This year, research revealed that £2 in every £10 individuals save into their pensions in the UK is linked to companies and financial institutions at high risk of deforestation, jeopardising many schemes’ ambitious commitments to achieve net zero..
How to achieve deforestation-free pensions provides practical steps and actions for pension funds to identify, address and eliminate deforestation risk and associated human rights abuses, as well as future-proof their investments.
The guidance was created by Global Canopy in partnership with Make My Money Matter, SYSTEMIQ and in close consultation with 12 pension funds. Its online format provides different pathways for various investment approaches - allowing users to log-in and access the guidance most relevant for the needs of their specific pension fund.
Building on the Finance Sector Roadmap on Eliminating Commodity Driven Deforestation launched at COP26, the guidance sets out six phases, from identifying and mapping deforestation and its associated human rights risks within portfolios, to setting a policy and engaging with asset managers, to eliminating deforestation from their investments.
Make My Money Matter and Global Canopy call on all pension schemes to review and adopt this best practice guidance – and to sign up to the Race to Zero commitment letter on eliminating agricultural commodity-driven deforestation from their investments by 2025, here.
Huw Davies, Senior Finance Adviser at Make My Money Matter commented: “The pensions industry has a huge role to play in the transition to Net Zero, and to achieve a sustainable future worth retiring into, it’s crucial that deforestation is eliminated at pace. That’s why – along with raising public awareness of the issue – Make My Money Matter is pleased to have co-created a useful guide to help. We now need to see pension funds embrace this guidance, and set about the task of tackling deforestation with an urgency befitting the crisis that the world’s forests face.”
Maria Nazarova-Doyle, Head of Pension Investments and Responsible Investments at Scottish Widows said: “Our forests play a crucial role in reducing carbon in the atmosphere and protecting biodiversity, so the scale of deforestation is an enormous threat to both nature and climate. At COP26 in Glasgow last year, more than 100 world leaders pledged to end and reverse deforestation by 2030. With the help of this new detailed guidance pension funds can now play their part by working to eliminate commodity-driven deforestation and associated human rights violations from their investment portfolios.”
Global Canopy’s Executive Director Niki Mardas said: “Ending tropical deforestation is an essential step in addressing the global climate challenge and pension funds can have tremendous influence in driving change. Pension holders are increasingly calling for deforestation-free pensions – after all, what’s the point of saving for a future on a dying planet? Savvy providers know this is where their future business lies, and our new How to guide provides the toolbox to tackle these risks. There should be no reason now for pension funds not to start taking action on this all-important issue today.”
Sindhu Krishna, Head of Sustainable Investments, Phoenix Group, commented: “Identifying and understanding tropical deforestation related risks in investment portfolios is a complex task, creating a barrier to effective collective action by investors to both halt and reverse forest loss. So we welcome the launch of this comprehensive guidance for pension funds, which represents an important and catalytic step forward in enabling the financial sector to meaningfully address this urgent issue. We are pleased to have been able to contribute to the working group supporting the development of the guidance, which will play an important role in our own work embedding nature as a material consideration within investment decision making at Phoenix Group.”
Joe Dabrowski, Deputy Director Policy at the Pensions and Lifetime Savings Association (PLSA), said: “The severity of deforestation and its impact on climate change and biodiversity cannot, and should not, be overlooked. This guide is a really helpful tool for asset owners to understand how to assess, review, report and act on deforestation risks in their investment portfolios. We’d encourage all schemes to look at this guide and utilise it to help inform their approach to responsible investment, and their contribution to achieving global commitments to tackle deforestation by 2030.”
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