Deforestation in the boreal is often missing from investors’ to-do lists. This year’s PRI In Person, taking place in Canada, presents a once-in-a-decade opportunity to address this.
On its official website, the Canadian government states: “At 0.02 percent of its forested area, deforestation in Canada is among the world’s lowest.”
In 2022, a leaked letter revealed a lobbying effort by the Canadian government to push back on the EU’s draft legislation on forest-product sustainability and traceability – why, if their deforestation rates are so low, would Canada need to lobby a deforestation policy?
When talking about deforestation, someone will almost always bring up cattle-farming in the Amazon, or potentially mining in the Congo Basin or logging in the Pacific Islands, but few if at all would bring up Canada’s boreal forest. As the largest intact forest and home to more than 600 Indigenous communities, it’s surprising there isn’t more conversation around the boreal.
Boreal characteristics
The boreal forest is a vast biome that stretches across the high northern latitudes of North America, Europe and Asia, and is characterised by long, cold winters and short, mild summers.
Trees are slow growth, as an adaptation to the harsh growing conditions of short summers, low temperatures, nutrient-poor, acidic soils and a frozen soil layer known as ‘permafrost’ that sits below the roots. Low temperatures mean that decomposition rates of organic matter like pine needles, and fallen trees, is slow.
This slow breakdown of organic matter paired with the permafrost, and waterlogged soil systems known as “peatlands”, makes the boreal ecosystem perfect for trapping carbon. These factors combined is why the boreal is the world’s largest carbon sink on land.
Although it may seem contradictory considering wildfire headlines, at a natural level fires play a crucial role in maintaining the health of the boreal ecosystem.
A key characteristic of the boreal, fire promotes ecological renewal and nutrient cycling (it opens up the forest canopy to allow for new vegetation, as part of a process called succession), stimulates species reproduction (species such as the jack pine depend on fire to open up their cones), reduces pathogens and pests, and regulates fuel load to prevent large fires.
In short, fires are essential in maintaining the boreal’s mosaic of coniferous trees and deciduous trees.
Biodiversity and culture
The boreal is abundant with biodiversity, including extensive old-growth forests with complex structures that provide habitat to a vast variety of species.
Notably, it serves as a nesting ground for more than three billion birds, over 85 species of mammals, including indicator species woodland caribou and keystone species snowshoe hare and Canada lynx, and more than 130 species of fish, such as walleye and lake trout.
For thousands of years, Indigenous Peoples have inhabited the boreal. A rich diversity of cultures and knowledge has developed over millennia, tied to the forest and the resources it provides.
Today, more than 600 Indigenous communities reside in the boreal region. As the stewards of the forest, Indigenous communities play an integral role in the management of the forest.
As an incredibly resource-rich region, the boreal has significant importance to Canada’s economy and industries, as well as to local livelihoods, including Indigenous communities.
Natural resources include oil and gas, metals and critical minerals like copper and aluminium, and timber, feeding the key industries of oil and gas, mining and forestry.
To give numbers to these industries’ importance: the country’s number one exporting industry is oil drilling and gas extraction, with oil sands totalling 3.2 million barrels a day, and the forestry sector alone directly employing more than 212,600 people and serving over 300 forest-reliant communities in 2021.
Threats to the boreal
From increased wildfires fuelled by climate change to outbreaks of invasive species like the spruce budworm, the boreal is under a multitude of threats.
Notably, industrial development, including forestry, oil and gas extraction, mining and agriculture, is a major cause of deforestation and the fragmentation of the boreal forest. While the physical removal of forest for the expansion of industry is one aspect, construction of roads, pipelines and other infrastructure fragments what’s left of the habitat, decreasing habitat connectivity for wildlife species.
Large-scale forestry practices like clearcutting have simplified the unique structure and composition of boreal forests by removing old-growth stands. This has led to a dominance of young, homogeneous stands lacking the diversity needed to support many specialist species, and has decreased the boreal’s resiliency to other threats such as wildfires.
A diversity of federal policies such as the Species at Risk Act, and regional policies like Quebec’s Sustainable Forest Development Act, are aimed at protecting Canada’s boreal forest, in addition to international biodiversity and anti-deforestation initiatives like the Global Biodiversity Framework.
Significant efforts have been made to establish protected areas, notably by the Indigenous-led conservation initiatives.
However, there remains a misalignment of priorities between the federal government, regional governments, scientific authorities, industry groups, Indigenous communities, environmental groups and the global stage.
Deforestation definition
One example of this is the definition of deforestation and what constitutes sustainable development in the boreal region. If you were to ask the trade association, the Forest Products Association of Canada, the response would be similar of that of the government: the boreal is sustainably managed.
Taking a closer look, and speaking with environmental organisations and other groups active in the boreal, the answer becomes more complex.
The intricacies of deforestation in and conservation of the boreal extend far beyond the extent of this discussion but in short, despite localised moves to protect the forest, at the federal level, Canada is far from sustainably managing the boreal.
Trade associations and board members of the industries active in Canada’s boreal have a voice on deforestation. As figureheads, these associations and companies can have significant influence on industry-related and deforestation-related policies through lobbying efforts and advocacy.
At PRI In Person this October, 2,000 of the world’s investors will meet to discuss key sustainability issues in Toronto. This presents us with a once-in-a-decade opportunity to place conservation of the boreal forest at the forefront of conversations around nature and climate change in the investor community.
In the lead-up to the event, Canbury will undertake a project to identify the commodity trade flows, the policy frameworks and the companies most influential on deforestation in Canada’s boreal forest with the intention of driving investor engagement.
The boreal project is supported by the MSCI Sustainability Institute. Additional investor partnership and expertise is welcome. For more information, e-mail emmy.shaw@canbury.io.
Emmy Shaw is an analyst at Canbury.
For more on non-tropical deforestation, in Canada and beyond, see our deep dive from March this year.
