The Norwegian Government set up a Council on Ethics by Royal Decree on 19 November 2004.
The purpose was to oversee the investments of the world’s largest Sovereign Wealth Fund the Norwegian Government Pension Fund Global with assets exceeding US$800 billion – a remarkable sum derived from oil. ( All about the fund here ).
Norway’s population is less than 6 million.
In 2012 the Council on Ethics produced a particularly damning report on Sarawak-listed company Ta Ann Berhad Holdings; as a result Norway’s Sovereign Wealth Fund sold millions of dollars’ worth of shares in this company, in part, because:
Ta Ann’s conversion of tropical rainforest into plantations is highly inconsistent with international initiatives to prevent deforestation. ( Read a report here ).
Ta Ann uses Tasmanian public forests to source billets for peeling in their Tasmanian factory which when peeled are laminated into boards manufactured in Sarawak. These laminates are peeled under a contract spelt out on 18 Dec 2005 in a MOU between Ta Ann, Newood and Forestry Tasmania – a MOU that has so far cost the Tasmanian and Australian taxpayers close to $50 million.
It could be suggested that in the future Sarawak and Tasmanian peelings if accidentally mixed could gain FSC accreditation should they be confused at the point of lamination in Sarawak.
For this to happen Forestry Tasmania must gain FSC accreditation as a result of the $7 million gifted for that purpose under the now scrapped TFA.
It should be born in mind that the monitoring of Ta Ann and its operations in Sarawak as evidenced by this Council of Ethics report is seemingly impossible.
For this reason FSC accreditation of any form over billets sourced from Tasmanian native forests and then processed here at a loss should not, I repeat not be given to Forestry Tasmania while the MOU with Ta Ann remains valid (and redacted).
The contents of the 18 December MOU between Ta Ann, Newood and Forestry Tasmania will be discovered.
This document will provide an insight for the FSC regulators as to the volume and sustainability of logged Tasmanian public forests producing peeler billets at a contracted loss to Forestry Tasmania. These are supplied to Ta Ann which in turn also makes a loss on peeling; is this a case of possible transfer pricing, prior to the product being exported to Sarawak?
Those determining FSC over Forestry Tasmania and our public forests should demand to see the non-redacted version of the MOU.
The 21-page Norwegian Council on Ethics report – with all its references – is tabled here on Tasmanian Times: http://www.regjeringen.no/pages/1930865/ta_ann_eng.pdf
This provides an independent summary suggesting why Tasmania should play no further part in Ta Ann’s global corporate structure.
The recently elected Centre Right Government in Norway has scrapped the Ethics Council and placed the making of ethical decisions back with the oil fund and the Norwegian Central Bank.
An extract from the Council on Ethics report:
1 Summary
The Council on Ethics for the Norwegian Government Pension Fund Global (GPFG) recommends the exclusion of the Malaysian company Ta Ann Holdings Berhad ( Hereafter Ta Ann ) from its investment universe due to an unacceptable risk of the company being responsible for severe environmental damage.
Ta Ann is a Malaysian logging and plantation conglomerate that is involved in the logging and conversion of tropical forest into oil palm and timber plantations. Its principal operations are located in Sarawak in Borneo, Malaysia. Ta Ann also runs plantations and sawmills in Tasmania, Australia.
The Council has assessed the environmental impact of the logging and clearing of forests in Ta Ann’s licence areas in Sarawak. In its assessment, the Council has emphasised the scale of the damage and to what extent it has long-term and irreversible impacts, whether the damage is a result of violations of national laws or international norms, and what the company has done to mitigate impacts. The Council has focused particularly on the extent to which the company’s licence areas overlap with areas containing important ecological values, and what consequences the conversion of forest will have for endangered species and their habitats.
The Council has communicated with Ta Ann on several occasions since 2010, and the company has provided documents pertinent to the licence areas. Nevertheless, the recommendation is based on limited information, as the company has not provided details of important aspects of its operations.
Ta Ann’s timber licence areas cover 360,000 hectares, of which more than 300,000 hectares overlap with plantation licenses. At least one-third of this area, and probably more, will be cleared and converted to acacia plantations and oil palm plantations. A third of Ta Ann’s licence areas are situated within the Heart of Borneo, and all of the licences overlap with the Sundaland Biodiversity Hotspot, which is considered to be one of the most biodiverse regions on earth. Ta Ann’s own environmental impact assessments show that the forest contains important ecological values and is home to a number of protected species, including many on the red list of threatened species maintained by the International Union for Conservation of Nature. These species are declining quickly because their habitats are disappearing due to logging and the conversion of forests into plantations. In the Council’s view, there can be no doubt that the destruction of more than 100,000 hectares of tropical rainforest in one of the world’s most biodiverse regions will have serious, irreversible consequences for biodiversity and the ecosystem services delivered by the forest. The Council considers it likely that the remaining forest will also be strongly affected due to edge effects and the increased fragmentation of forests and habitats.
Ta Ann has pointed out that the company is implementing a number of measures to reduce environmental damage. For example, the company has stated that better planting methods mean the removal of less forest. The company has also emphasised that buffer zones along waterways are being set aside as wildlife corridors, that logging is avoided in steep terrain, and that biologically important areas are being protected. The Council considers it positive that Ta Ann is taking such steps, which indicate that the company is seeking to steer its operation in a more environmentally friendly direction.
The Council is nevertheless of the opinion that these measures appear insufficient to protect the habitats of endangered species and ecosystems. Even though patches of forest, buffer zones along waterways and wildlife corridors are important for biodiversity and ecological functions locally in these areas, the Council does not regard it as proven that the areas that are being set aside will in fact function as sustainable habitats for endangered or wide-ranging species, or that they will help to maintain the rich biodiversity that has been documented in the licence areas. The Council has also given weight to the documented risk that orangutans and other endangered species may have their habitats in Ta Ann’s licence areas. Two of the company’s licence areas border on the Lanjak Entimau Wildlife Sanctuary. In the Council’s opinion, this proximity to the sanctuary demands that a precautionary approach be taken. The surveys conducted by Ta Ann appear to lack the systematic approach needed to confirm that Ta Ann’s operations will not destroy valuable habitats. The Council takes the view that this increases the risk of severe environmental damage.
The Council considers it positive that Ta Ann conducts surveys of conservation values in forest areas before logging. The Council has only had access to one such report, relating to two coupes. The report does not make it clear how the conservation values were identified, or how they are evaluated in a larger landscape context. Based on the information Ta Ann has provided to the Council, the Council finds it unlikely that the assessments undertaken by Ta Ann ensure the protection of important conservation values.
Given that the conversion of tropical forests involves the complete, irreversible alteration of affected ecosystems, that the scale of deforestation is large, and that these operations are being pursued in areas with a particularly rich biodiversity as regards species, habitats and ecosystems, the Council has concluded that the measures implemented by Ta Ann to reduce the adverse effects are insufficient to secure a material reduction in the risk of severe environmental damage now and in the future. The Council therefore recommends the exclusion of Ta Ann Holdings Berhad from the investment universe of the GPFG.
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