Major US pension fund invested in illegal deforestation

Tuesday, May 16th, 2017

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

A 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:

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.”