In 2007, Norway announced that it would spend US$500 million a year to support REDD. But Norway has also invested US$13.7 billion in 73 companies in industry sectors that threaten forests, including oil palm, oil and gas, mining, cattle ranching, logging, pulp and paper, soy and hydropower dams.
A new report by Rainforest Foundation Norway and Friends of the Earth Norway documents this contradiction: “Beauty and the Beast: Norway’s investments in rainforest protection and rainforest destruction”.
Lars Løvold, director of Rainforest Foundation Norway, describes the problem:
“Whilst Norway has become famous internationally for its initiative to protect the rainforest, the truth is that the country invests far more money in industries responsible for massive forest destruction. The Norwegian Government is offering its little finger to help, while using its fist to destroy. This incoherence in the Norwegian approach to the rainforests is serious. The placements done by the Norwegian government are in fact undermining the much needed international effort to save the rainforest.”
Norway’s Government Pension Fund – Global manages assets of US$553 billion making it the largest sovereign wealth fund in the world. It invests money earned from Norway’s oil and gas. The investments are managed by the Norwegian Central Bank through the Norges Bank Investment Management, under the overall responsibility of the Ministry of Finance.
A Council of Ethics has a mandate to recommend to the Ministry of Finance that individual companies should be excluded from the investment fund. But out of a total of 8,005 companies, the Council of Ethics has found problems with 54 companies. Of these, only six companies have been excluded because of the destruction they caused in rainforest areas. Clearly this approach is not enough to address Norway’s investment in forest destroying sectors.
In 2010, Norway’s prime minister, Jen Stoltenberg said that rainforest protection is “the most important thing we are doing in the world”. But the report, “Beauty and the Beast”, looks at how Norway’s investments are undermining rainforest protection, by investing in the drivers of deforestation.
Two case studies of companies in which the Norwegian Government Pension Fund Global has invested illustrate the point: Wilmar the world’s largest oil palm trader in Indonesia; and Chevron, one of the world’s biggest oil companies in Ecuador.
In August 2011, a subsidiary of Wilmar, PT Asiatic Persada, was involved in tearing down houses belong to local indigenous communities in Jambi, Sumatra. Police fired shots into the air while the company’s bulldozers flattened the houses of 83 families. There has been an on-going land conflict since PT Asiatic Persada starting working in Jambi in 1987. The situation got worse in 2006, when Wilmar took control of the company. A recent investigation by HuMa, Sawit Watch and Forest Peoples Programme found that 1,359 indigenous people had been left with only 241 hectares to live on.
Texaco started drilling for oil in the Ecuadorian Amazon in the 1960s. It left nearly a thousand open, unlined waste pits that continue oozing toxins. It dumped 18.5 billion gallons of toxic waste into rivers. It destroyed large areas of forest. Texaco abandoned its oilfields in Ecuador in 1992. Tens of thousands of people were affected. The pollution of the soil and rivers makes food growing difficult and more than 1,400 people have died of cancer linked to oil contamination in the area.
Chevron bought Texaco in 2001. For the past 18 years local communities and indigenous peoples have sued Texaco, then Chevron, for the damage they caused. In February 2011, a court in Ecuador ruled that Chevron was guilty and set damages at US$18 billion. Chevron refuses to accept the decision. Meanwhile, Norway’s Government Pension Fund Global has US$1.4 billion invested in Chevron.
Norway’s investments in high-risk industries is increasing, with US$13.7 billion invested in 73 companies in high-risk sectors. From 2010 to 2011, that figure increased by 13.6%.
At the end of the report Rainforest Foundation Norway and Friends of the Earth Norway have a series of recommendations for the Norwegian government:
- Assess the impact of the Government Pension Fund – Global (GPFG) on destruction and degradation of tropical forests. The assessment should consider the consequences of the fund’s rainforest investments on greenhouse gas emissions, loss of biodiversity and violations of the rights of indigenous peoples and other local communities. The assessment should be presented to the UNFCCC as a step towards compliance with the Cancún Agreements.
- Ensure that the Council on Ethics systematically and urgently investigates all the Fund’s investments in industries where the risk of causing forest destruction is especially high.
- Lower the threshold for excluding from the Fund companies that are involved in rainforest destruction.
- Take steps to ensure and strengthen the independence of the Council on Ethics, by limiting the ability of the Ministry of Finance’s ability to overrule the recommendations of the Council. The government should consider whether the Council should be given authority to independently make decisions on exclusions from the pension fund’s investment universe.
- Instruct the fund manager Norges Bank Investment Management to increase its openness and transparency with regard to the exercise of its mandate for responsible investment and active ownership, so that the progress and quality of its work can be independently monitored.
- To make sustainable management of rainforests a strategic focus area for Norges Bank Investment Management’s ownership activities, and to use all available tools to promote good social and environmental performance in companies and sectors that operate in rainforest areas.
Full Disclosure: REDD-Monitor has received funding from Rainforest Foundation Norway. Click here for all of REDD-Monitor’s funding sources.