Major US pension fund invested in illegal deforestation

16.05.2017

One of the largest pension funds in the US has invested millions of dollars in the palm oil sector, including in companies repeatedly exposed for illegal deforestation.

report released in April by a coalition of NGOs details how the Teachers Insurance and Annuity Association (TIAA), which manages funds for more than five million people, held $172 million in Southeast Asian palm oil firms as of March this year.

The companies include:

  • Bumitama Agri Ltd., which has “clearly and explicitly engaged in illegal practices, misrepresented itself to investors and financiers to underwrite the expansion of its operations, and was repeatedly engaged in deforestation, including on orangutan habitat and peatland”.
  • IOI Corporation., which is proven to have cleared forest in Central Kalimantan, Indonesia, without a legally-required Environmental Impact Assessment.
  • First Resources Ltd., which is involved in one of the most high-profile land conflicts in Indonesia. According to the NGO the Forest Peoples Programme, five community members were forcibly arrested in 2014 while protesting illegal land clearance by First Resources outside its permit area in West Kalimantan, Indonesia.
  • Ta Ann Holdings, which has clear-cut orangutan habitat in the Malaysian state of Sarawak. A major shareholder of Ta Ann is a first cousin of Taib Mahmud, the former Chief Minister of Sarawak and one of the world’s leading kleptocrats.
  • Felda Global Ventures, which has been implicated in the use of trafficked and captive labour in its Malaysian plantations.

The report also links TIAA to land speculation in Brazil. As of late 2015 the fund had more than US$200 million invested in farmland by “using a complex company structure and acting under subsidiary companies” that allowed it to evade restrictions on foreign investment.

For three years in a row TIAA has been named one of the world’s “most ethical” companies by the Ethisphere Institute, which describes itself as “the global leader in defining and advancing the standards of ethical business practices that fuel corporate character, marketplace trust, and business success”.

The world’s largest sovereign wealth fund has a self-imposed ban on holding equity in many of the companies TIAA has invested in, on the grounds that their business models cause “severe environmental damage”. HSBC, one of the leading financiers of the palm oil sector, has also been forced to revise its sustainability policies after it financed and provided services to some of the same companies.

When the figures from the report were shared with TIAA by its authors, the firm said that it has “no direct investments in palm oil farmland”.

It added: “Because we are dedicated to offering our customers choices, however, we do hold a variety of public company index funds that automatically track specific stock market indexes, some of which may hold palm oil producers. The majority of TIAA’s exposure to palm oil producers is via such index funds where there is no active discretion.”

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