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Expansion Of Deforestation Free Funds Enables Investors To See Rainforest Destruction Hidden In Mutual Funds - Friends Of The Earth And As You Sow Expand Financial Transparency Tool To Include Amazon Deforestation As Well As Indonesian Palm Oil

Date 19/02/2020

As wildfires continue to threaten forests from Australia to the Amazon, environmental advocacy groups Friends of the Earth and As You Sow have expanded the Deforestation Free Funds tool to help investors avoid owning companies actively destroying global rainforests.

DeforestationFreeFunds.org a free web-based tool, gives every investor the ability to see if they are unwittingly investing in deforestation around the world through the production and trading of palm oil, cattle, timber, pulp/paper, soy, and rubber. Taken together, these six commodities drive up to two-thirds of global deforestation. The platform also reveals which funds stand out for both environmental and financial performance. 

“We cannot solve the climate crisis without addressing the money behind it. Investment firms are pouring tens of billions into the industries driving climate change by decimating forests around the world,” said Jeff Conant, Senior International Forests Program Manager with Friends of the Earth. “Everyone with an IRA or a 401(k) has the power to pressure investment firms to change their practices and stop funding the destruction of our planet and our communities. Deforestation Free Funds unleashes that power, for good.”

Deforestation Free Funds, updated monthly, uses the most current Morningstar fund holdings data to show how thousands of brand-name mutual funds and ETFs may be invested in companies linked to deforestation, habitat destruction, and grave human rights abuses across the tropics. The companies are broken into three categories: agribusiness commodity producers and traders that directly impact forests; publicly owned banks that finance these companies; and consumer goods retailers whose products contain the commodities produced on land that depends on deforestation. Companies flagged in the mutual funds on the site range from huge Asian conglomerates largely unknown to a U.S. public, as well as familiar names like Nestlé, Pepsico, and Yum! Brands.

Initially launched in 2016 to cover palm oil, the most notorious of the “forest-risk commodities,” the upgraded site now covers palm oil, cattle, timber, pulp/paper, soy, and rubber. Deforestation Free Funds is part of a suite of “Invest Your Values” sites produced by As You Sow, including Fossil Free Funds, Weapon Free Funds, Tobacco Free Funds, and Gender Equality Funds, that allow people to “vote with their dollars.”

“110 million people have a workplace 401(k) retirement plan with $8.4 trillion in assets invested in mutual funds and ETFs; yet virtually no one knows what companies are held within these funds,” said Andrew Behar, CEO of As You Sow. “Everyone who cares about climate change and injustice should take five minutes to go to DefrestationFreeFunds.org, type in your fund tickers and see if you are profiting from the destruction of the rainforests. We are talking about the ‘lungs of the planet’ being burned — if you are profiting from it then you are complicit.”

The site shows, for example, that BlackRock U.S. mutual funds and exchange-traded funds (ETFs) have upwards of $10 billion invested in the stocks of companies that directly drive deforestation; Vanguard has $20 billion, and State Street has $3 billion – and all of them have tens of billions more invested in consumer brands and banks that enable the destruction. Clients of BlackRock or Vanguard who want their fund managers to get out of deforestation can then take action on the site by voting to send a message to the companies, urging action on deforestation.

The site also allows visitors to see which fund managers, and which funds, are free of deforestation altogether — and which of these also provide higher returns, allowing users to choose funds that avoid deforestation without sacrificing financial performance. Certain fund managers also receive an “engagement badge,” because rather than eschewing the big six agro-commodities altogether, they choose to engage with companies in these sectors to drive change through shareholder advocacy.