IJM, Genting among blacklisted
Published on: Monday, September 14, 2015
Kuala Lumpur: IJM Corp Bhd has been blacklisted from the investment list of Norway's Government Pension Fund Global (GPFG).On Aug 17, the fund's manager Norges Bank Investment Management announced a decision to drop IJM Corp and three other companies from GPFG's investment list, saying they cause severe environmental damage. Genting Bhd and South Korean steelmaker Posco, with subsidiary Daewoo International Corp, are the other companies.
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IJM Corp owns 55.19 per cent stake in the oil palm grower.However, IJM Plantations CEO and Managing Director Joseph Tek Choon Yee says: "European countries view us differently. The main issue is we have a different definition of deforestation. For instance if someone sees you using a buffalo in your plantation, they may say I do not like this... it is animal cruelty."Whether it is prejudice, we respects its decision. It is its right, its money, so it may want to take a view, that's what it wants to invest."He stresses the exclusion from GPFG's list has not affected the company.
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"it did engage us with but there were differences. When we embark on green-field development, we always adhere to regulatory framework and put best practice in place. In this case, it (GPFG) is looking at the environmental aspect but we are looking at the social environment aspect and sustainability."For instance, if it sees you clearing the forest, it sees this is not what it wants to invest in. Also it is under scrutiny by others, so it takes the view of no more plantation stocks, (just) like shariah-compliant counters where there are no sin stocks on the list," he adds.
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Despite IJM Corp having downplayed the exclusion's impact, its share price fell 12 sen to RM6 on Aug 18 - the day after the announcement. The benchmark FTSE KLCI closed seven points higher at 1,579.6 points on that day. IJM Plantations was unchanged.GPFG divested itself of IJM Plantations in 2011; but it is believed it fully exited IJM Corp only before the announcement as the fund was not among its 30 top shareholders as of June 30, based on a shareholding analysis in IJM Corp's 2015 annual report. Bloomberg data show Norges Bank holding a 1.37 per cent stake in IJM Corp as of Dec 31.IJM Plantations says the withdrawal will not dampen its progress towards the first Roundtable for Sustainable Palm Oil (RSPO) estate certification by 2018. Tek says the company remains on track to reaching its goal three years from now. The company has been an RSPO member since 2004.Refuting an accusation by the fund's Council of Ethics (CoE) of an "unusually long timescale for building a more sustainable operation" on its RSPO journey, Tek says the planter is adopting a phased approach."Every company has a different journey because of the differences in resources and size. You may want to address it as a priority. We start with local certification and what is mandatory. Then we move to ISCC (International Sustainability and Carbon Certification). So we are also on the roadmap to 2018 RSPO certification," he says.Compared with voluntary initiatives like RSPO and the Malaysian Sustainable Palm Oil, the Indonesian Sustainable Palm Oil system is mandatory and applies to all oil palm growers in Indonesia."Eventually we will be RSPO-certified but now we want to take things stage by stage because we need time to build capacity, to groom people to be able to adopt these certifications," Tek says. IJM Plantations plans to achieve 100 per cent RSPO certification of its estates by 2020.He believes some of the certifications are tools necessary to sustainability; but he also sees a need to appreciate "a common but differentiated responsibility"."We all care for the environment but we are also in the business and the world needs palm oil; there is a need to make a balance."The mid-sized planter with 60,000ha in Sabah and Indonesia intends to try its fortunes in the downstream segment.Its plan to set up a refinery with Kuala Lumpur Kepong Bhd (KLK) at Sangatta in East Kalimantan is pending approval for the building of a jetty before constructing a factory.KLK holds a controlling stake of 63 per cent in the planned refinery. IJM Plantations has 32 per cent and the remaining 5 per cent is held by an Indonesian.The exclusion of IJM Corp and Genting came after a recommendation by GPFG's CoE, which said the firms or their subsidiaries are responsible for the destruction of tropical forests in Indonesia and Malaysia.According to a four-year investigation by the CoE into IJM Plantations' four concessions in East Kalimantan, Indonesia, the body says, the conversion of natural forest and habitats into oil palm plantations by the company "entails the irreversible alteration of ecosystems and vegetation, with potentially major impacts on biodiversity".It further maintains IJM Corp did not seem to be implementing measures to prevent the loss of important conservations values."The council has contacted the company several times with questions about its operations, including what steps the company is taking to mitigate the environmental damage associated with the conversion of forest into plantations, but has received no response," the report reads.Established in 1990, the oil fund is committed to transparency and ethical investment. GPFG has a wide range of ethics criteria which firms on its portfolio must fulfil; causes for exclusion are nuclear arms and weapons-making, tobacco production and human rights violations.In 2012 and 2013, the fund's decision to invest itself of its interests in 27 Malaysian and Indonesian palm-oil producers created a stir in the market.Before IJM Corp and Genting it excluded Malaysian-owned Samling Global Ltd, Lingui Developments Bhd, Ta Ann Holdings Bhd and WTK Holding Bhd from its investment list.Stay up-to-date by following Daily Express’s Telegram channel.
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