Climate Conversations - Norway’s government pension fund divests from palm oil producers

Norway’s government pension fund – one of the world’s largest – has withdrawn US$314 million in investments from a string of companies that it says produce palm oil “unsustainably”.

As AlertNet reports, in March, the Norwegian Government Pension Fund Global released its 2012 Annual Report announcing that it had sold its stakes in 23 of the world’s largest palm oil companies, reducing its investments in the Indonesian and Malaysian palm oil industry by more than 40 percent.

"Several palm oil producers were excluded from the portfolio because their long-term business model was deemed unsustainable,” said the report. The decision comes in the same year that the fund became a member of the Carbon Disclosure Project, an international not-for-profit organization that “works with market forces to motivate companies to disclose their impacts on the environment".

The organization, which is backed by more than 722 institutional investors representing over US$87 trillion in assets, provides investors with information including insight into companies’ greenhouse gas emissions and strategies for managing climate change, deforestation and water.

While Norway has pledged billions of dollars to combatting deforestation through the UN mechanism known as REDD+ (Reducing Emissions from Deforestation and forest Degradation), its government pension fund has in the past attracted attention for its investments in the palm oil industry. The pension fund’s decision is likely, among other factors such as changes in procurement policies and advocacy campaigns, to put more pressure on palm oil producers to consider environmental sustainability more carefully.

The decision to divest was made by Norges Bank Investment Management (NBIM), the fund manager, independently of Council of Ethics investigations into oil palm companies. Earlier decisions also resulted in divestments from tobacco, timber and gold mining companies.  For full article, click here.