The majority of pension funds and providers within the Glasgow Financial
Alliance for Net Zero(GFANZ) and the
UN-backed Race to
Zero campaign have not
issued comprehensive policies or commitments to tackle deforestation, according
to
research
by Global Canopy.
Along with partner Make My Money Matter,
Global Canopy found that fewer than one in five (19 percent) of the 77
pension providers that are members of these net-zero coalitions have a current
comprehensive policy or commitment to tackle this crucial climate issue. Global
Canopy’s 2022 Raising the Bar
report
conducted a baseline review of the 557 financial institutions in GFANZ and Race
to Zero; 77 were classed as pension funds/providers, alongside additional data
from the Finance Sector Deforestation Action
initiative.
The 15 funds/providers 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
(beef,
soy,
palm
and
timber).
Deforestation driven by the four highest forest-risk commodities currently
accounts for 11 percent of the world’s greenhouse gas emissions; reaching true
net
zero
won’t be possible without addressing it. Yet, the majority of pension
institutions committed to these net-zero initiatives 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° if we do not take urgent action.
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“Report after report has told us that if we’re serious about meeting our
Paris climate goals, our window of opportunity is closing fast,” says Niki
Mardas, Executive Director at Global
Canopy. “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.”
While initiatives such as the Fossil Free Banking
Alliance
have emerged to help steer individual investors toward funds that more closely
align with their values, employees tend to have less input into where their
employers direct their retirement
funds.
A survey commissioned by Make My Money Matter in March 2023 of UK pension
holders found that savers care about this: Over half (55 percent) 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 labor rights
abuses
and investments into arms manufacturing.
With the IPCC stating in no uncertain terms that this is our last chance to act
to achieve the internationally agreed target of 1.5°, Global Canopy and Make
My Money Matter are urging the finance industry to heed this call — to take
immediate action to tackling deforestation and take the necessary first steps of
mapping portfolio exposure (with which the NZAOA’s recently updated
Target-Setting
Protocol
might be of help) and implementing effective policies on deforestation as soon
as possible.
“Inaction on deforestation is a risk to the planet, a risk to life and a risk to
business,” Mardas added. “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.”
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Sustainable Brands Staff
Published Apr 13, 2023 2pm EDT / 11am PDT / 7pm BST / 8pm CEST