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Following a recommendation from the Council on Ethics, at the end of February 2024 Norges Bank announced its decision to exclude the companies (1) Jardine Matheson Holdings Ltd., (2) Jardine Cycle & Carriage Ltd and (3) PT Astra International Tbk from the Government Pension Fund Global due to unacceptable risk of the company contributing to or being responsible for severe environmental damage, ref. the conduct-based criterion in the Guidelines for Observation and Exclusion from the Government Pension Fund Global § 4 e. PT Astra International Tbk has been under observation since October 2015, but that observation now ends given the exclusion decision.
Worth underscoring is the following principle: "The Council takes the view that parent companies which have a controlling influence over their subsidiaries’ business operations are accountable for the actions of those subsidiaries. Jardines is the parent company of JC&C, which is Astra’s controlling shareholder. Astra is the majority shareholder of PT United Tractors (United Tractors), which, via wholly owned subsidiaries, owns 95 per cent of the mining company PT Agincourt Resources (PTAR) that operates the Martabe Gold Mine. (Council Recommendation p. 2).
Also important was the standard off sever impact adopted and applied: "For the Council, the decisive factor is that the Tapanuli orangutan is a critically endangered species and that any further reduction in the size of its habitat would, according to many experts, worsen its situation and increase the risk of it becoming extinct. The company’s efforts to preserve these orangutans does not to any great degree seem to be limiting the mine’s expansion or prospecting deeper into the orangutans’ habitat." Ibid., p. 3.
This standard was critical for the decision to discontinue observation for Astra: "The Council’s observation of Astra and AAL has focused particularly on how AAL conserves and manages biodiversity and areas of high conservation value (HCV) in its concessions. During the observation period, AAL has not opened up any new areas of peat or forest, and has undertaken to preserve High Carbon Stock (HCS) forests, peat and HCVs. The company’s sustainability strategy, which rests on a policy of zero deforestation, no conversion of peatlands and respect for human rights, has been operationalised through three-year action plans. AAL has introduced systems to prevent forest fires, preserve peatland and avoid
deforestation in its supply chain." (Ibid., pp. 3-4).
Please find the Council’s recommendation here and below.
PT Astra International Tbk, Jardine Matheson Holdings Ltd and Jardine Cycle & Carriage Ltd
The Council on Ethics recommends that PT Astra International Tbk (Astra) and the parent companies Jardine Cycle & Carriage Ltd (JC&C) and Jardine Matheson Holdings Ltd (Jardines) be excluded from the Government Pension Fund Global (GPFG) due to an unacceptable risk that they are contributing to or are themselves responsible for serious environmental damage.
The Council’s assessment concerns the Martabe Gold Mine in Sumatra, which is owned by Astra’s subsidiary United Tractors. The Martabe Gold Mine lies within the confines of the critically endagered Tapanuli orangutan’s habitat which constitutes the species sole remaining habitat. The Tapanuli orangutan is the most critically endangered of all the great apes and there are fewer than 800 individuals left. The survival of the species depends on the preservation of this habitat. The Council attaches 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. The Council considers that, as long as PTAR’s activities result in a reduction in the size of the orangutan’s habitat, the risk of the companies contributing to serious environmental damage will remain unacceptable.
Astra has been under observation since October 2015 due to the development of oil palm plantations in Indonesia by one of its subsidiaries, PT Astra Agro Lestari Tbk (AAL), and consequent risk of deforestation and loss of biodiversity. The Council recommends that observation pursuant to this issue be discontinued, irrespective of the decision to exclude Astra on the grounds of its involvement in the Martabe Gold Mine, due to the company’s measures to reduce the risk of deforestation.
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