The Schwarzenegger dilemma:Years of investing dangerously
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Years of Living Dangerously, the first mass-media program on the impacts of climate change, is set to air this Sunday on Showtime. It’s a tremendous opportunity to raise awareness of the climate crisis, and we hope it gets huge viewership. In the first two episodes, Harrison Ford goes to Indonesia to confront the authorities about massive deforestation due to palm oil. View the first episode here.
Given that the opening episodes deal with palm oil, we’ve been in conversation for some weeks with the show’s team about linking our Landgrabs, Forests & Finance campaign to the broadcast.
But then, two weeks ago, we discovered a little problem: one of the show’s star producers — Arnold Schwarzenegger — is profiting from forest destruction. The former entertainer-turned-Governor-turned environmental champion, it turns out, has more than $1 million dollars worth of stock managed by Dimensional Fund Advisors.
DFA is no stranger to us: they are a money manager with more than three-quarters of a billion dollars in some of the most environmentally destructive companies on the planet, and $775 million specifically tied to palm oil. DFA’s holdings include KLK, a palm oil company widely known to use forced labor and child labor in their operations. And others, like IOI and Wilmar — the company with the No Deforestation, No Peat, No Exploitation policy that still has not been put into effect — continue to purchase illegally produced palm fruit from suppliers like Bumitama Agri. We have written to DFA three times since June 2013, alerting them to the environmental and social risks of palm oil companies. We never received any reply.
Mr. Schwarzenegger is not only a client of DFA, but he is also a part owner. When our allies at Global Witness alerted us to the Schwarzenegger-DFA-deforestation connection, we immediately made concerted efforts to talk to the show’s creators and producers about this situation. We called. We wrote. We urged the producers: for the integrity of the show, please do not let this show air until Mr. Schwarzenegger addresses his financial ties to forest destruction.
Unfortunately, they never got back to us.
We really like Years of Living Dangerously. We think it’s the best shot environmentalists have had, ever, to bring the news on climate to life for a US public that has been beset for too long by climate deniers and corporate polluters. But profiting from investments in rainforest-destroying companies while producing and fronting a series that publicly, and rightly, criticizes those same companies for destroying forests is just not okay.
When Global Witness published the original story about Mr. Schwarzenegger’s involvement in tropical deforestation through DFA, they were not aware of Mr. Schwarzenegger’s involvement in the Years Project, or its imminent screening. (The Guardian, however, did make the link.) But, as Global Witness’s Lead Forest Campaigner, Tom Pickens, wrote to the show’s producers, “This unfortunate connection cannot be ignored now; it goes to the heart of one of the major challenges in resolving the climate crisis — changing the economics behind it.” And part of the economics is this: the massive deforestation caused by the palm oil industry would not be possible without huge flows of money from banks and investors.
To be fair, this is a structural issue: it is not about one person’s investments: it is about the economic underpinnings of the ecological crisis.
It wouldn’t be the least bit surprising if Mr. Schwarzenegger didn’t know about the DFA-deforestation link. In fact, as we detail in our report Years of Investing Dangerously, DFA also manages investments for a vast array of clients including CalPERS, the cities of Seattle, San Diego, San Francisco, and Kalamazoo and numerous foundations, universities and labor unions. DFA’s investments are one of the threads that unwittingly tie millions of people, from ordinary citizens like ourselves to movie stars like Arnold Schwarzenegger, to some of the worst palm oil and forestry companies on the planet.
But now we know. And as they say in addiction counseling, the first step is recognizing you have a problem. The next step is dealing with it.
Through DFA, many of us have financial ties with rainforest-destroying companies. But Mr. Schwarzenegger, as a major client and part owner of DFA, is in a unique position to flex his muscles at Dimensional — a fund manager which up to now has shown no indication that it cares about the environmental and social devastation caused by the palm oil industry.