Influence of corporate responsibility on financial return in planted forests: case studies from South East Asia and Africa

Investments in planted forests in emerging markets are increasing and investors are looking for Sustainable and Responsible Investments (SRI) to integrate Environmental, Social And Governance (ESG) into the investment process. This study presents an ESG Risk Assessment protocol tested in 12 case studies of investments in planted forests evenly distributed between Uganda, Cambodia and Vietnam. The ESG Risk Assessment allows to identify the most important 25 issues for investments and reveals that existent instruments for SRI are often focusing on issues that on-the-ground are not the major risk sources. This is the case of "Third party certification" and "High Conservation Value Forests" (HCVFs). Few exemptions where SRI tools are properly identifying the major risks are "Tenure rights", "Health and safety of workers" and "Social impact assessment". Climate change impacts, long term financial sustainability, poverty reduction and encroachment are ranked as the most dangerous sources of risk across the 12 case studies. SRI tools are positively influencing the risk mitigation of investments in planted forests, accounting for a percentage of risk mitigation that ranges from 34 till 60%. FSC certification was often reported by projects' stakeholders as a key instrument to mitigate risk of investments in planted forests.