Norway’s $760 billion pension fund has divested from two Malaysian forestry companies in Borneo due to ‘severe environmental damage’, Mongabay.com reported.
On Saturday, the Norwegian Government Pension Fund Global (GPFG) — the world’s largest sovereign wealth fund — announced it has sold stakes in WTK Holdings Berhad and Ta Ann Holdings Berhad, Malaysian companies with extensive logging operations and timber plantations. The decision is based on recommendations from the fund’s Council on Ethics, which conducted an investigation that found “unacceptable risk” of large-scale forest destruction, non-compliance with environmental laws, and poor forest management practices.
In the case of WTK, the Council found evidence of logging in breach of regulations outside concession boundaries, in buffer zones along river banks and roads, and on steep slopes. It added that destructive WTK logging operations inside primary forests in the ‘Heart of Borneo’ may have contributed to the log-jam disaster that made international headlines in 2010 when a 50 kilometer stretch of the Rajang river in Sarawak was blocked by logs.
“The Council finds that WTK does little to reduce the environmental damage associated with its forest operations,” said a report from the Council.
For Ta Ann, the Council documented instances of egregious forest destruction in the ‘Heart of Borneo’, including re-entry logging without required Environmental Impact Assessments. It said that Ta Ann’s measures to limit environmental damage — which include a partnership with WWF — are falling short.
“Given that the conversion of tropical forests involves the complete, irreversible alteration of affected ecosystems, the scale of the deforestation, and that these operations are being pursued in areas with a particularly rich biodiversity as regards species, habitats and ecosystems, the Council has concluded that the measures implemented by Ta Ann to mitigate the adverse effects are insufficient to secure a material reduction in the risk of severe environmental damage now and in the future.”
The moves come seven months after GPFG disclosed selling off stakes in nearly two palm oil companies, including Astra International, Golden Agri-Resorces, Indofood Agri Resources, Kuala Lumpur Kepong, Ta Ann Holdings, United Plantations, and Wilmar International, among others. Most of the firms are based in Malaysia, Indonesia, and Singapore. GPFG maintain and increased stakes in palm oil companies that it believes offer better environmental policies.
Since 2009 Norway has been world’s largest financial supporter of rainforest conservation, pledging 3 billion krone per year ($522 million) to the cause. Its sovereign wealth fund — a product of the country’s oil revenue — is independent of that commitment, which falls under its foreign aid budget.
Norway’s largess is part of its efforts to slow climate change. Deforestation accounts for roughly ten percent of global carbon emissions from human activities. It is also one of the leading threats to many charismatic animal species, including orangutans, Asian rhinos, and the Sumatran tiger.
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