Norway’s $871 billion sovereign wealth fund said it would remove four Asian companies from its investment portfolio, citing the environmental damage they are causing by turning rain forests in Indonesia and Malaysia into palm oil plantations.
Palm oil, a widely-used processed food ingredient, has been widely criticized for harming the environment due to deforestation and the related production of massive quantities of methane, a greenhouse gas that is 34 times more potent than carbon dioxide.
Critics also allege multiple labour rights abuses in the industry, including employing child workers.
The massive Norwegian sovereign fund, funded by the country’s offshore oil and gas profits, said it would divest from the Malaysian construction firm IJM Corporation Berhad and conglomerate Genting Berhad, along with the South Korean steelmaker Posco and its subsidiary Daewoo International Corp, which has palm oil holdings in Indonesia and Papua New Guinea, among other countries.
Earlier this year, the Norwegian parliament approved plans to sell off $8 billion in coal investments as it divests from fossil fuels.
Critics have noted that the fund’s environmentally friendly investment decisions are difficult to square with the source of its wealth.
“It is hard to avoid the perception of hypocrisy in Norway’s selective combat against carbon emitters,” the New York Times noted earlier this year in an editorial.
The fund is officially known as the country’s Government Pension Fund Global.
As of last year it held about 1% of global stocks and bonds. In 2014 it shifted its strategy to investing in property and emerging markets.
It has a list of ethical criteria that it follows to exclude companies from its investments, which in addition to environmental damage include nuclear arms and tobacco production.
Retail giant Wal-Mart is among the companies Norway will not invest in due to its history of alleged labour rights abuses.