Investment & Pensions Europe | 09 Mar 2012
Land-grabbing claims complicate agricultural investment, says BT scheme
GLOBAL – The BT Pension Scheme has acknowledged that investing in agriculture land was a "real challenge" due to concerns over accusations of land grabbing.
Director of policy Helene Winch, speaking at the National Association of Pension Funds investment conference in Edinburgh, said the telecoms giant's scheme had limited its agricultural exposure to countries such as Brazil, Canada, New Zealand and the US due to concerns over ownership disputes.
She said the risks associated with agricultural investment were of great importance at the scheme, particularly the need to support local communities and avoid accusations of land grabbing or disrupting subsistence farming.
"For both those reasons, we won't currently invest in Africa and other frontier countries," she told attendees.
Her comments come shortly after Denmark's DKK160bn (€21.5bn) pension fund PKA strongly denied accusations of land grabbing.
It acknowledged that land grabbing "without doubt" took place in Africa, but it "strongly" disassociated itself from the practice.
Winch also cited the problem of meeting investment targets, explaining that BT's trustees asked that an asset class account for at least 2.5% of fund assets.
"Unfortunately, 2.5% is a £1bn (€1.2bn) exposure for our pension scheme – you can see where we got a bit stuck on the implementation, trying to do direct agricultural land for £1bn or $1bn (€750m) is a real challenge," she said.
"It will be a very long-term allocation move. What we try to do is look at the £200m mark and slowly put money here and there as we see the opportunities. We have yet to find something that completely matches what we're looking for."
Winch also warned of attacks from non-governmental organisations (NGOs).
"The focus of the NGOs has been on institutional investors and the question of whether we, in our investing in commodities, cause high prices," she said.
She referenced a report published in the Netherlands last year accusing several local pension funds and "pointing the finger at them" for being the cause of increasing food prices.
"Because of these concerns and the issues specifically related to institutional investors, a group of us who are [UN Principles for Responsible Investment] signatories got together and created Principles for Responsible Investment for Farmland," she said, adding that it was not the case that pension funds had driven up prices, as they had often entered before the land prices increased.
She said the separate PRI for Farmland stressed sustainability, transparency and accountability, and urged schemes investing in the asset class to incorporate the charter into any tenders.