Norway’s wealth fund ditches 33 palm oil firms over deforestation

A truck carrying oil palm fruits passes through Felda Sahabat plantation in Malaysia. (Reuters)
Updated 28 February 2019

Norway’s wealth fund ditches 33 palm oil firms over deforestation

  • Norway’s Government Pension Fund Global (GPFG) sold stakes in more than 60 companies due to deforestation — including 33 firms involved in palm oil
  • As the world’s most widely used edible oil, palm oil is found in everything from margarine to biscuits and soap to soups, as well as in biofuel

KUALA LUMPUR: Norway’s $1 trillion sovereign wealth fund, the world’s largest, has pulled out of more than 33 palm oil companies over deforestation risks during the last seven years, a green group said on Thursday.
Norway’s Government Pension Fund Global (GPFG), which released its annual report on Wednesday, sold stakes in more than 60 companies due to deforestation — including 33 firms involved in palm oil — Rainforest Foundation Norway said.
“It’s great to see that the GPFG is taking action against deforestation,” Vemund Olsen, a senior policy adviser at the Oslo-based group said on Thursday.
“The divestments should be seen as a warning shot to those investors and companies still involved in deforestation,” Olsen, whose group has monitored the GPFG’s investments since 2010, told the Thomson Reuters Foundation.
As the world’s most widely used edible oil, palm oil is found in everything from margarine to biscuits and soap to soups, as well as in biofuel.
But in recent years, the industry has come under close scrutiny from green activists and consumers, who have blamed it for clearing forests for plantations and causing fires, along with the exploitation of workers.
Green groups have often accused Norway of double standards by investing billions of dollars in palm oil or soya farmers while also giving cash to nations from Brazil to Indonesia to slow deforestation.
Norway signed a $1-billion deal with Indonesia to help protect its tropical forests in 2010, and the first payment for reduced emissions was agreed last week.
Since 2012, the GPFG has become a more active shareholder and now pushes sustainability and ethics among its investments and drops firms that fail to meet its standards.
Marthe Skaar, spokeswoman at Norges Bank Investment Management, which manages the fund, confirmed that more than 60 divestments had been made due to deforestation risks, including 33 palm oil firms, since 2012.
Divestments in two palm oil companies happened as recently as last year, said Skaar, adding that the fund does not disclose the names of such companies. Most palm oil is grown in Indonesia and Malaysia.
In a report released earlier this month, GPFG said that it engages with companies it owns stakes in to push them to cut their ties to deforestation.
It is currently asking banks in Indonesia, Malaysia and Brazil to adopt no deforestation criteria for their loans to the agricultural sector, the report said.
“The GPFG has realized that deforestation reduces its long term returns on investments,” says Olsen.
“It’s increasingly clear that companies involved in deforestation, directly or through their supply chains, are a major liability to investors.”


Ericsson hit by higher 5G costs and weaker US market

Ericsson CEO Borje Ekholm. The company’s position as a leader in 5G has not protected it from costs associated with the technology. (Reuters)
Updated 26 min 21 sec ago

Ericsson hit by higher 5G costs and weaker US market

  • Ericsson’s adjusted quarterly operating earnings rose to 5.7 billion crowns ($600.2 million) from 2.6 billion a year earlier, but were down from 7.4 billion the previous quarter

STOCKHOLM: Sweden’s Ericsson reported a smaller-than-expected rise in fourth-quarter core earnings on Friday and said higher costs would spill over into 2020 as the telecoms equipment maker looks to exploit its leading position in super-fast 5G networks. Its shares fell more than 6 percent in early trading.
After a number of lean years, Ericsson has been boosted by the roll-out of 5G, particularly in the US.
But while 5G has helped sales, it has increased costs. Ericsson has also opted to take on strategically important clients to gain market share, betting a hit on margins in the short term will help to deliver longer-term profitability.
The company recently bought the antenna and filter business of German’s Kathrein to boost its 5G portfolio and said costs and investments related to the deal would weigh on margins through 2020.
Increased investments in digitalization and more spending on compliance — after a $1 billion payment to resolve probes by US authorities into corruption — are also expected to mean somewhat higher operating costs in 2020.
Nevertheless, CEO Borje Ekholm said Ericsson was on track to deliver on its 2020 targets of an adjusted operating margin of more than 10 percent and sales of 230 to 240 billion ($25.1 billion) Swedish krona.
Ericsson is fighting rivals Nokia and Huawei to take the lead in the roll out of 5G networks, which are expected to host critical functions from driverless vehicles to smart electric grids and military communications.
That has led the US to blacklist Huawei and launch a worldwide campaign to try to persuade allies to ban the Chinese firm from their 5G networks, alleging its equipment could be used by Beijing for spying — which Huawei denies.

BACKGROUND

While the US is an early 5G adopter, China is expected to start its roll out this year and Western Europe after that.

The UK is expected soon to make a final decision on whether to allow Huawei equipment in its 5G mobile networks, while Germany may also rule on the matter during the spring.
North America has been the biggest market for 5G so far, boosting Ericsson’s sales, but the company said demand slowed in the fourth quarter as the proposed merger between Sprint and T-Mobile hit their spending.
“It was a significant impact in a small part of the market which means the quarter came out negative in North America,” Ekholm said. “But in general demand is very strong there.”
By 2025, the GSMA telecoms industry lobby group estimates operators globally will have spent $1 trillion building up 5G networks, offering a huge jackpot for the leading suppliers.
Ericsson’s adjusted quarterly operating earnings rose to 5.7 billion crowns ($600.2 million) from 2.6 billion a year earlier, but were down from 7.4 billion the previous quarter.