Norway’s largest pension fund KLP is talking with BlackRock this week on the issue of deforestation and wildfires in the Amazon, as it starts engagement with companies and investors with activities in Brazil.
Protecting the Amazon, for many a key natural asset to tackling climate change, has rapidly shot up the global agenda. The latest development has seen Brazilian president Jair Bolsonaro reject $20m in aid from the G7 to tackle the problem amid an unseemly spat with France’s President Macron.
So far this year over 75,000 fires have been recorded, an increase of 85% according to the Brazil National Institute for Space Research.
According to Amazon Watch, beef and soya production are amongst the most significant drivers of the increased deforestation, and now, many of the fires.
KLP, the NOK737bn (€74bn) Norwegian pension mutual, has strict guidelines preventing it from investing in companies that cause severe environmental damage, this includes unacceptable risk of deforestation.
It has a $50m exposure to US companies, Archer Daniels Midlands (ADM), Bunge and Cargill, which supply Brazilian soya.Jeanett Bergan, Head of Responsible Investments, told RI it has reached out to the companies last week and was awaiting a response. “We aim, in the first instance, to have a dialogue and hear what companies are doing. We expect answers this week.”
“We are now trying to be a driving force for reaction”
She added: “We’ve been engaging with these companies on the issue for many years. So we are now trying to be a driving force for reaction. We want to try and mobilise action and attention from the Brazilian government and the business interests in Brazil.”
JBS – the world’s biggest meat company and a giant player in Brazil’s beef industry – is excluded by KLP due to corruption, but KLP is putting pressure on investors which hold its shares. Fellow beef producer Marfrig has just released so-called transition bonds, which have had a mixed market response.
KLP has reached out to several major investors including BlackRock, JP Morgan, HSBC, Bank of America and Citigroup. Bergen says KLP is receiving responses and is having a conference call with BlackRock this week.