Tuesday, August 18, 2015

Norway’s wealth fund expels POSCO, Daewoo Int’l over palm oil holdings

https://news.mongabay.com/2015/08/norways-wealth-fund-expels-posco-daewoo-intl-over-palm-oil-holdings/


Norway’s wealth fund expels POSCO, Daewoo Int’l over palm oil holdings

by Philip Jacobson on 18 August 2015



A subsidiary of POSCO and Daewoo International in Indonesia’s Papua province is clearing forest the WWF has recognized as among the most important in the world.

Genting and IJN were excluded for the activities of their units in Indonesian Borneo.

Noble Group also faces a recommendation for expulsion from the sovereign wealth fund..

Norway’s central bank is divesting the country’s $870 billion pension fund of its holdings in four Asian multinationals over rainforest destruction for palm oil in Southeast Asia, the bank announced yesterday.

Two of the companies, steelmaker POSCO and its subsidiary Daewoo International Corp., are headquartered in South Korea. The others, Genting Bhd. and IJM Corp. Bhd., are Malaysian conglomerates.

POSCO and Daewoo International were excluded for the activities of a subsidiary in Merauke, a district of Indonesia’s Papua province, where the central government intends to revive a controversial megaproject, the Merauke Integrated Food and Energy Estate (MIFEE).

The Korean firms take the bigger hit: at the end of 2014, Norway’s fund held a 0.91 percent stake in POSCO worth $198 million and a 0.28 percent stake in Daewoo International worth $9 million, according the fund’s Council of Ethics’ recommendation to divestfrom the two companies.

As for the Malaysian companies, at the end of 2013 the fund held a 0.49 percent stake in IJM worth $12 million and a 0.52 percent stake in Genting, according to the recommendations to exclude them. Genting’s market capitalization today is about $6.5 billion.

“The companies are excluded based on an assessment of the risk of severe environmental damage,” Norges Bank, the central bank which manages the fund, said in a statement.

“Before deciding to exclude a company, Norges Bank shall consider whether the use of other measures, including the exercise of ownership rights, may be better suited. The Executive Board concludes that it is not appropriate to use other measures in these cases.”

Daewoo International’s Merauke subsidiary is Bio Inti Agrindo (BIA). Its concession spans 32,500 hectares near Indonesia’s border with Papua New Guinea and overlaps with a WWF Global Ecoregion known for its rich assortment of plants and animals. There are 344 registered bird species and 69 species of mammal, including a variety of marsupials and birds of paradise, some of which are endangered and only found in this area. Yet its biodiversity remains poorly documented, with many species thought to be undiscovered.



A map from the West Papua Oil Palm Atlas, a report by the Pusaka Foundation, awas MIFEE and six other organizations, shows oil palm concessions in Merauke. The asterisk next to Daewoo International’s name atop “PT Papua Agro Lestari” indicates that while the authors were uncertain of PAL’s ownership, local people said the company had the same management as Bio Inti Agrindo, which is owned by Daewoo. Image: West Papua Oil Palm Atlas

At some point after BIA began clearing in 2012, the council noticed a discrepancy between the company’s environmental impact assessment, which portrays the concession as covered mostly in shrubs and bush with the rest consisting of secondary forest, and official maps and satellite imagery, which show that around half the concession holds untouched primary forest.

The council repeatedly reached out to Daewoo International to clarify the matter, but the information provided by the company “provides few answers,” according to the recommendation.

For example, the environmental impact assessment “contains little information on the condition of the forest, ecosystems or species diversity in the concession area,” and “the company has not carried out assessments to identify high conservation values in the concession area.”

In the name of safeguarding protected species, BIA established three buffer zones along its waterways, but the council said it was “unclear … which species these actions are designed to protect, and how narrow strips of forest in a large plantation landscape will help to preserve ecological values in the concession area.”



A close-up of Bio Inti Agrindo’s concession in Merauke, which is divided into two blocks separated by a wildlife sanctuary. The yellow line represents Indonesia’s border with Papua New Guinea. Image: Council of Ethics



The upper image shows Bio Inti Agrindo’s concession in 2013, at which time it had cleared much of the western block. The red area in the lower image was cleared in 2014, and the rest of the western block was cleared too. Image: Council of Ethics

In response to the council’s inquiries, Daewoo International replied that it planned to conduct a high conservation value (HCV) assessment, but according to the council the company specified no timetable for doing so and gave no indication that clearing would be suspended in the meantime.

“In the Council’s view, this measure is therefore inadequate to prevent severe environmental damage,” the statement says. BIA did not respond to an email seeking comment.

The recommendation also points to “an abnormally large number of fire hotspots” on the concession, enough to indicate that land is possibly being cleared by burning, which is illegal in Indonesia. Daewoo denied that burning was used to clear and attributed the fires to local peoples’ negligence, according to a correspondence cited in the recommendation. “This cannot be ruled out,” the recommendation says. “Nevertheless, the Council finds it unlikely that so many fires would occur in the concession area without any connection to the land clearing. In the Council’s view, the sheer number of fires and the fact that the burning has been ongoing for several years should have prompted the company to investigate the cause of the fires, and to consider whether its measures are adequate to prevent fires from occurring.”



Red dots show fire hotspots that registered in BIA’s oil palm concession between January 1, 2011, and August 15, 2014. The company’s owner, Daewoo International, maintains that the fires were set by local people, but the Norwegian Council of Ethics associated with the country’s $870 billion pension fund sees the large number of hotspots as an indication that fire was used intentionally as a land-clearing method, a violation of Indonesian law. Image: Council of Ethics

Genting was excluded from the fund for clearing orangutan habitat and peatland in Borneo in violation of the Norway-Indonesia moratorium on logging certain types of forest. IJM was also said to be clearing important forest in Borneo.

Both of the Malaysian companies are members of the Roundtable on Sustainable Palm Oil (RSPO), a voluntary eco-certification scheme, but neither said they planned to obtain certification for their Indonesian units before 2018, “an unusually long timescale for building a more sustainable operation,” according to the council.

Noble Group Ltd., Asia’s largest commodities trader, was previously excluded from the fund over its oil palm plantations in the Indonesian provinces of Papua and West Papua.

A previous version of this article stated that the Council of Ethics has an outstanding recommendation to exclude Noble Group Ltd. from the pension fund and suggested that the company had yet to be excluded

No comments:

Post a Comment

Knowing Malaysian Palm Oil Investors in Indonesia

https://www.palmoilmagazine.com/news/8504/knowing-malaysian-palm-oil-investors-in-indonesia   Main News | 21 January 2021 , 06:02 WIB ...