Storebrand Puts Palm Oil on Blacklist With Tobacco

Storebrand ASA (STB) ended its investment in most palm oil producers, apart from Golden Agri-Resources Ltd. (GGR), after Norway’s second-largest insurer found the companies breached its environmental sustainability standards.

“The main driver behind deforestation in tropical regions is often the establishment of new palm oil plantations,” Christine Meisingset, head of sustainable investments at the insurer, said in a statement. “Storebrand would rather invest more in companies that are pushing the industry toward a more sustainable approach.”

Storebrand, Norway’s largest insurer after Gjensidige Forsikring ASA (GJF), joins the nation’s sovereign wealth fund in ending investments in palm oil producers. Oslo-based Storebrand last year halted investments in coal producers and those with exposure to oil sands, adding to a blacklist that includes tobacco and landmine producers. Norway’s sovereign wealth fund, the world’s largest, sold investments in 23 palm producers including Wilmar International Ltd. (WIL), Golden Agri and Kuala Lumpur Kepong Bhd (KLK) in 2012 due to concerns about deforestation.

A Storebrand study of the palm oil industry found 11 companies to be in breach of the insurer’s sustainability standards, Meisingset said. “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 company said it assesses possible investments based on its own environmental, social and governance criteria.

Deforestation Concerns

The Norwegian investor declined to name the 11 palm oil producers it decided to exclude from its investments, saying it plans to continue dialog with them. Indonesia and Malaysia are the largest producers, with some leading companies including Sime Darby Bhd (SIME), Indofood Agri Resources Ltd. (IFAR) and PT Astra Agro Lestari. (AALI)

Storebrand disposed of 293,000 shares in Singapore-listed Wilmar, the world’s largest palm oil trader, a filing from Dec 31. showed, according to data compiled by Bloomberg. The Norwegian investor had 114,192 shares in Golden Agri, also traded in Singapore, a Dec. 31 filing showed, according to data compiled by Bloomberg.

“We do not know exactly what Storebrand is referring to by ‘breaching environmental standard,’” Wilmar said today by e-mail, adding that Storebrand hadn’t contacted the palm oil trader on its study. Wilmar is a member of the Roundtable on Sustainable Palm Oil which sets a “very stringent benchmark on environmental and social performance,” it said.

Climate Change

Wilmar rose 0.3 percent to S$3.25 in Singapore at 4:10 p.m. local time. The benchmark Straits Times Index was little changed.

“When an investor such as Storebrand pulls out of palm oil producers such as these 11, it sends a clear message to the industry: commit to ending forest destruction,” Truls Gulowsen, head of Greenpeace Norway, said in an e-mail. “Greenpeace expects more companies to follow Storebrand’s lead on this and for more producers to finally clean up their act.”

Conserving forests, part of a United Nations initiative, is key to controlling climate change because deforestation and changes in land use account for about 17 percent of global emissions of heat-trapping gases.

Palm oil, the world’s most-used edible oil, is an ingredient in products ranging from margarine and ice cream to detergents, cosmetics and biodiesel. A boom in demand has helped destroy rainforests as growers expanded plantations of the 20-meter (66-foot) trees.

To contact the reporters on this story: Alastair Reed in Oslo at areed12@bloomberg.net; Chanyaporn Chanjaroen in Singapore at cchanjaroen@bloomberg.net

To contact the editor responsible for this story: Jonas Bergman at jbergman@bloomberg.net

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