World’s largest sovereign wealth fund has dropped 11 companies over deforestation


Norway’s Government Pension Fund Global (GPFG), the world’s largest sovereign wealth fund, has dropped 11 companies from its portfolio over their links to deforestation.

The GPFG, which manages $828 billion worth of funds, released its annual report for 2015 on Wednesday, revealing that six palm oil companies, four pulp and paper companies, and one coal company were dropped from its investment portfolio.

The latest report shows that six palm oil firms, four pulp and paper companies, and one coal firm were dropped from its investment portfolio last year. Daewoo International Corp, Genting Bhd, IJM Corp Bhd, and POSCO — were formally excluded by the GPFG Council on Ethics after investigations showed their plantations cause severe environmental damage.

Two more palm oil companies, First Pacific and Kulim Malaysia, were divested by GPFG managers directly due to their unsustainable palm oil production operations

This is not the first time that GPFG has dropped companies over environmental concern and  the fund has been pursuing a “risk-based divestment” strategy for the past few years. Between 2012 and 2015 the fund dropped its shares in more than 100 companies over concerns around global warming, deforestation, and sustainability and a further 50 companies were dropped because of their connection to deforestation.

Norges Bank Investment Management, which manages the GPFG, announced a new policy making it clear that companies it invests in must also address human rights issues in their business practices.

Lars Løvold, director of the NGO Rainforest Foundation Norway, said in a statement that the GPFG’s actions show that companies involved in deforestation risk being cut off from international investment.

“One of the world’s largest investors sends a clear signal to the palm oil industry that the industry must stop rainforest destruction,” Løvold said.

“The divestment from First Pacific shows that international investors are moving away from unsustainable practices, and should give First Pacific a reason to reform its business model.”

Photo Credit: CIFOR from Flickr