World’s largest SWF picks soy as next divestment target

Norway's sovereign fund has exited one of Brazil's largest agribusinesses, the latest in its moves away from assets it deems linked to deforestation.

The Norwegian Government Pension Fund Global is accelerating efforts to dump ag and forestry investments it sees as environmentally risky.

In the latest instalment of the policy, Norway’s $1 trillion sovereign wealth fund divested its stake in SLC Agrícola, one of Brazil’s largest agribusinesses, in which it had initially injected $30.5 million in 2012. The size of its holding then fluctuated from a low of $6.3 million to a high of $35.4 million, reached in Q4 2015. Its stake prior to the exit was valued at $26.9 million.

“The production of soy has been linked to deforestation in Brazil, as previously forested areas are converted to agricultural land,” NGPF said in its annual report, released this month. “Certain land conversion practices can result in increased greenhouse gas emissions, reduced biodiversity, increased water stress and pollution of existing water sources, as well as negative impacts on local communities.”

SLC Agrícola’s holdings cover 323,000 hectares across 15 farms in the states of Mato Grosso, Goiás, Bahia, Piauí, Maranhão and Mato Grosso do Sul. The company is said to have cleared nearly 40,000 hectares of forest since 2011.

The move comes after the fund took a strong stance against palm oil producers, exiting 29 companies between 2012 and 2015. It then broadened its scrutiny to pulp and paper producers, four of which got dropped from its portfolio in 2016. NGPF’s divestment from a soy business on environmental grounds is its first.

“When assessing companies, we consider the geographical footprint of their operations, the percentage of the business linked to the production of soy and other agricultural commodities, documented land conversion activities and the percentage of their operations certified by the Round Table [a standard of sustainability],” the fund said.