Norway Fund Axes Four Korean and Malaysian Firms Over Palm Oil
20 Aug 2015 --- Norway's gigantic sovereign wealth fund has announced it is divesting from four large Asian companies over the environmental damage their palm oil activities have on tropical forests. The world's largest public investment fund, managing 7.15 trillion kroner (785 billion euros, $872 billion), said its decision to exclude four groups -- including South Korean group Daewoo International -- from its portfolio was based on "an assessment of the risk of severe environmental damage" from their conversion of tropical forests to cultivate palm oil.
A statement read: “The Executive Board's decision on exclusion was made on the basis of the recommendations of the Council of Ethics. The Executive Board has not conducted an independent assessment of all aspects of the recommendations, but is satisfied that the exclusion criteria have been fulfilled.”
Daewoo, South Korean steelmaker Posco and Malaysian groups Genting and IJM were targeted in the divestment decision by Norway's central bank, which manages the wealth fund that owns around 1.3 percent of all stocks on global equity markets, with stakes in about 9,000 companies.
The Norges Bank has taken the decision to exclude RSPO members IJM and Genting Berhad from the Norwegian Government Pension Fund Global (GPFG). Daewoo International Corporation and its parent company POSCO were also excluded from the GPFG. The decision was taken based on the recommendation of the GPFG Council on Ethics which found that there was an unacceptable risk of the companies being responsible for severe environmental damage associated with the conversion of tropical forest into oil palm plantations, based on information provided by these companies as part of their sustainability reporting commitments.
In a statement, the RSPO said that it is: “encouraged to see the more active role that financial institutions are playing in helping the industry move towards a sustainable palm oil supply chain. RSPO is proud to act as a facilitator to third party monitoring of this progress, by remaining committed to transparency and requiring our members to submit detailed reports on their progress towards the sustainable transformation of their palm oil production. This transparency allows companies to be benchmarked against their sustainability commitments, and evaluated in their performance in achieving sustainability.”
