A report from environmental organisation Friends of the Earth has suggested UK pension funds’ holdings in the equity and bonds of large listed organisations have caused environmental harm to native populations.
The organisation documents examples of companies purchasing land and causing local social and environmental issues leading to food insecurity.
It also claims that firms involved in “large-scale land grabs” were financed by UK pension funds and asset managers.
Andy Atkins, executive director at Friends of the Earth, said: “With at least £37.3bn (€46.3bn) of investment, our future retirement and livelihoods are often being secured at the expense of the poor and powerless. This is something that troubles me.”
In its report ‘What’s your pension funding? How UK institutional investors finance the global land grab’, the group focuses on 23 companies known to be conducting large-scale land deals, or alleged to be involved in “land grabbing” in Africa, Asia and Latin America.
The report estimates the UK’s 10 largest pension funds have an estimated £1.8bn invested in these companies via equity or bonds.
Some 17 UK asset managers have around £35.5bn invested, it says.
The Universities Superannuation Scheme (USS), one of the UK’s largest pension funds, said it did believe the fund should take ESG issues into account but only when it would affect the company’s performance.
According to Friends of the Earth, the nearly £40bn USS has £617m invested in the aforementioned 23 companies.
A spokesperson added: “The trustee’s responsible investment policy is consistent with its legal duties under trust law, and legal advice confirms that the trustee should not make investment decisions based purely on an ethical or moral stance.
“The fund has actively engaged with some of the companies on the list on the issues raised in this report.”
RMPI Railpen, a near £20bn pension fund also named in the report, said it noted the report’s accusation.
Head of corporate governance, Frank Curtiss, said: ”We will take up the issue in the ongoing engagement we have with companies in which we invest.
“Our organisation is also a supporter of the principles for responsible investment in farmland.”
However, a spokesman at one asset manager listed in the report, who wished to speak off the record, said what Friends of the Earth deemed “land grabbing” was loosely associated with what was often legitimate business.
“Friends of the Earth is an activist organisation and targets investors in a bid to enhance their campaign work,” they said.
“The issues they raise are sometimes relevant, and do feed into the discussions we have with companies, as do a wide variety of stakeholder views.
“However, investors have become the target as opposed to companies, which is a challenge. We do fundamentally believe companies have a duty of care, but it is not up to us whether they should or should not be buying agricultural land.
“It is rather how companies gain access to land, as opposed to whether they should have access to land.”
Samuel Lowe, a campaigner for Friends of the Earth, said the report also highlights significant investor risks, which pension funds should take into account.
“A lot of these investments are riskier than accounted for, particularly agriculture land grabs, where bio fuels are concerned, which can easily become stranded assets,” he said.
“Also, large-scale land grabs can pull up a lot of negative press and lead to governments repatriating resources.
“While we have a big interest in the moral argument, there is a strong financial one as well.”