Norway's $650B pension fund to require deforestation disclosure among portfolio companies

mongabay.com
November 12, 2012



BORNEO RAINFOREST.
Borneo rainforest. Photo by Rhett Butler.

Norway's $650 billion sovereign wealth fund will ask companies in which it invests to disclose their impacts on tropical forests, as part of its effort to reduce deforestation, reports Reuters. The move could usher in broader reporting on the forest footprint of operations and boost eco-certification initiatives.

In a policy posted on its web site in September, Norway’s Pension Fund said it now expects portfolio "to manage risk associated with the causes and impacts of climate change resulting from greenhouse gas emissions and tropical deforestation." The fund has investments in some 7,000 companies but the policy is initially directed at "companies with operations or value chains in sectors and regions materially exposed" to deforestation risk.

The move came after campaigners targeted the fund for continuing to invest in companies associated with deforestation — especially timber, palm oil, mineral, and wood pulp production — at a time when the Norwegian government has committed 3 billion krone per year ($522 million) toward protecting forests, making it the world's biggest patron of rainforest conservation.

Logging operation in Borneo.
Logging operation in Borneo. Photo by Rhett Butler.

The fund's new policy was welcomed Rainforest Foundation Norway, one of the groups that pushed for stronger investment criteria.

"This decision is a turnaround from the Norwegian government and an important step forward in the battle to save the world’s rainforests. Companies responsible for deforestation now get a message from one of the world’s largest investors that it is unacceptable to continue destroying rainforests for profit," said Lars Løvold, director of Rainforest Foundation Norway, in a statement.

"This decision strengthens Norway’s reputation as an advocate of rainforest protection. What remains now is to make this policy operational and demonstrate to the world that Norway is able to follow up on its high profile commitment to save the tropical forests."

As a first step, the fund will engage in an “ownership dialogue” on climate and forest issues with companies in its portfolio. The fund lists several questions it will consider in assessing deforestation risk.
  • Does the company disclose information on its tropical forest footprint, how it monitors its impact on tropical forests over time, and its assessment of whether it poses a risk to its business operations?
  • Has the company, or its suppliers, committed to achieve compliance with international standards for sustainable production of agricultural commodities, or sustainable forest management?
  • Does the company report on the implementation of its commitments to reduce tropical deforestation?
The new policy doesn't state the implications for non-compliance, but in recent years the fund has divested from six companies involved in especially egregious deforestation.

Norway's Pension Fund is thought to be the world's largest sovereign wealth fund. Launched in 1990, the fund is a product of Norway's oil revenue.













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