Norway fund tightens rules to protect forests

Reuters News
Posted: Nov 09, 2012 12:08 PM

OSLO (Reuters) - Norway's $650 billion sovereign wealth fund has started asking companies it invests in to minimize their impact on rainforests, green groups said on Friday, welcoming a shift they hoped would make it rethink some deals.

The fund, one of the world's biggest investors, made the changes to its guidelines in September without fanfare.

"We hope this will mean Norway stops investing and pulls out of many companies that are damaging rainforests," said Nils Hermann Ranum, spokesman of the Rainforest Foundation Norway.

Environmentalists have in the past accused Norway of investing uncritically in industries that threaten forests, such as palm oil, oil and gas, cattle ranching, logging, pulp and paper and hydropower dams.

A central bank official did not comment on the specific accusations but said the fund, which manages the country's surplus oil revenue, had a long-running policy of not investing in companies that damaged the environment.

The fund's guidelines, posted online, said Norway "expects companies to manage risk associated with the causes and impacts of climate change resulting from greenhouse gas emissions and tropical deforestation."

The companies had to provide information on the impact of their work on forests over time and how it complied with international standards to protect forests, according to the rules.

The fund's guidelines had referred to global warming in the past, but it was the first time they had mentioned rainforests, said the green groups.

The rules did not spell out sanctions for companies that did not comply. But Norway's fund has withdrawn investments in the past from firms that fail to comply with guidelines on human rights, child labor and other areas.

"We see this as a significant signal ... But the language is vague and needs to be followed up by clear measures," said Truls Gulowsen of Greenpeace.

Norway, rich from oil and gas exports, has set up a number of programs to protect rainforests including two worth $1 billion each for Indonesia and Brazil and one worth $750 million for Guyana. The countries get payouts for meeting targets for slowing deforestation over several years.

But a report from the Rainforest Foundation and Friends of the Earth Norway earlier this year said Norway's fund had invested $13.7 billion dollars in 73 companies in sectors that damaged forests.

"The invested amount is 27 times higher than what Norway spends annually on rainforest protection said the study, entitled "Beauty and the Beast, Norway's investments in rainforest protection and rainforest destruction".

(Reporting By Alister Doyle; Editing by Andrew Heavens)