- Two pension funds in the Netherlands and one from Japan have invested a combined half a billion dollars in Brazil’s top three meatpackers.
- These investments in cattle ranching, an industry that’s the main driver of Amazon deforestation, contradict the environmental stances of the respective funds and their national governments.
- The fund managers and other experts say maintaining their stake is a more effective way of pushing for change in the companies than simply dumping the stock.
- But there’s also a growing realization that continued exposure to environmental risks over the long term will incur not just ethical and reputational harm for the funds, but even financial fallout.
For citizens of the Netherlands and Japan, the dream of a comfortable retirement is fueling an environmental nightmare in the Amazon.
Three of the biggest pension funds in thse countries, catering to public employees and professionals, have invested a combined $571 million in Brazil’s largest meatpackers. These, in turn, are companies that operate in the Amazon, buying cattle raised on farms that have been illegally deforested. The sum invested by the Dutch and Japanese funds — Algemeen Burgerlijk Pensioenfonds (ABP), Pensioenfonds Zorg en Welzijn (PFZW) and the Government Pension Investment Fund (GPIF) — is more than the entire 2021 budget for Brazil’s environment ministry, which has been slashed to 2.9 billion reais ($530 million).
And these are just the funds that we know of, says Ward Warmerdam, senior researcher at Profundo, a Dutch NGO that advocates for greater environmental sustainability in business. Few pension funds open their portfolios to public scrutiny, he says. “It is a sector with a large black hole. In most parts of the world, you don’t know where your retirement money is being invested.”
Pension funds are heavyweights on the financial markets because they control and determine the destiny of resources belonging to large numbers of people. “Of the institutional investors [that administer third-party resources], they are the largest,” says Cole Martin, an analyst at Fitch Solutions.