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July 29, 2016

Major Pension Funds Still Funding Deforestation
    by Robert Kropp

Friends of the Earth and As You Sow create a free online database to help educate individual investors about which retirement funds continue to invest in companies engaged in deforestation for palm oil production.

Facing increased scrutiny from sustainable investors and civil society groups, many agribusiness companies and consumer brands have devised policies that at least suggest “a willingness to address the risks associated with an industry that causes the loss of millions of hectares of rainforest and that drives widespread social and cultural harm,” according to a recent report by Friends of the Earth.

The leveling of rainforest in order to build plantations for the production of palm oil—the world's most widely used vegetable oil, which is found in thousands of the most commonly used consumer products—threatens the way of life of indigenous communities and the very existence of many of the most endangered species as well. Deforestation is also a significant contributor to climate change.

While many companies engaged in palm oil production have acknowledged the necessity of ending deforestation and respecting the human rights of workers and local communities, the financial industry has largely failed to keep up with commitments to improved conditions. “Since 2008, major financial institutions have invested more than $20 billion in the palm oil industry,” the report states.

Furthermore, “Opaque and complex value chains in the palm oil sector can insulate investors from awareness of the social and ethical impacts and risks of their investments.”

“When Americans put their hard-earned money in savings and retirement accounts, they believe they are preparing for a better future,” Jeff Conant of Friends of the Earth said. “But large asset managers undermine that very future, globally speaking, by putting this money into destructive agribusiness firms, generally through complex investment chains and failures in due diligence. Financial managers must stop investing in companies that grab land from subsistence farmers and Indigenous people in order to install massive plantations with dangerous, low-wage labor.”

The report urges investment firms with funds in palm oil production to undertake the following commitments:
1. disclose their exposure to deforestation and land risk in palm oil and other commodities;
2. commit to a deforestation and land grab-free investment policy;
3. exclude bad actors and advocate for responsible financing; and
4. repair the damage and ensure justice for affected communities, and support only companies that restore ecological damage as part of their commitment to forests.

To help investors concerned about the social and ethical impacts and risks of their investments, Friends of the Earth has teamed with As You Sow to create a free online database entitled
Deforestation Free Funds. The database, according to its creators, “lets you see if your savings are invested in dirty palm oil, shows you how to take action to get fund managers to implement more sustainable investment policies, and helps you find investment options that support a forest friendly future.”

“The search platform, which currently encompasses 6,500 global mutual funds, will be expanded in the future to include all market drivers of deforestation,” a press release states. “As of June 2016, US mutual funds had a net investment of more than $5 billion dollars in palm oil producers.”

“Investments in palm oil are embedded in our pension funds, IRAs, and 401(k)s but most of us are not even aware of it,” Andrew Behar of As You Sow said. “This web tool empowers investors to know exactly what they own so that they can pressure fund managers to implement sustainable investment policies and find investment options that support a forest-friendly future.”

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