Tackling the Tackler: Norway’s Climate Stance

Norway, a global afterthought since hosting the Winter Olympic Games in 1994, is at it again.

The Norwegian environmental collaborators have kicked off their latest black campaign against Malaysian national interests, and it is aimed at hurting Malaysia’s 650,000 small farmers.

Norges Bank Investment Management (NBIM) stated in February that it has started an ethical dialogue with three Malaysian banks over their financing of palm oil operations.

NBIM is the entity responsible for the investments of Norway’s Government Pension Fund Global (GPFG); it is the largest sovereign wealth fund and the world’s largest equity investor.

The move by NBIM to open this dialogue – and indeed some of its previous divestment actions against palm oil companies – has excited anti-palm oil and environmental activists.

The hypocrisy of the situation is breathtaking.

NBIM’s issue with palm oil is, according to its own reports, the contribution of deforestation to climate emissions.  Yet NBIM has completely ignored the fact that palm oil’s contribution to global deforestation is tiny compared with other agricultural sources. A reminder from EU research on deforestation: Of all global deforestation, 24 per cent is from livestock (i.e. beef), 5.4 per cent is from soy, 3.3 per cent is from maize, and 2.5 per cent is from oil palm.

By contrast, NBIM has overlooked these other commodities that are proven to be vastly more significant in terms of global deforestation. The anti-palm oil bias is clear.

Other commodities, however, are not NBIM’s most prominent oversight. There is a much larger elephant in the room that Norway thinks it is possible to ignore: Norway’s current and historical economic dependence upon environmentally-destructive fossil fuel, i.e. oil, revenues.

It is estimated that since the 1970s, the total contribution of Statoil, the Norwegian state-owned oil company, to Norway’s economy has been around USD1.7 trillion. It has made Norway one of the wealthiest countries on the planet relative to its size; it has essentially made Norway’s sovereign wealth fund into what it is today.

Currently the Government of Norway still holds 67 per cent – two thirds – of Statoil’s stock. It continues to be the largest shareholder and continues to benefit from the company’s oil revenues.

According to its critics, Norway – through Statoil – is a major contributor to climate change.

One NGO estimates that Statoil has been responsible for around 0.5 per cent of global fossil fuel emissions over the past 30 years. For one company, that is an extremely large contribution. It is being sued in the state of California for its contribution to environmental damage caused by the rise of sea levels.

Despite this track record of government-endorsed fossil fuel extraction, Norway apparently now has appointed itself as the moral arbiter for everyone else. The problem is that its morals are wholly biased against the developing world. Rich-world polluters are not treated with the contempt that Norway has shown for Asian small farmers of oil palm. Norway’s pension fund is not, for example, divesting its holdings in companies such as Royal Dutch Shell. It is not calling on the Government of Norway to sell out of Statoil.

And it’s not just NBIM that’s selling out developing countries. The Parliament has also piled in. In the middle of last year, Norwegian parliamentarians called for a ban on palm-based biofuels for their renewable fuel mandate, which they had raised to 20 per cent. This would provide a boost to Norway’s own fledgling biofuels sector. If Norway – and Norwegians – are so concerned about sustainability, they should consider weaning themselves off oil and start spreading benefits globally, and not only limited to inefficient Norwegian biofuel producers.

Consider the other points of hypocrisy in its action against palm oil and the palm oil supply chain, where Norway ignores the broader economic and social benefits of palm oil.

  • Palm oil provides food, but also biodiesel that is renewable. Statoil’s oil provides neither.
  • Palm oil provides jobs and supports independent livelihoods in rural areas in emerging and developing economies, pioneering poverty reduction and social development. Statoil’s oil provides neither.
  • Palm oil gives small landholders the ability to independently improve their living standards and diversify crops, broadening their income base. Statoil’s oil does neither.
  • Oil palm plantations can be established with relatively small amounts of capital, giving small landowners an achievable base for intergenerational investment. Statoil’s drilling operations require significant amounts of capital.
  • Oil palm smallholder schemes have brought millions of people out of poverty. Statoil’s operations have simply bolstered the wealth of an already rich economy.

There is a patronising element of Western guilt in Norway’s actions. The country’s apparent ‘conscience’ on palm oil prompted it to throw billions of dollars at failed aid programs that attempted to compensate developing countries for not cultivating oil palms.

Norway’s government failed to appreciate that economic development isn’t simply about accepting welfare payments from a wealthy benefactor.

And this same level of patronising behaviour is apparent in its recent actions. Norway is questioning the conduct of banks in Malaysia for financing palm oil operations that will provide jobs and income for people across the ASEAN region. Apparently this is behaviour that should be sanctioned.

It is very easy for a wealthy country to judge the behaviour of its less well-off economic partners. But Norway has a small population, it is sparsely populated and very homogenous. The population of the entire country is less than that of Kuala Lumpur. It is around a quarter that of Greater Jakarta. It has never needed to make a transition to large-scale agriculture. And its energy needs are provided by oil.

In other words, Norway’s understanding of how the rest of the world lives is limited at best.  Norway seems to make the assumption that every other country can be Norway. But this simply isn’t possible. (Although – given that the Barents Sea is no longer full of gas, and oil prices are no longer anywhere near $100, it’s unlikely that other countries would even want to be Norway)

The critical point is that there is a different set of development priorities almost everywhere. The sooner Norway wakes up to this the better.

Sure, a dialogue is a good way to start a conversation on sustainability. But attempting to shame the palm oil sector, which has done so much good in the developing world, is hardly a way to generate goodwill. Especially when you are not willing to hold your own country to the same standards.

#Policy News