Norway’s government warned companies present in Brazil against any involvement in deforestation amid escalating international criticism of the Latin American country’s management of the Amazon rainforest. Norway’s Environment and Climate Minister, Ola Elvestuen, said businesses involved in Brazil should make sure that their value chains in the country “don’t contribute to deforestation.”
Elvestuen met with major Norwegian companies with stakes in Brazil – Yara International ASA (fertilizer), Norsk Hydro ASA (bauxite/aluminum), and Equinor (oil) – along with environmental groups and academics on Aug. 27, according to a recent Bloomberg report. The government owns major stakes in all three of the companies.
“We think it is very important to safeguard the rainforest,” a Yara spokesperson told Green Markets on Aug. 29. “This has high priority in Yara, and we do our utmost to ensure compliance across the supply chain to prevent the illegal clearing of land.”
The world’s largest wealth fund, Norway’s Norges Bank Investment Management (NBIM), with $1 trillion in investments across more than 9,000 companies, is adding its clout to a growing number of asset managers scrutinizing the wildfires. “We have had a focus on deforestation for several years and follow the ongoing serious situation,” NBIM Chief Corporate Governance Officer Carine Smith Ihenacho told Bloomberg. She said in 2017 the fund initiated dialog with companies that buy and sell soy and cattle products in Brazil. By the end of 2018, the fund had invested $6.2 billion in stocks in Brazil and about $2.8 billion in bonds, according to a holdings overview on its website.
“We have in previous years divested from one soy producer in this region due to links to unsustainable production and deforestation,” said Ihenacho.
Norwegian investment funds Storebrand Asset Management (SAM) and KLP are also reaching out and intensifying their research as to which firms are responsible for the damage. “We have an ambition to exit companies that contribute to deforestation by 2025 should a dialog not achieve the desired changes,” Matthew Smith, SAM Head of Sustainable Investments, told Bloomberg.
Pension fund KLP said it was also reaching out and calling on other large investors and banks to exert pressure on companies such as Cargill Inc., Bunge Ltd., and Archer Daniels Midland Co. (ADM).
ADM stressed that it has taken measures to protect the Amazon, including signing the Amazon Soy Moratorium in 2006, putting in place a “strict No Deforestation Policy,” and satellite monitoring. “We understand the significant role the Amazon plays in our ecosystem worldwide, and we are leveraging our role as a major merchandiser of sustainable crops with a traceable supply chain to help do our part to protect it,” said Jackie Anderson, an ADM spokesperson.
Cargill and Bunge had not responded. Norway and Germany, both concerned over the situation in the Amazon, recently froze millions of dollars for a preservation fund for the Amazon because they said the agreement had been broken.
Brazil President Jair Bolsonaro on Aug. 22 responded to Norway’s fund suspension by saying the country should instead allocate the funds to help German Chancellor Angela Merkel reforest Germany, according to O Globo newspaper. The Norwegian and German withholding was put at R133 million (NOK300 million) and R155 million, respectively. Norway estimates that it has paid some NOK8.3 billion to the reforestation fund over the years.
Bolsonaro, feeling insulted by French President Emmanuel Macron, refused to take €20 million that was recently offered by the Group of Seven (G7) to fight the fires, with more insults being passed back and forth thereafter.
As of Aug. 29, Bolsonaro did ban legal fires for land-clearing for a 60-day period. Fires are still being allowed if set by indigenous people involved in subsistence farming.
In the meantime, perhaps more under the radar, fires are also occurring in outer reaches of the Amazon in Colombia, Peru, and Bolivia, reportedly set by miners, ranchers, and cocaine producers wanting the land for expansion.
Woods Hole Research Center Senior Scientist Michael Coe said at the deforestation rates seen in recent years, the whole forest will lose an area about the size of Virginia over the next decade.
Countries like Colombia, Peru, and Bolivia are not encouraging deforestation, but lack the resources and political will to enforce existing regulations, according to Carolina Gil, an attorney with Amazon Conservation, an environmental protection group.
Brazil has experienced more than 83,000 fires so far this year, up 77 percent from the same period last year, according to the country’s National Institute for Space Research. Meanwhile, Bolivia and Peru have seen their number of fires roughly double during the same period.
In Bolivia, where 19,000 fires have destroyed more than 1 million acres, left wing President Evo Morales has mobilized firefighters and used a Boeing 747 Supertanker to fight the blaze. He said he is open to international help, and called for a summit of Amazon countries to “coordinate immediate actions and long-term plans.”