Kiwi investment in companies destroying tropical rainforests increases

New research from Mindful Money unveils a troubling connection between New Zealand KiwiSaver, managed fund investors and the companies driving deforestation.

Wednesday, May 10th 2023, 8:59AM

by Andrea Malcolm

The study has found that there has been an increase in New Zealand investments in companies known to be major contributors to deforestation, operating in sectors such as palm oil, beef, and soybeans.

“New Zealand and international finance is funding massive deforestation of tropical forests in the Amazon basin, the Congo basin and South East Asia,” says Mindful Money CEO and founder Barry Coates.

He says unlike a previous Mindful Money study on investment in nuclear weapons which found that most New Zealand investment was through passive index funds, the current research has found direct investment through managed funds.

Local investment in companies driving deforestation is concentrated on five global conglomerates; Archer-Daniels Midland (food processing), Bunge (agribusiness), Glencore (commodity trading and mining), POSCO International (investment and trading) and Astra International (automotive manufacturing) plus 19 other companies.

“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.”

Coates wouldn’t name the fund providers saying Mindful Money will be asking them to engage with the companies or divest of their holdings.

Destruction of rainforests transforms them 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, says Coates.

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, the report says.

“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.

Coates is urging the New Zealand 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.”

Mindful Money will host a seminar on deforestation and the links between finance and nature on Wednesday 10th May.

Tags: Mindful Money