Norway’s sovereign wealth fund, Government Pension Fund Global, the world’s largest sovereign wealth fund, dropped 11 companies in 2015 over their connections to forest destruction.
Meanwhile in Singapore, our sovereign wealth funds, GIC and Temasek Holdings (TH), operate on a purely commercial basis in order to maximise long-term risk-adjusted returns.
Responding to Workers’ Party member Leon Perera’s question in Parliament if the Government monitors GIC and TH have investments in haze-linked companies; and if so, how much are the total investments of GIC and TH in these companies; and how will GIC and TH ensure that their investment monies do not support haze activities, the Finance Minister, Mr Heng Swee Keat, said:
“The individual investments of GIC and Temasek are the responsibility of their respective management teams, while the Government monitors the performance of their overall portfolio. GIC and Temasek operate on a purely commercial basis in order to maximise long-term risk-adjusted returns, and the individual investment decisions are fully independent of any Government interference or influence. This is an important governance principle that we seek to maintain.
The investment activities of GIC and Temasek are oriented towards generating long-term returns on a sustainable basis. Investing in companies with environmentally unsustainable practices could negatively impact the commercial value of the investments over the long term.
Temasek has stated that it fully supports zero-burning policies for land clearance, and would urge palm oil companies and plantation owners to do the same. GIC has also informed the Government that the palm oil companies in Indonesia that GIC invests in have confirmed that they observe zero-burning policies for their plantations. GIC’s investment teams engage actively with the companies’ management and highlight that such responsible actions are important for maintaining the long-term value of the companies.”
Jessica Cheam an award winning eco-journalist said in September last year that, “Singapore is a major palm oil trading hub and many of its banks are major financiers of agricultural companies in the region. None of these banks however have any policies relating to the environmental, social and governance standards of the companies it gives loans to. This means that they have indirectly financed deforestation activities and, as a result, are also indirectly responsible for the haze.”
She further suggested that our sovereign wealth funds help finance the activities of some of these publicly traded companies which engage in deforestation.
Commenting on the news about Norway’s decisive action taken against errant companies, ex-GIC Chief Economist Yeoh Lam Keong said in his Facebook that it is “ironic that the Norwegians, so geographically far removed from egregious deforestation business practices, can take such decisive financial action to sanction these companies; while we, who suffer so directly and painfully from their environmental damage, do not!”
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