Ed Robertson, Unsplash

UK pensions invested in companies linked to deforestation

News / 23 Feb 2022

More than £300 billion of UK pension money is invested in companies and financial institutions exposed to high deforestation risks according to new research published by Make My Money Matter, SYSTEMIQ and Global Canopy.

That means that two pounds for every ten invested in an average pension* is linked to a risk of deforestation, destroying natural ecosystems and habitats, driving climate change and impacting the livelihoods of Indigenous communities across the globe.

An estimated 30 football fields of forest are lost every minute – and an area the size of London destroyed every week.

These investments directly contradict the values of savers across the UK, as polling commissioned by Make My Money Matter revealed that the vast majority (77%) of pension holders would be unhappy to discover that their savings were contributing to deforestation.

Links to deforestation are savers’ top concern when it comes to their pension investments – surpassing worries around fossil fuels, labour rights violations and weapons manufacturing. More than 3 million said they would reduce their pension contributions if they found that their money was linked to deforestation.

Richard Curtis, Co-Founder at Make My Money Matter commented:

“While we may not see the forests falling or hear the trees crashing, we are all connected to deforestation. We’re connected as consumers, as citizens, and as this report powerfully highlights, as pensions holders too. Because it’s our money – managed through our pensions – that’s being invested in companies driving deforestation, damaging the environment, and threatening lives and livelihoods across the planet.

“But it doesn’t have to be this way. If pension funds commit to cutting deforestation from our portfolios – and our money is cleverly and massively applied to support the industries and businesses that are restoring, not jeopardizing, our natural environment – both profits and the planet can come out on top.

“That’s why now is the moment to make our money matter and to cut deforestation from our pensions for good.”

The report calls on pension funds to commit to going deforestation-free, following on the commitments made by some financial institutions at COP26 last year. Global Canopy is consulting pension funds on new guidance, setting out how to address deforestation in their portfolios.

It is also urging pension holders to contact their pension fund providers and employers to make sure that their money is in line with their values and not driving deforestation, conversion or human rights abuses.

Niki Mardas, Executive Director at Global Canopy said:

“It has been too easy for pension funds to turn a blind eye to the deforestation risks hidden in the investments they make on our behalf. Those risks are hidden in the complex supply chains, often ignored by the companies involved.”

Katherine Stodulka, Partner at SYSTEMIQ and Programme Director at the Blended Finance Taskforce commented:

“The pensions industry is critical to tackling deforestation: it has powerful tools to understand climate- and nature-related financial risk and is collectively working to set ambitious net-zero targets. Delivering on those targets depends on portfolios being deforestation-free. Without this, there is no net zero.”

*Findings are based on an average defined contribution pension scheme pot of £30,000 according to the Office for National Statistics, containing 70% public equity and corporate bonds.

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