The world’s biggest sovereign wealth fund has permanently banned investment in two palm oil companies for alleged unethical practices, after dropping 23 palm oil firms from its portfolio for the same reason in March.
The US$729.2bn Norwegian Government Pension Fund Global (GPFG) is the largest pension fund in the world, holding 1% of global equity stocks, and is backed by Norway’s oil and gas industries. In 2012, it decided to include deforestation in its investment guidelines as a threat to future growth.
Following a review of its investments, and based on recommendations from the Council of Ethics, it sold its stock in 23 palm oil companies that it considered to be “unsustainable in the longer term” due to their deforestation policies.
Now, two Malaysian palm oil companies, Ta Ann Holdings Bhd in Malaysia, and WTK Berhad Holdings, have been permanently banned from GPFG investment, although they were already among those it had delisted from the fund earlier this year.
Ta Ann: Reforestation is best for sustainability
Ta Ann spokesperson Sharon Yii told FoodNavigator via email: “Whilst the decision by Norwegian Government to exclude Ta Ann from the investment universe of its pension fund is regrettable, Ta Ann stands firm in its belief that reforestation is the best way in ensuring sustainability of forest resources.
“We are constantly striving to refine our best practices as part of our commitment towards sustainable resource management and we reiterate that our Group adheres strictly to all relevant laws and regulations governing our business operations.”
No one from WTK Berhad responded to a request for comment prior to publication.
Catapult Campaigns, an organisation working to end trade in commodities linked to deforestation, described the GPFG move as “recognition that rainforest destruction is not just bad – it’s bad for business. It generates serious reputational and financial risk, and investors worldwide should look hard at the palm oil and pulp and paper sectors and factor this substantial risk into their valuations.”
Three other companies were also permanently banned from the fund based on the Council of Ethics’ recommendations: Zijin Mining Group and Volcan Compañia Minera for risk of severe environmental damage, and Zuari Agro Chemicals Ltd. for risk of contributing to the worst forms of child labour.