The majority of pension providers in major climate coalitions do not have credible policies or commitments to tackle deforestation

The majority of pension funds and providers within GFANZ and Race to Zero do not have comprehensive policies or commitments to tackle deforestation. Working together with our partner Make My Money Matter, we have found that fewer than one in five (19%)* of the 77 pension providers who are members of these net zero coalitions have a current comprehensive policy or commitment to tackle this crucial climate issue*.Deforestation driven by commodities such as beef, soy, palm and timber currently accounts for 11% of the world’s greenhouse gas emissions – addressing it is key to reaching robust net zero. Yet, the majority of pension institutions have not followed the path set by governments and leading financial institutions at COP26 in Glasgow to halt and reverse forest loss.Both Race to Zero and GFANZ have acknowledged that eliminating deforestation is fundamental to credible net zero transition plans and the findings follow the latest IPCC report, which issued a final warning that the world is set to use up its remaining carbon budget and exceed 1.5 degrees if we do not take urgent action.

Finance is key to driving change and pension funds – as the largest group of asset owners in the world – have real power to take a lead. Currently our data shows too many are ignoring the deforestation their investments cause.

Niki Mardas, Executive Director Global Canopy

Research from Make My Money Matter shows that savers care about this – and do not want their pension money to fuel the fire. Over half (55%)** of UK pension holders do not want their savings invested in companies at risk of driving deforestation and the topic consistently ranks as the top concern among savers, alongside other issues such as labour rights abuses and investments into arms manufacturing. With the IPCC stating loud and clear that this is our last chance to act to achieve the internationally agreed target of 1.5 degrees, we are asking the finance industry to heed this call. We are urgently calling on the UK pension sector to urgently commit to tackling deforestation, and take the necessary first steps of mapping portfolio exposure and setting effective policies on deforestation as soon as possible. Niki Mardas, Executive Director at Global Canopy said:

“Time is running out. Report after report has told us that if we’re serious about meeting our Paris climate goals our window of opportunity is closing fast. And forests are a key part of the solution. Destroying them both adds to climate change and makes it more difficult to tackle it.

Finance is key to driving change and pension funds – as the largest group of asset owners in the world – have real power to take a lead. Currently our data shows too many are ignoring the deforestation their investments cause.Inaction on deforestation is a risk to the planet, a risk to life and a risk to business. We know that net zero policies without action on deforestation will not work and regulations and global demand for action will intensify. The best time for pension funds to take deforestation seriously was yesterday, the second best time is now.” Commenting on the findings, Tony Burdon, CEO at Make My Money Matter said: “At COP26 in Glasgow, governments and international financial institutions – including some major UK pension providers – rallied to lay out a path that would see the practice and effects of deforestation halted and reversed by the end of the decade. Since then, the vast majority of pension providers have failed to set credible commitments or effective policies that can help tackle deforestation. “Deforestation is one of the worst drivers of carbon emissions globally and has immensely negative impacts on human rights, nature and biodiversity. Our ongoing research also shows that it is the topic savers care about the most. We are protective of our precious forests – the lungs of Planet Earth – and more than half (55%) of UK pension holders do not want their savings invested in companies that are linked to the practice. That’s why Make My Money Matter calls on the UK pensions industry – all £3 trillion of it – to sit up and listen to the views of its members and urgently tackle deforestation. That way, we can build a world that is fit for retirement.”

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* This research utilised Global Canopy’s Raising the Bar report from November 2022, where a baseline review was conducted of the 557 financial institutions in GFANZ and Race to Zero, of which 77 were classed as pension funds/providers, alongside additional data from the Finance Sector Deforestation Action initiative.The 15 funds/providers that have been pinpointed in this research have either signed up to the Financial Sector Commitment Letter on Eliminating Commodity-Driven Deforestation or have a deforestation policy across all of the four highest forest-risk commodities (palm oil, soy, cattle products and timber) as recorded in Global Canopy’s Raising the Bar report.**Findings taken from a survey commissioned by Make My Money Matter and conducted by Censuswide in March 2023***Findings taken from a survey commissioned by Make My Money Matter and conducted by Censuswide in March 2023 All opinions expressed are those of the author and/or quoted sources. investESG.eu is an independent and neutral platform dedicated to generating debate around ESG investing topics.