It includes job creation, flood attenuation and buffering extreme heat events in urban areas while also conserving biodiversity. Many of us in biodiversity and the ecological sustainability business call it smart. It is one of the main reasons I am drawn to the work of Canada’s Forest Trust Corporation. They conceive of and develop forest restoration projects that consider the complete ecosystem – the right trees in the right places for the right reasons. 

As the world confronts an unprecedented biodiversity crisis with more than one million species facing extinction globally, including hundreds of at-risk species in Canada, biodiversity preservation and conservation are finally coming in from the margins. 

We are entering a new era where innovative business leaders and municipalities, in particular, are reaching beyond reducing and mitigating their environmental impacts to measuring, in dollar terms, the value of the various beneficial services that natural environments perform. Some have termed this Sustainability 3.0. Chris Knight, the founder of PricewaterhouseCoopers’ (PwC’s) forestry and sustainable land use team, called it “hard-nosed economics.”

When the Earth’s biodiversity depends on the world’s forests, what does a more comprehensive approach to investments look like in Canada? 

Here are a few thoughts:

The point here is that if we are serious about our investments in climate action, regenerating and restoring entire forest ecosystems is the very definition of wise investing. As Mr. Buffet is fond of saying: “Our favourite holding period is forever.”