08 March 2017
Between 2012 and 2015, NBIM divested more than 30 palm oil companies due to high risk of contributing to tropical deforestation. The new report states that NBIM in 2016 carried out a thorough review of the palm oil sector, in order to assess whether the sector had improved sufficiently to merit reinvestment. While NBIM found that some improvements had been made by certain companies, too many problems persist for the palm oil sector as a whole to be worth the risk.
The specific challenges cited by NBIM are lack of traceability in the palm oil supply chain and lack of faith in palm oil certification systems, as well as the expansion of some palm oil producers into parts of Africa where governance, land ownership and human rights issues are key concerns.
No deforestation policies still fall short
“The decision of the Fund to stay out of the palm oil sector shows that the recent wave of No deforestation policies adopted by palm oil companies has not yet made a big difference on the ground. Investment in the palm oil sector still entails a high risk of contributing to rainforest destruction and human rights violations”, says Vemund Olsen, Senior Policy Adviser at NGO Rainforest Foundation Norway.
NBIM has a climate change policy which sets out expectations to all companies in its portfolio to reduce their contribution to climate change and rainforest destruction. Crucially, the policy states that companies engaged in activities with a direct or indirect impact on tropical forests should have a strategy for reducing deforestation that results from their own activities or from their supply chains.