The Oil Palm

Revisiting Norway’s Decision to Cut Out Responsible Small Oil Palm Farmers

Recently, officials from Norway were in Malaysia. Given this, we wanted to revisit the ongoing actions by the Norwegian Government Pension Fund (GPFG) to divest from responsible oil palm development taking place in Malaysia.

The position of the Norwegian pension fund is unhelpful for small palm oil farmers in Malaysia, and sends a signal that Norway does not support oil palm as a means to create a sustainable, improved economic picture for Malaysia’s small farmers and landholders.

Rather, it is elevating the interests of a few vocal groups who prioritise the environment, first, over poverty alleviation (WWF and The Forest Trust). This puts at risk over 300,000 small oil palm farmers.

This is despite Malaysian Palm Oil being the most sustainable and land-efficient oil seed crop on the market today. Further, Malaysia has committed to keeping over half its land as primary forest. According to the UN FAO latest analysis, at least 62 per cent of Malaysia’s total land is forest area making Malaysia a leading example of sustainable practices in the region.

The Malaysian Palm Oil industry is focused on generating an environmental, social and economic dividend for Malaysian growers and the country that will have a direct impact on Malaysian livelihoods.

Read the original blog post here to learn more, including why leading economists deemed the actions of the GPFG, above all, hypocritical.

Norway Penalises Responsible and Sustainable Malaysian Palm Oil
3 April, 2013

A large global pension fund administered by the Norwegian Government has divested from a number of palm oil producing companies in developing countries. The Norwegian Government Pension Fund Global (GPFG) has reportedly divested from a number of Southeast Asian palm oil producers and agribusiness companies, citing concerns about the sustainability of palm oil production.

The fund has provided no independent evidence of unsustainable practices to support the divestment decision. Palm oil is in fact a sustainable and resource efficient crop for producing vegetable oil.

The GPFG – formerly called the Government Petroleum Fund – acts as a fund for the surplus income derived from Norway’s petroleum industries. It is the largest sovereign fund in the world.

Norwegian and international environmental campaigners have lobbied the Norwegian Government to divest from palm oil producers on ‘ethical’ grounds. Norwegian NGOs have also campaigned to reduce national palm oil consumption and targeted a number of major Norwegian food producers.

The RSPO – a certification organisation established by WWF – has supported the fund’s decision to divest. The RSPO claims “to advance the production, procurement, finance and use of sustainable palm oil products”, but it has publically attacked its own members, many Malaysian, and described the divestment as “affirmative”. The function of industry organisations and roundtables is traditionally to defend members, especially those who have gone to considerable lengths both operationally and financially to support the RSPO. The public attack highlights the strategy of influential WENGOs, chiefly WWF, to use the RSPO as a vehicle to assert an anti-palm oil agenda.

NGO campaigning and divestment by the fund could threaten the livelihood of hundreds of thousand palm oil growers in developing countries such as Malaysia.

The Norwegian Government administers the fund and appoints an ethics committee tasked with providing divestment advice on activities they deem ‘unsustainable’.

Norway has amassed a vast wealth based on extracting and exporting fossil fuels which have been linked to greenhouse gas emissions; this wealth has been stored in sovereign wealth funds which are managed by the government pension fund. But it now appears that the very economic activities behind the fund would not meet the administrators’ own ‘ethical’ investment requirements.

Not only are the grounds of divestment weak – the palm oil industry is well regulated and must meet strict government environmental and conservation standards in Malaysia – it is also hypocritical.

Eminent American economist Richard Rahn, highlighted such hypocrisy in Norwegian policy when referring to the countries stance on tax havens: “Norway, which now has the highest, or closest to the highest, per capita income on the planet due to its immense oil reserves and relatively small population, has decided to beat up on a number of poorer countries that do not have the luck to sit on a vast pool of oil.”

Norwegian divestment from palm oil producers in Asia highlights a concerning environmental policy paradigm: the developed North are content to continue with environmentally damaging business operations in order achieve and maintain high living standards; at the same time they requiring the South to minimise develop through sustainable agricultural industries.