More than £300 billion of UK pension funds are invested in companies and financial institutions at high risk of deforestation, according to a joint study by Make My Money Matter (MMMM), SYSTEMIQ and Global Canopy.
MMMM estimated that pensioners could unknowingly invest more than £6,500 in companies which contribute – directly or indirectly – to destroying ecosystems and natural habitats, causing climate change and having a impact on indigenous communities.
His estimate was based on an average £30,000 defined contribution pension pot containing 70% public equity and corporate bonds.
A survey commissioned by MMMM found that 77% of pensioners would be unhappy to find out their savings are contributing to deforestation.
According to the research, links to deforestation are the top concern for savers when it comes to their pension investments, surpassing worries about fossil fuels, labor rights abuses and weapons manufacturing.
Indeed, it found that 27% of people would switch to a more sustainable supplier if they discovered their money was leading to deforestation, which equates to 14 million people in the UK.
Meanwhile, 3.2 million people would cut their pension contributions if they found out their money was tied to the practice.
MMMM co-founder Richard Curtis commented: “There’s an old saying: ‘If a tree falls in the forest and no one hears it, does it actually make a sound?’ Suddenly, this old adage has become one of the most important questions in the world.
“Because even if we don’t see forests falling or hear trees crashing, we are all linked to deforestation. We are connected as consumers, as citizens and, as forcefully underlined by this report, also as pensioners.
“Because it is our money – managed by our pensions – that is invested in companies that drive deforestation, damage the environment and threaten lives and livelihoods across the planet. But it doesn’t have to be that way.
“If pension funds commit to reducing deforestation in our portfolios – and our money is used smartly and massively to support industries and businesses that restore, not jeopardize, our natural environment – profits and planet can prevail.
“That’s why now is the time to make our money count and to permanently reduce the deforestation of our pensions. Now is the time to hear the tree fall in the woods and take heroic action to protect our planet.
Global Canopy Executive Director Niki Mardas added, “It has been too easy for pension funds to turn a blind eye to the hidden deforestation risks in the investments they make on our behalf.
“These risks are hidden in complex supply chains, often overlooked by the companies involved.
“But savers are clear: None of us want our money to finance deforestation – and with it, climate change, extinctions and impacts on local people.
“Now fund managers have no excuse not to act. The information they need to identify where the risks lie is available. It is time to listen to their clients and act.”
With around 30 football pitches of forest lost every minute – and an area the size of London destroyed every week, MMMM called on pension schemes to listen to the views of their members by committing to deforestation-free portfolios.