European Parliament report implicates pension funds in land grabbing

Pension funds are described as being among the leading players in “land grabbing” agricultural land in the developing world in a new report commissioned by a European Parliament human rights committee.

The report specifically mentions Dutch civil service pension fund ABP and Swedish buffer fund AP2, with the former saying it has exited the investment referred to by the report and the latter rejecting the claims outright.

The European Parliament’s Subcommittee on Human Rights’ ‘Land grabbing and human rights: The involvement of European corporate and financial entities in land grabbing outside the European Union’ is available for download using the link on the left of this page.

The 132-page study, written by human rights NGO FIAN International and the International Institute of Social Studies, explores the ways that land grabbing and consequent human rights violations occur.

It finds five EU institutional players culpable: 1) EU-based private companies; 2) EU development finance institutions; 3) supply chains associated with EU companies; 4) public-private partnerships; 5) EU finance companies, including “public and private pension funds”.

The committee, chaired by Spanish MEP Elena Valenciano, was presented with the report earlier this year at a meeting where speakers included Linda Broekhuizen, Chief Investment Officer at Dutch development bank FMO.

On EU finance companies, the study says that “major financial capital company players with regard to land grabbing are pension funds” and cites Dutch giant ABP as an example.

It claims ABP was involved in a land grab in Niassa province in the north of Mozambique through a legacy investment in Sweden-based investment fund the Global Solidarity Forest Fund (GSFF). It is presented as a specific case study in the report.

GSFF subsidiary Chikweti acquired 45,000 hectares of land in Niassa that the report says had “severe impacts” on the human rights of the community, including loss of farmland to make way for plantations and bad working conditions for local employees.A spokeswoman from ABP said it has since exited the investment: “ABP’s stake in the Global Solidarity Forest Fund went to Norwegian Green Resources in 2013. We closed the deal in June 2014 and have had no involvement in the project for the past two or three years.”

She added that ABP had engaged several times concerning GSFF’s operation in Mozambique in 2011. “Our engagement did have a positive impact on local activities but in the end the investment did not live up to our expectations.”

The report also refers to Andra AP-fonden, the Second Swedish National Pension Fund (AP2) as being involved in land-grabbing through a farmland investment in Brazil through the TIAA–CREF Global Agriculture (TCGA) fund.

The report is critical that AP2, citing competitive concerns, has not been willing to disclose any detailed information concerning the location of the land purchased by TCGA.

The fund invests in farmland in Brazil, which the report says has been associated with big land conflicts. It says AP2’s approach makes any transparent verification about the impacts on the land deals impossible. The report also claims that TCGA is using a complex company structure enabling it to evade Brazilian laws restricting foreign investments.

AP2 rejects the report’s claims. In a statement to Responsible Investor, AP2 said: “TCGA is not involved in so-called ‘land grabbing’. TCGA only acquires farmland properties from sellers that are equal partners and do not acquire properties close to indigenous territory.”

But AP2 does say that going forward it will be more open about the investment. It says that in order to increase transparency TCGA has initiated third party sustainability audits of all farms in Brazil. “More information regarding the outcomes of these audits will be disclosed in AP2’s sustainability report for 2016.”

A spokeswoman for the fund’s manager TIAA, the US financial giant, said it believes in the importance of protecting and respecting the environment, workers and local land rights. She continued: “While we do not disclose the precise locations of our agricultural properties in order to protect the privacy of local farm tenants, we do publish an annual report that gives an overview of our holdings… and the steps we take to ensure farmland investments meet rigorous standards.”

She added that there was no global certification for institutional investors in farmland, but TIAA believed that transparency was crucial, and it strove to achieve a balance.

AP2, TIAA and ABP are founding members of the Principles for Responsible Investment in Farmland, a set of six principles developed by a group of PRI signatories in 2011. Investors who sign up to them commit to implement in farmland investments the promotion of environmental sustainability, the respect of labour and human rights, and the respect of existing land and resource rights.

But the report is critical about the principles’ effectiveness. It says many of its case studies show the self-regulation of investors has not prevented human rights abuses in the context of land deals.

It says: “The deeper issue with the Farmland Principles is that it is not at all clear what it means to adhere to these principles, as there are no documents or statements available clarifying on land issues.“The complete absence of clarity and accountability is well illustrated by a very recent statement by TIAA–CREF. When confronted with concerns regarding its investments in Brazil, the fund dismissed the concerns referring to “the high standards of responsible investing principles to which we hold ourselves accountable”. The PRI declined to comment.

In its recommendations to tackle the issue of land grabbing, the report says voluntary regulation schemes have failed to prevent land grabbing and calls for the development of policy.

It says the EU should proactively track and monitor land deals involving EU actors. It adds that mandatory disclosure rules should require reporting on information relevant to assess human rights risks and impacts in relation to their business activities, and that of their subsidiaries.