Dimensional Fund Advisors (DFA), a U.S.-based investment company, has significant shareholdings in some of the most environmentally destructive companies in the world, including tropical logging companies and the world’s largest palm oil growers and traders.

Palm oil, used in over half the food and cosmetics on our shelves, as well as in biofuels in many countries, is the single fastest growing driver of deforestation, greenhouse gas emissions, and displacement of forest-dwelling communities across the tropics. Because every 10,000 acres of new palm oil plantations requires roughly $100 million in capital investments, this scale of destruction would not be possible without significant financing from banks and investors.

Institutional investors account for about six percent of the financing for palm oil inSoutheast Asia. Dimensional Fund Advisors is among the largest shareholders of palm oil companies in the United States, along with Van Eck Associates, BlackRock, The Vanguard Group, and Fidelity Investments. Dimensional fund advisors has at least $775 million spread across 80 palm oil companies – the largest number of palm oil companies held by a single fund manager in the U.S.

DFA should immediately implement a robust forest policy across all its products to address the grave environmental and human rights impacts associated with its palm oil holdings. It should have a clear and effective implementation system in place that is transparent to all stakeholders. In case of a complaint, there should be a clear and effective procedure in place with a timeframe to ensure that direct action is taken and followed up on.

Given the high risk of illegal activity, money laundering, environmental violations, and human rights abuses associated with the palm oil sector, DFA should employ heightened due diligence procedures and eliminate the most egregious and recalcitrant companies from all of its portfolios. DFA’s environmentally and socially screened products are natural starting points, but such due diligence and screening procedures should apply across all its portfolios.

In addition, as an investment firm known for actively engaging with the companies it owns, DFA should use its shareholder power to improve companies’ environmental and human rights performance, particularly in the palm oil sector. 

TIAA should institute a Deforestation and Land Grab-Free investment policy across all of your investment vehicles.

TIAA and its subsidiaries should take the following steps:

• Disclose the nature, extent, and location of its investments, directly or through its subsidiaries, in all farmland in Brazil, the United States, Australia and other countries.

• Refrain from further investment and divest from land acquisitions leading to the displacement of local community members and family farmers, deforestation, and further climate change.

• Adhere to four pillars of responsible investment in land and forest-risk commodities: 1) disclose any investments in palm oil producer companies and other forest-risk commodities; 2) commit to a deforestation and land grab-free investment policy that will functionally dis-incentivize investee companies from engaging in land grabbing and gross deforestation; 3) exclude any companies that fail to meet this policy and global best practices in protection of human rights; and 4) repair the damage by supporting companies with credible grievance mechanisms, by investing in projects and companies that serve the public good, and by considering providing land to small-scale family farmers and beginning farmers who are utilizing sustainable forms of agriculture destined to improve human health and shared economic development.

• Publicize TIAA’s response to these requests to its members, particularly members in higher education.

Supporting Evidence

- Through its wholly owned subsidiary TIAA-CREF Global Agriculture LLC (TCGA), TIAA is involved in land speculation in Brazil, using corporate subsidiaries to buy up land in apparent contravention of Brazilian law restricting land ownership by foreign individuals and corporations, according to a report from The New York Times. Moreover, NPR reported that this subsidiary purchased lands from a businessman accused of violently displacing local communities and fraudulently acquiring land titles.

- TIAA holds several hundred million dollars worth of shares in palm oil companies with documented records of tropical deforestation, environmental degradation, and land rights abuses. Among the companies that TIAA holds are Felda Global Ventures (profiled by the Wall Street Journal for employing child labor and engaging in human trafficking), KLK (a poster child for labor abuse) and IOI (recently suspended from the Roundtable on Sustainable Palm Oil for multiple environmental and legal violations).

A report by researchers from Brazil’s Network for Social Justice and Human Rights and the international organization Grain shows that TCGA acquired farmland in the state of Piaui from a Brazilian businessman known to have illegally grabbed hundreds of thousands of acres of land in the area and to have displaced the peasant occupants through intimidation and violence. The forest was cleared to plant industrial monocultures of cash crops for export, destroying ecologically sensitive areas that are critical to preserving biodiversity and stopping climate change. According to TIAA’s 2015 report “Responsible Investing in Farmland,” TIAA owns 633,392 acres of farmland in Brazil, and we are extremely concerned that reports of land grabbing and human rights violations in Piaui are not isolated to that state but occur throughout the country. We do not want our retirement to come at the expense of families’ livelihoods.

Additionally, TIAA holds 227,389 acres of farmland in the United States, ranging from berry and grape production in Washington State to rice, corn, soybean, cotton, vegetables and cranberries in the Midwest and the South. TIAA has not disclosed the exact location of any of its farmland, which makes it impossible to prove that TIAA’s land holdings are free from environmental harm or labor exploitation, either in Brazil or the United States. Moreover, the trend of pension funds investing in farmland, which has been led by TIAA, distorts the price of land and exacerbates the already prohibitive cost of lands for most small-scale or beginning farmers across the United States.

TIAA’s investment holdings in destructive palm oil companies means that TIAA supports an industry that is the single fastest growing driver of deforestation and displacement of tropical forest-dwelling indigenous communities. It is also a major driver of climate change and a protagonist of human rights violations. The World Climate Summit (UNCOP21) in Paris has declared the danger of continued carbon emissions and called for a reduction of those emissions – and it is incumbent upon the financial sector to do its part in contributing to this effort.

These are additional reasons for TIAA to disclose specific locations of its land holdings in the United States and internationally, which would ensure transparency and accountability regarding TIAA’s claims as a responsible investor in farmland. By investing the retirement funds of universities, non-governmental organizations and other public education institutions, whose purpose is to serve the public good, in farmland projects and palm oil companies that are causing environmental and social destruction, TIAA exacerbates inequities and climate destruction while exposing these institutions to reputational and financial risk. Many universities and public education institutions have been committed historically to the defense of human, civil and labor rights as well as the promotion of social justice at home and abroad. We write to you as concerned citizens who recognize the responsibility that comes with such financial involvement.

Vanguard should institute a Deforestation and Land Grab-Free investment policy across all investment vehicles.

Vanguard holds hundreds of millions of dollars worth of shares in destructive palm oil companies and other forest-risk commodities. Vanguard’s continued financing of palm oil’s worst offenders therefore contributes to far-reaching environmental and social problems and exposes both Vanguard and its clients to reputational and financial risk.

Palm oil, used in over half the food and cosmetics on our shelves, as well as in biofuels in many countries, is the single fastest growing driver of deforestation and displacement of forest-dwelling indigenous communities across the tropics, and is a major driver of climate change. Deforestation is responsible for some 10-15 percent of global greenhouse gas emissions – more than the emissions from all the cars, trucks, trains, and buses in the world each year combined.

While palm oil production damages the environment as a whole, it has a particularly acute impact on the human rights of marginalized people in the global south, through coercive takeovers of their lands, well-documented labor abuses, and far-reaching impacts on cultures and livelihoods. As such, it is neither sustainable nor just.

As the palm oil sector’s environmental and social impacts become more widely recognized, investments in these destructive palm oil companies are becoming increasingly risky.

Many banks and institutional investors are increasingly adopting policies to prevent financing companies that operate in ways that are illegal or unethical – and Vanguard should do the same. The Norwegian Government Pension Fund, for example, excludes most of the world's largest palm oil companies – including companies held by Vanguard – because they fail to meet the fund’s ethical criteria. CalPERS, the nations largest public pension fund has a a policy to engage with companies inviolved in deforestation as a matter of risk management.

Vanguard should follow suit and commit to a Deforestation and Land Grab-Free investment policy that entails four pillars of responsibility: to publicly disclose its deforestation-risk holdings, commit to a deforestation-free, land grab-free investment policy, exclude companies that do not meet the criteria of the aforementioned policy, advocate with the companies it owns to repair social and environmental harm; and to re-invest in a more sustainable future.