Open letter to DFA: I divested from forest destruction and so should you
Posted Sep. 4, 2014 / Posted by: Jeff Conant
Preface: When Friends of the Earth member Janet Thew learned how palm oil companies destroy rain forests, she decided to divest her family’s retirement account from Dimensional Fund Advisors. Dimensional, or DFA, has investments in more problematic palm oil, timber, and pulp and paper producers than any other financial institution in the U.S. Read Janet’s open letter to DFA's CEO, David Booth, and then join her in calling on DFA to get out of forest destruction.
Dear David Booth,
When I recently learned that Dimensional Fund Advisors was investing my family’s retirement money in companies responsible for destroying rain forests, I was stunned. I knew that DFA managed funds for TD Ameritrade Institutional Accounts, which manages my family’s IRA; but I’d never given much thought to how DFA was investing my family’s money. When Friends of the Earth let me know that DFA’s financial decisions are burning and bulldozing the last fragile forests on earth, displacing peasant farmers, and devastating orangutans, Sumatran tigers, and African great apes, I was sickened.
After reading about DFA’s investments in abusive logging and palm oil companies, I broke into tears. I saw what my money was doing, and I hated it.
So I pulled myself together and I called my broker, and I told him to sell it all. I moved $100,000 out of DFA. Over time, I’m going to unwind the rest of my family’s investments from DFA. And I’m going to support others to do the same.
Mr. Booth, Dimensional Fund Advisors has over $775 million in over 80 companies involved in palm oil and deforestation -- the largest number of palm oil companies held by a single financial institution in the U.S. You may or may not be aware that palm oil, along with pulp and paper and logging, is responsible for the greatest share of tropical forest destruction in the world today. And you may or may not be aware that, aside from its other awful impacts on biodiversity and people’s lives and livelihoods, tropical forest destruction is a leading cause of global warming.
In other words, the destructive impacts of DFA’s investments affect us all.
DFA has made its name investing for celebrities, pension funds, universities, cities, and wealthy individuals. How many of these celebrities, how many of these endowments, how many of these individuals know what their money is doing? Do they know that DFA has hundreds of millions of dollars in firms implicated in highly destructive activities, including one company that trafficked arms in Liberia and another accused of treating workers like slaves?
I don’t want anything to do with these companies. I doubt that other people do either.
I understand that getting good investment returns is fraught with challenges. But I also understand the power of money to affect positive change.
If DFA can’t get its money – our money – out of bad companies, you should use your leverage to get companies to change their ways.
I understand that DFA has some environmentally and socially screened products, and that’s a start. But DFA should ensure that those screens are really keeping out the worst companies, and then apply environmental and social screens across all your portfolios. In addition, DFA should use its shareholder power to improve companies’ environmental and human rights performance, particularly in the area of forests where you’re invested in so many really problematic companies.
I understand, too, that DFA’s entire investment approach is based on a passive investment strategy. This might be a good way to maximize returns on investment over time -- but it’s also a really good way to maximize environmental and social destruction. So, I urge you to take DFA’s pioneering financial management to the next level by doing what so many companies are doing these days: go deforestation free.
Until DFA takes these steps, I’m going to put my family’s money elsewhere. And I’m looking forward to seeing celebrities, pension funds, and endowments -- DFA’s biggest clients -- do the same.
Watch Friends of the Earth’s video telling celeb and former California governor Arnold Schwarzenegger to step up and get DFA to do the right thing.
Support Janet and Friends of the Earth by signing our petition.
Oceans and Forests
/ Tags: Climate change, Dfa, Dimensional fund advisers, Friends of the earth, Jeff conant, Palm oil
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