Norway’s massive €785 billion (US$865 billion) sovereign wealth fund, the world’s largest public investment fund, has announced its decision to divest four Asian groups from its portfolio based on deforestation resulting from their palm oil cultivation activities.

 

Malaysian groups, Genting and IJM, Daewoo, and South Korean steelmaker, Posco have been targeted in the divestment by the fund’s manager, Norway’s central bank, which owns 1.3% of all the stocks on global equity markets and which holds stakes in 9,000 companies. As of the end of 2014, the fund owned a 0.28% stake in Daewoo worth $9 million, a 0.91% stake in Posco worth $198 million, a 0.4% stake in Genting worth $41 million, and a 1.6% stake in IJM worth $46 million.

 

In the past, over 60 companies including Airbus, Safran, Wal-Mart, and Boeing have been removed from the fund’s portfolio due to its strict investment ethics guidelines which restrict any investment being made in a company or group that has been accused of human rights or child labor violations, serious environmental damage, or companies that are considered ‘particularly inhumane’ tobacco or arms manufacturers.

 

Despite its effort to increase sustainability, transparency and environmental consciousness, the palm oil industry remains controversial and divisive. In early 2012 the fund divested from 23 palm oil producer without releasing the names of the companies.

 

Norway’s central bank takes the fact that neither Daewoo nor Posco are member of the Roundtable on Sustainable Palm Oil (RSPO) which was formed in 2004 and who’s guidelines prohibit its members from clearing old-growth forests or conservation sites very seriously. Genting and IJM are members of the association, but have been accused of ignoring the group’s guidelines.