Why companies need to manage their value chain sustainably
Ensuring your sustainability extends throughout your value chain is now more important than ever as investors increasingly pull investments that do not match their sustainability criteria.
Norges Bank Investment Management (NBIM), the world’s biggest sovereign wealth fund, will exclude Indonesian conglomerate PT Astra International and its subsidiaries Jardine Matheson Holdings and Jardine Cycle & Carriage, it announced on Feb. 29.
NBIM stated that they had serious concerns that its gold mining ambitions in Sumatra represent an unacceptable threat to a critically endangered species of orangutan.
Located within the habitat of the Tapanuli orangutan, of which there are fewer than 800 individuals left, lies the root of the problem – the Martabe gold mine in Sumatra, which is owned by Astra subsidiary United Tractors.
The fund’s ethics council had recommended the company take the action “due to an unacceptable risk that they are contributing to or are themselves responsible for serious environmental damage”.
NBIM attached importance to the fact that the company is planning to significantly increase the mining area during the mine’s lifetime, that new deposits will be exploited if commercially viable, and that the Indonesian authorities have granted permission for mining operations in an area that is as yet undeveloped, NBIM’s ethical council said in its assessment.
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The Growing Environmental Activism Revolutionizing the… 360iResearch™ 1 year ago Made To Work. Josh Budd 3 months ago Apples to Apples: Developing a Framework for… Alex Grant 6 years agoThe NBIM decision was welcomed by observers who saw it as a sign that the world is moving forward on nature and biodiversity-related issues.
“NBIM’s decision is an example of the growing momentum around nature stewardship action among asset owners and asset managers”, said Tony Goldner, executive director of the Taskforce on Nature-related Financial Disclosures (TNFD).
The approach of the [TNFD] is grounded in the need to look at the specific geo-location of impacts and dependencies on nature and biodiversity, and calls out Key Biodiversity Areas as a basis for disclosure of operations in priority locations, according to their website.
NBIM said that the company had been under observation since 2015 over palm oil plantations and the accompanying risks of deforestation.
So, as scope 3 emissions become more and more regulated, taking a hard look at not only your core business but also those of subsidiaries and partner companies will increasingly be under more intense scrutiny than ever before.
Where ESG meets Valuation