The world’s largest sovereign wealth fund, Norway’s Government Pension Fund Global, has dropped 11 companies from its portfolio over their links to deforestation.
The GPFG, which oversee’s US$828 billion worth of funds, released its annual report for 2015 on Wednesday, revealing that it had excluded six palm oil companies, four pulp and paper companies, and one coal company based on their involvement in irresponsible deforestation practices.
“One of the world’s largest investors sends a clear signal to the palm oil industry that the industry must stop rainforest destruction,” Director Lars Lovold of nongovernmental organization Rainforest Foundation Norway stated in a press release.
RELATED: Palm Oil’s Corporate Deception: Green-Washing a Dirty Industry
The decision was made based on the recommendations of the fund’s Council on Ethics, which determined that at least four palm oil companies had caused serious environmental damage: Daewoo International Corp, POSCO, Genting Bhd and IJM Corp Bhd.
Additionally, the palm oil companies First Pacific and Kulim Malaysia were divested by the fund managers directly, as they were found to “produce palm oil unsustainably.”
The move sends an important message, said Lovold: “Companies involved in deforestation risk being cut off from international investment."
RELATED: Monsanto to Be Sued for Ecocide at International 'Tribunal'
According to Rainforest Foundation Norway, since 2012 the GPFG has divested from 50 companies because of their deforestation practices, in addition to formally excluding 8 companies because of severe environmental damage in rainforest areas.
Despite the recent divestments, the fund still invests heavily in business sectors that drive the destruction of rainforests. Rainforest Foundation Norway estimates that the fund’s list of holdings invest close to US$13 billion in these sectors.
“The GPFG still invests huge sums in sectors where forest destruction is widespread. This gives the Fund a significant liability, but also a great opportunity to influence companies to stop destroying rainforests," said Løvold.
WATCH: Brazil: OECD Says Environment Must Be Cleaned Up