Giant Norway pension fund weighs Brazil divestment over Amazon deforestation

(Mongabay News, 3 Sep 2019) KLP, Norway’s largest pension fund, with over US$80 billion in assets, is saying it may divest from transnational commodities traders operating in Brazil such as Archer Daniels Midland (ADM), Bunge and Cargill, if they work with producers who contribute to deforestation.

In mid-August, the governments of Norway and Germany suspended payments to the Amazon Fund, which finances conservation efforts in the Amazon Rainforest aimed at limiting deforestation. Not long after, Norway’s largest pension funds began publicly discussing their concerns about investing in companies that may be complicit in deforestation in the Amazon region. With approximately US$170 billion in combined assets, these funds carry significant clout and leverage, say asset managers.

“We are trying to create dialogue and awareness in those companies and those investing [in] those companies, like us, financiers,” said Jeanette Bergan. Bergan heads up KLP’s Responsible Investments initiative. KLP is Norway’s largest pension fund, with more than US$80 billion in assets. Bergan says KLP is seeking dialogue with companies that operate in Brazil, including transnational commodities trading giants Cargill, Bunge, and Archer Daniels Midland (ADM) with the goal of ensuring they follow sustainable supply chain practices. KLP has $50 million in shares and loans with the firms.

“It’s always very hard,” Bergan said. “Responsible corporate behavior, or responsible behavior from anybody, is always a challenge when there is a conflict between economic development and responsible business practice or ethics.”

International investment firms carry clout in terms of  global deforestation. For example, a recent report from Friends of the Earth U.S., Amazon Watch, and the Dutch financial-research firm Profundo, found that global asset management firm BlackRock ranks among the top three shareholders in 25 of the globe’s largest public “deforestation-risk” companies. The report says BlackRock ranks among the top 10 shareholders in another 50 such companies. “Deforestation-risk” companies are defined as those dealing in soy, beef, palm oil, pulp and paper, rubber and timber.

Some investment firms, however, strive to curb environmental harm. Nordea, the largest asset management group in Scandinavia  announced on August 28 that it was quarantining Brazilian government bonds in response to the forest fires devastating the Amazon Rainforest.

External link

Mongabay News, 3 Sep 2019: Giant Norway pension fund weighs Brazil divestment over Amazon deforestation