This is revealed in the annual report for responsible management of the Government Pension Fund Global (GPFG), which Norges Bank Investment Management (NBIM) released February 13th. The report describes NBIM’s efforts to ensure that over 1 trillion US$ in the Government Pension Fund Global is managed according to the Fund’s ethical guidelines and the expectations of the Norwegian Parliament with regard to social and environmental sustainability. New to this year’s report is NBIM’s willingness to reveal more detail about the content of dialogues they are conducting with companies in the Fund’s investment portfolio. Details concerning companies’ environmental or social behaviour have not previously been publicised.
‘As the largest sovereign wealth fund in the world, Norway’s GPFG has enormous influence. Consequently, it is very good news that NBIM has finally chosen to be open about which companies the Fund is engaging with to improve social and environmental performance, ’ said Vemund Olsen, senior adviser at Rainforest Foundation Norway (RFN).
In 2017, the GPFG reached out to companies to get them to stop converting tropical forests to cropland or pasture, including three companies criticised for deforestation in South America. These are the meat producers Marfrig and Minerva, as well as the soy producer Bunge. An earlier report from environmental organizations Rainforest Foundation Norway and Mighty Earth linked Bunge to systematic deforestation in Brazil and Bolivia.
‘It is really positive that the Government Pension Fund has listened to our request and demanded that Bunge stops deforestation. Now it is Bunge’s turn to listen to what an important investor has to say and stop the destruction the company is causing,’ said Vemund Olsen. He is also pleased that the Government Pension Fund is putting pressure on the two meat producing companies.
‘Soy production and cattle farming are the two greatest drivers of deforestation in South America. We applaud the Government Pension Fund for putting pressure on these companies to halt destruction,’ he added.
The GPFG is also targeting Indonesian and Malaysian banks that fund deforestation for palm oil development. The report names the following banks: CIMB Group Holdings, Malayan Banking and RHB Bank. Olsen is satisfied with this development, which follows a report documenting investments of more than 2 billion US$ from the GPFG and other Nordic investors in South East Asian banks financing palm oil in Indonesia.
‘Banks which provide loans for deforestation are the greatest hurdle to making the palm oil industry clean up their act and stop destroying rainforest in Southeast Asia,’ Olsen said. ‘The GPFG should demand that banks like Bank Mandiri, Bank Rakyat Indonesia, Bank Negara Indonesia and Bank Central Asia must refuse loans to companies that destroy rainforests.’
The report reveals that, in 2017, the Government Pension Fund divested four companies as a consequence of deforestation. These included three palm oil producers in Indonesia and Malaysia, and one soy producer in Brazil. According to NBIM, the shares were sold because of the risk that forest will be converted into agricultural land.
Since RFN convinced NBIM to work systematically against deforestation in 2012, the Government Pension Fund has divested 58 companies due to the risk of deforestation. In addition, the independent Council on Ethics has formally excluded six logging and palm oil companies in accordance with the Pension Fund’s ethical guidelines.