LONDON: The Environmental Investigation Agency (EIA) commends Norway’s divestment of its pension fund’s shares in Malaysian logger Samling Global this week, but calls for a more comprehensive review of the fund’s wider investments of over $400 million in other controversial forestry and plantation companies.
On August 23, the Norwegian Ministry of Finance announced the sale of $1.4 million of the Government Pension Fund Global’s (GPFG) shares in Malaysian logging conglomerate Samling Global, based on the findings of an independent study containing compelling evidence of illegal logging and environmental damage in Sarawak, Malaysia.
While EIA welcomes the divestment, the organisation’s research reveals Samling is only a small part of the picture; a recent EIA survey of GPFG’s December 2009 portfolio revealed $437 million (NOK 2.5 billion) of shareholdings in a host of major forestry, agriculture and related commodities companies.
With activities mainly focused in Asia and the Pacific, the companies in which Norway has holdings control more than 9.4 million hectares of land, largely in Indonesia, Papua New Guinea and Malaysia.
Many have been linked to deforestation and other severe environmental damage; some have been accused of illegal logging and land clearance, rights and labour abuses, corruption and significant tax fraud. All such activities would contravene the Ethical Guidelines of the Pension Fund if confirmed.
During the past two years, Norway has emerged as the leading financer of forest conservation in tropical countries through an ambitious global scheme to mitigate climate change by Reducing Emissions from Deforestation and Degradation (REDD). In May, Norway announced a billion dollar deal with Indonesia on REDD. Its growing investments in firms linked to deforestation activities appears at odds with its leadership on promoting forest protection through REDD.
EIA is calling on Norway’s Finance Ministry and the GPFG’s Ethical Council to work with officials at the country’s Climate and Forests Initiative, and with NGOs, to develop a comprehensive sectoral approach to screening forestry and plantations investments for compliance with the Fund’s Ethical guidelines, and Norway’s wider contribution to forest-focused climate mitigation.
Jago Wadley, EIA Forests Campaigner, said “Norway’s Samling divestment is a critical acknowledgement that financiers are driving deforestation and degradation, but that’s just the first step. While it’s not just a Norwegian problem, Norway has the opportunity to set an example for the world by aligning its sovereign wealth fund investments with its global goals to protect forests.”
Other than Samling Global, EIA identified Norwegian shareholdings in companies currently deforesting or planning to deforest large swathes of the last frontier of Papua, in eastern Indonesia. Papua makes up half of New Guinea Island, which harbours the third largest remaining tropical forests in the World – home to hundreds of tribal communities, high biodiversity, and a significant climate asset.
Norway holds $39 million worth of shares in Hong Kong-based Noble Group, which recently purchased a largely forested 32,000 hectare oil palm plantation licence in Sorong, West Papua. When EIA visited the plantation in April 2009, investigators met a four-year-old child who had been forced to sign a multi-decade land release contract. Landowners reported receiving equivalent to $2.50 per hectare, and complained that promised benefits had not materialised. Forest clearance is ongoing.
Norway’s Pension Fund also owns $1.2 million of shares in LG International Corp, and further shares in Medco Energi International, which together control 170,000 hectares and seek a total of one million hectares of forest in Papua for pulp and wood chip production. The land is part of a controversial food and ‘green energy’ estate project in Merauke where 1.6 million hectares is targeted, but local and international opposition is becoming widespread.
Norway’s Pension Fund also holds $17.8 million of shares in the controversial Singapore-listed Golden Agri Resources, which controls Indonesia’s oil palm and pulp plantation giant, Sinar Mas Group. A recent independent assessment of Sinar Mas’ operations concluded that in one Indonesian province “all concessions examined were found to have carried out land clearance before the EIA (Environmental Impact Assessment) was approved.” Sinar Mas is also clearing forests in Lereh, Papua.
It is widely acknowledged that the activities of companies active in logging, oil palm and timber plantations are some of the major drivers of forest loss worldwide.
Andrea Johnson of EIA said: “Norway and other nations are undermining their good intentions by paying countries like Indonesia to protect their forests with one hand and investing in deforestation without environmental or social safeguards with the other.”
For more information, contact:
Jago Wadley, EIA Forest Campaign: firstname.lastname@example.org / +44 (0)20 7354 7960
Andrea Johnson, EIA Forest Campaign: email@example.com / +1-202-483-6621
Satellite and stills images available on request.
1. The Environmental Investigation Agency (EIA) investigates and campaigns against environmental crime and abuses.
2. Deforestation in countries like Indonesia is thought to be the source of between 12-20 per cent of global carbon emissions.
3. Norway, with France, has spearheaded the REDD+ Partnership, a forum of countries working to drive REDD in the absence of agreement at the 2009 UN Copenhagen climate summit.
4. In May, the Norwegian Ministry of Environment’s International Climate and Forests Initiative signed a Letter of Intent (LoI) with Indonesia, committing $1 billion of performance-based incentives for Indonesia to reduce emissions from forestry and agriculture.
5. The Norwegian Finance Ministry’s Announcement of its Samling divestment is available here.
6. Norway’s Pension Fund Holdings can be reviewed here.
7. EIA’s November 2009 report on plantations in Papua, Up for Grabs, is downloadable here.
8. On August 19, 2010, BSI-CUC issued a Clarification Statement on its audit of Sinar Mas Group operations, which is viewable here.