A set of responsible farmland investment principles overseen by the PRI has come under scrutiny amid high profile claims of ‘land-grabbing’ of agricultural land in Brazil by global pension fund investors that has been reported in major media outlets such as the New York Times and Reuters.
The issue surfaced this week with GRAIN, the campaign group, Brazil’s Social Network for Justice and Human Rights, Inter Pares and Solidarity Sweden releasing a research report – Foreign Pension Funds and Land Grabbing in Brazil – investigating US investment giant TIAA–CREF’s agricultural investment activities in the country.
The report alleges complex legal structures it says bypasses restrictions on foreign ownership and that farms have been bought from individuals reportedly involved in violence/coercion.
TIAA–CREF launched a global fund in 2012 with investment from a range of major global pension funds, including Sweden’s AP2 and Canada’s British Columbia Investment Management Corporation (bcIMC) and Caisse de dépôt et placement du Québec.
TIAA–CREF was among a group of major global investors which got together in 2011 to launch the Principles for Responsible Investment in Farmland. In September 2014 the principles were integrated into the PRI as Guidance for Responsible Investment in Farmland, housed as part of the PRI’s commodities work stream.
There are currently 16 institutions signed up to the farmland principles, according to PRI documents. They include AAG Investments, ABP, Adveq Management, AP1, AP2, APG, Aquila Capital Green, Insight, PFZW, PGGM, Rabo Farm, Southern Pastures Management, TIAA–CREF, Treetops Capital, UFF Asset Management, and Valiance Advisors
“For years these pension funds have refused to provide specifics of their land deals in Brazil, saying we should trust their due diligence procedures,” said Solidarity Sweden in a statement. “What we found contravenes theprinciples of responsible farmland investment that these companies claim to follow.”
The PRI told Responsible Investor: “It is up to managers on the ground to ensure that the principles are genuinely being reflected in a company’s activities.” It added that the “PRI does not police individual organisations”.
“What we found contravenes the principles of responsible farmland investment” – NGO
“The PRI encourages investors to apply the guidance in their farmland investments as well as to pre-investment due-diligence, including the selection of investment managers and/or operators acting on their behalf, and through ongoing oversight and governance of their investments,” it said last year announcing the guidance.
As part of the integration of the farmland principles, investor reporting would now take place as part of the PRI Reporting Framework, not as a separate framework. The PRI added it would compile individual signatory responses to the farmland-specific indicators and publish them in a single Farmland Transparency Report.
TIAA–CREF has not responded to media calls for comment. Sweden’s AP2, one of the investors in the TIAA–CREF fund, has faced accusations of a lack of transparency around its agricultural investments before, as reported
by RI in 2013, which it has denied.
Disclosure of ownership is not part of the responsible farmland principles. The wording, rather, is for signatories “to report publicly on activities and progress towards implementing the Guidelines, taking into account appropriate confidentiality considerations, within the PRI’s reporting system.”
But the principles speak of promoting “high business and ethical standards in farmland investments” and “free, prior and informed consultation”. And asset managers are required to “implement processes aimed at avoiding corruption in all its forms, including extortion and bribery”.