Storebrand, a major Norwegian pension fund and insurance firm, is to divest from 11 palm oil companies following deforestation and sustainability concerns.
According to Bloomberg, the insurer will continue to invest in palm oil companies that meet its own environmental and social governance standards. The firm has not said which producers it will now exclude.
Christine Meisingset, head of sustainable investment at Storebrand, said, “The main driver behind deforestation in tropical regions is often the establishment of new palm oil plantations. Storebrand would rather invest more in companies that are pushing the industry toward a more sustainable approach.”
She added, “Climate change is the most comprehensive risk to sustainability, and the protection of forests, especially rainforests, is essential in order to negate the effects of climate change.”
The Norwegian branch of Greenpeace described Storebrand’s move as “good news”, adding that it could encourage more investors to consider how sustainable the palm oil companies they invest in are, as well as showing the industry it “pays to be environmentally responsible”.
The decision follows on from Storebrand’s announcement in July that it was to divest from 19 fossil fuel companies in order to ensure “long-term stable returns”. The company added at the time that such stocks would be “worthless financially” in the future. It also does not invest in tobacco or landmine producers.
An investigation has shown inconsistency among ‘sustainable’ palm oil firms. Various human rights and environmental charities found that 16 palm oil firms that signed up to the Roundtable on Sustainable Palm Oil (RSPO) have failed to comply with the environmental and social standards required.
This can make it difficult for ethical investors to decide whether or not to invest in a palm oil company, even if it says it is sustainable. Investors have recently been told to steer clear of an Indonesian palm oil firm, whose founder is one of the bosses of an illegal logging company.