Make My Money Matter (MMMM) has published new guidance to provide pension schemes trustees with practical steps to help them identify, address and eliminate deforestation risk and associated human rights abuses from their investments.

The guide, How to achieve deforestation-free pensions, was created by Global Canopy in partnership with MMMM, SYSTEMIQ, and in close consultation with 12 pension funds.

It uses an online format with different pathways for various investment approaches, and is designed to allow users to log-in and access the guidance most relevant for the needs of their specific pension fund.

It outlines six specific phases, from identifying and mapping deforestation and its associated human rights risks within portfolios, to setting a policy and engaging with asset managers, to eliminating deforestation from their investments.

The guide was published after previous research from the campaign group revealed that over £300bn of UK pension money is invested in companies and financial institutions with high deforestation risk, prompting concerns as to those schemes' ability to meet their net-zero commitments.

Indeed, MMMM senior finance adviser, Huw Davies, argued that the pensions industry has a "huge role to play in the transition to net zero, and to achieve a sustainable future worth retiring into", stressing that "it’s crucial that deforestation is eliminated at pace".

"That’s why – along with raising public awareness of the issue – MMMM is pleased to have co-created a useful guide to help," he explained.

"We now need to see pension funds embrace this guidance, and set about the task of tackling deforestation with an urgency befitting the crisis that the world’s forests face.”

Adding to this, Scottish Widows head of pension investments and responsible investments, Maria Nazarova-Doyle, stressed that the scale of deforestation is "an enormous threat to both nature and climate", explaining that forests play a "crucial role" in reducing carbon and protecting biodiversity.

She continued: "At COP26 in Glasgow last year, more than 100 world leaders pledged to end and reverse deforestation by 2030.

"With the help of this new detailed guidance pension funds can now play their part by working to eliminate commodity-driven deforestation and associated human rights violations from their investment portfolios.”

Global Canopy executive director, Niki Mardas, also argued that there should be "no reason" for pension schemes not to start taking action on this "all-important issue" today.

“Ending tropical deforestation is an essential step in addressing the global climate challenge and pension funds can have tremendous influence in driving change," she said.

"Pension holders are increasingly calling for deforestation-free pensions – after all, what’s the point of saving for a future on a dying planet?"

The guidance has also been backed by the Pensions and Lifetime Savings Association (PLSA), with its deputy director for policy, Joe Dabrowski, highlighting the guide as "a really helpful tool for asset owners".

He stated: "The severity of deforestation and its impact on climate change and biodiversity cannot, and should not, be overlooked. We’d encourage all schemes to look at this guide and utilise it to help inform their approach to responsible investment, and their contribution to achieving global commitments to tackle deforestation by 2030.”

Also commenting on the guidance, Phoenix Group head of sustainable investments, Sindhu Krishna, added: “Identifying and understanding tropical deforestation related risks in investment portfolios is a complex task, creating a barrier to effective collective action by investors to both halt and reverse forest loss.

"So we welcome the launch of this comprehensive guidance for pension funds, which represents an important and catalytic step forward in enabling the financial sector to meaningfully address this urgent issue.

"We are pleased to have been able to contribute to the working group supporting the development of the guidance, which will play an important role in our own work embedding nature as a material consideration within investment decision making at Phoenix Group.”

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