Norway’s Government Pension Fund Global (GPFG) is the world’s largest sovereign wealth fund, accounting for funds totalling up to $828 billion USD. On 9 March this year, the GPFG announced that it had dropped 11 companies in 2015 due to the companies’ high rates of deforestation and harm to the environment.
Specifically, the companies dropped include 6 firms in the palm oil industry, 4 pulp and paper companies, and 1 coal company. The GPFG’s divesting of these 11 companies makes it clear that causing deforestation gives rise to severe consequences for companies as they risk such exclusions from international investment, said the head of the NGO Rainforest Foundation Norway, Lars Løvold.
This move is also an indication that Norway’s GPFG is willing to make do with the potential losses associated with the divestments, with the view that the prevention of the loss of forests holds greater importance than profits.
Back in the ASEAN region, close to 92,000 hectares of forest is lost every year. Deputy director of the Ministry of Environment of Cambodia stated at a Conference of the ASEAN Social Forestry Network that despite knowing and understanding the consequences of deforestation and forest degradation, short-term profit still tends to remain the main focus.
From agricultural purposes to forest fires to urbanisation, the clearing of forests in Singapore has left the country with merely 3% of its original land area of tropical rain-forests and 1% of mangroves, according to the Singapore Nature Society.
Recently, since late last year, flying drones have begun to be utilised to combat instances of illegal deforestation in countries such as Malaysia and Indonesia where numerous palm oil plantations are located. One such company that has picked up the use of drones is Cargill Tropical Palm, which has headquarters located in Singapore and approximately 75,000 planted hectares of company-owned land in Indonesia.
Cargill stated that the company is using drones to monitor fires that occur close to its plantations and that these fires are often caused by illegal land clearing methods. Such forest fires have been the source of the regional haze problem that has been plaguing ASEAN nations and the surrounding region in the recent years.
In the wake of the generally alarming rate of deforestation that ASEAN countries are facing, coupled with the haze and its health risks caused by slash and burn practices that are used to clear forests, the dropping of companies with unsustainable forest clearing practices by the GPFG, the world’s largest sovereign wealth fund, will hopefully lead an increasing number of firms to revamp and refine their practices to reduce deforestation.