A startling new research report released today unveils the troubling connection between New Zealand KiwiSaver and managed fund investors and the companies driving deforestation.
The study, conducted by the charity Mindful Money, discovered that New Zealand investments have been increasingly directed towards specific companies that are known to be major contributors to deforestation, operating in sectors such as palm oil, beef, and soybeans.
Over the past year, the total investment in these companies has grown from $38 million to $68 million, with the majority ($40 million) coming from KiwiSaver accounts.
Barry Coates, Founder and CEO of Mindful Money, commented: “This report highlights, for the first time, the links between Kiwis’ investments and deforestation. Surveys show that the vast majority of New Zealanders want to avoid environmental damage from their investments, yet their funds are invested in companies that have been identified as drivers of deforestation.”
New Zealand and international finance is funding massive deforestation of tropical forests in the Amazon basin, the Congo basin and South East Asia. This destruction transforms these vital ecosystems from carbon sinks into net carbon emitters, exacerbating global emissions and accelerating climate change. Deforestation also has devastating impacts on ecosystems, contributing to biodiversity loss and violations of the rights of indigenous peoples.
Despite the pledge by 145 governments to halt deforestation, made at the Climate Summit COP26 last year, financiers continue to provide funding to the companies responsible for this devastation. As of 2022, 61% of the financial institutions financing the companies driving deforestation do not have a deforestation policy covering their lending and investments.
Funding of companies driving deforestation not only contradicts their clients’ values but also exposes them to financial risks. The report highlights specific risks associated with deforestation, such as upcoming EU regulations on trade involving deforestation-linked products. It also cites a recent legal opinion by Chapman Tripp on directors’ duties concerning nature-related risks.
In response, Coates urges New Zealand’s investment sector to act decisively against deforestation: “It is crucial for our investment sector to adopt policies that exclude support for deforestation-causing activities or demand urgent changes in the policies and practices of the companies involved. They must assure clients and the public that their investments will not contribute to climate damage, biodiversity loss, or the violation of indigenous and forest-dwelling peoples’ rights.”
“It is time that New Zealanders take a stand and use their financial power to support sustainable development and combat global deforestation.”
