UNI Storebrand considers dropping mining giant? Environmental investment fund is a bluff

By Harald Eraker, Tarjei Leer-Salvesen and Morten Rønning
Norwatch

When UNI-Storebrand's environmental investment fund was announced last year, UNI received much special mention in Norwegian media. They have been positively referred to for their initiative not to invest in the environmentally worst companies, and have since been put forward as an example of dependable stock market activity.

But investigations carried out by NorWatch shows that several of the Fund's ten largest investments (as per 30th June 1996) are in companies which have dark stains on their environmental records.

After several attempts to get a comment from UNI, NorWatch got a meeting with the environmental section of UNI Storebrand. A week later NorWatch received a note from UNI where it is denied that there has been given an interview in this matter, and that if any quotes from the first interview are used, UNI will claim that these are fabricated.

UNI's environmental fund chooses companies quoted on the stock market, primarily based on an economic analysis by the American company Scudder. Those who pass this needle's eye for economic profitability, are companies which afterwards are analysed by UNI's two full time environmental analysts, according to UNI Storebrand's environmental criteria (see box).

– In order for EVF (The environmental fund) to invest in a company, it must score at least above average for the relevant sector, and preferably be among the top 30%, writes Carlos Joly in his note to NorWatch.

In other words, the selection is primarily based on economic performance. In reality this means that many companies with better environmental performance than the selected ones, are rejected from the very beginning.

For example: Among the around 14.000 mining companies in the world, UNI's analysts have only evaluated 20. For all sectors, UNI Storebrand have evaluated around 300 companies.

– It is a fact that we live in a market oriented society, and that is the way most people want it, Joly writes, who also has stated in a meeting with NorWatch that the EVF also has as one of its aims to get as much profit as possible.

UNI's environmental value fund invest in most sectors, also sectors UNI admits have a poor environmental record.

– The electronics industry is not a particularly clean industry, Joly writes, and lists up waste and pollution problems in its wake.

– Why does EVF invest in companies when we are aware that they are not clean? We live in the electronics age, Joly continues, and is of the opinion that that is why it is important to invest in companies which are among the best with regard to environmental- and financial performance.

NorWatch has not got access to UNI's analyses of the investment objects. However, both from UNI's own environmental criteria and from their massive profiling of the fund as environmental, it is difficult to find «companies which take the environment and nature into consideration».

On the contrary, the fund has bought shares in companies which operate in stark contrast to the fund's green image, an image UNI has focused on in repeated media statements.

As an example, four of the companies are active in the «nuclear industry», an activity UNI-CEO Aage Korsvoll strongly has stated not to invest in.

– We have excluded two sectors: Tobacco and nuclear power producers, says Joly, who claims that UNI executive director Korsvoll was misquoted in the Swedish newspaper, even tough he admits not to have been present during the interview.

RTZ, one of the companies the fund has invested most money into, have had so much opposition since 1978 that there has been established an organisation which Uniquely works with the environmental sins of RTZ around the world - sins which destroy the very basis for existence of indigenous people.

– We acknowledge now that RTZ is a dubious investment object, and will take this up for discussion internally. Maybe we end up with selling the shares, Joly says in the first interview.

Later Joly claims that they have never said that RTZ has a doubtful environmental record, but «on the contrary, we are of the opinion that RTZ has a good environmental representation within their sector.»

Also in relation with RTZ, Joly shows to the fact that «we live in a world which is very dependent on metals. Therefore we only invest in the best mining companies, seen from both environmental as well as financial perspectives.»

As an answer to the criticism that RTZ is involved in the nuclear industry through its uranium mines, Joly states:

– The uranium mines only represents less than 1% of the sales of the company. Therefore we have not focused on them.

Following a question from NorWatch, UNI must still admit that RTZ is one of the world's largest suppliers of uranium to the nuclear industry.

Two of the other ten largest investments the EVF has made, are also companies with such bad environmental records that organisations exist with the sole purpose of monitoring their activities. These are Daimler Benz and Bayer.

Daimler Benz is, among other things, Germany's largest exporter of arms, and supplies mines, tanks and other offensive weapons.

– Daimler Benz gets 4% of its sales from defence and the civil system. Storebrand Scudder EVF is not a pacifistic fund, and have no exclusion criteria for companies with less than 10% of its activities within defence. We believe that it is Norway's and other countries' right to defend its values and population, Joly replies in his note to NorWatch.

In other words, UNI's environmental fund seems to turn pacifistic when a company has more than 10% of its activities within defence?

The «democratic countries» Daimler Benz sells arms to, include Iraq, Nigeria, Syria and Turkey.

In spite of the fund's guidelines using CO2-equivalent in relation to production which causes the greenhouse effect as a criteria for selection of companies, UNI has invested in Praxair. Praxair is the world's largest producer of CO2 for industrial purposes, in addition to other most feared greenhouse gases, which the State Pollution Authority SFT is actively working to reduce extent of.

– Of the total amount CO2 Praxair supplies, 50% is used in solid compounds, and therefore does not end up in the atmosphere. The remaining CO2 is used for production of carbonated drinks, like Coca Cola and sparkling mineral water, says Carlos Joly, who admits that he is unaware of the fact that Praxair produces the gas sulphur hexaflouride, a considerably stronger greenhouse gas than CO2. Later, Joly has sent NorWatch a note, where he states:

– Praxair also distributes hexafluorides and halocarbones for the electronics industry for the production of computer chips. These gases - also known as PFCs - are among the strongest greenhouse gases, and have a lifespan in the atmosphere of up to 50.000 years. These gases are not yet regulated in the USA.

UNI is of the opinion that Praxair has approached this important problem, because in 1996, the company was given a patent which makes it possible to separate and recycle PFC. If UNI's analyses shows that Praxair is one of the most environmentally sound companies in its sector, fundamental questions are raised around the validity of calling the investment «environmentally sound». Based on the criticism of the investment object WMX (see later in the text), a company who has received numerous fines for illegal discharges/emissions, UNI responds:

«It is a well known fact that all waste treatment companies have environmental accidents. WMX is the World's largest waste management company, it consequently is very exposed in environmental context. What qualifies or disqualifies a company, is not the number of accidents or mistakes or failures as such, but the number of accidents in relation to the total activity of the company, says Joly, who points to a reduction in number of fines from 1991 to 1994.

UNI does not only break its public promises when it comes to the nuclear industry.

Carlos Joly stated to Aftenposten on 4th December 1994 that the chemical giant BASF was a non-starter as an investment object. Still, the fund invested in the Skandia-group, one of BASF's stock holders.

In addition, Skandia has ownership in other infamous companies like Total, Shell, Unilever and Mitsubishi.

But Joly tells NorWatch that they have not considered Skandia's investment in other companies.

– As of today, there are only a few bank and insurance companies who base their investments on environmental criteria. Storebrand EVF is a Unique example. (...) When it comes to Skandia's investment policies, they do exactly as other companies do (which makes it impossible to do an evaluation), writes Joly and points to the fact that they evaluate the activities of the insurance company (Skandia) itself.

In spite of the criticism, UNI Storebrand says that they have a green and clean conscience. According to UNI, the EVF plays an important environmental function in steering the financial forces to chose greener alternatives.

– Many well intended programs by NORAD, UN, FAO and other organisations have been failures; others have been successful. An environmental fund can not be expected to solve all the problems of the World. The environmental efficiency is what we are focused on. (...) We are convinced that our concept results in a stock portfolio which can be proven to be environmentally better than others, Joly says.

That «best within each sector» in this context not necessarily means environmentally friendly, seems clear.

When UNI publishes the complete list of investment objects, it will be interesting to see which other «environmentally friendly» companies turn up.

UNI's green investment fund
Storebrand Scudder Environmental Value Fund is operated by UNI Storebrand in Luxembourg. The fund has at its disposal a capital of approximately USD 79 mill. The largest investors are UNI Storebrand, Orkla, Trygg Hansa (Sweden) , Swiss Reinsurance Co. (Switzerland), Anova Holdings (Switzerland) and Gerling (Germany). The 9 indicators UNI has selected to measure the environmental efficiency of a company are: 1. Global Warming, 2. Depletion of the ozone layer, 3. Efficient use of materials, 4. Toxic discharges, 5. Use of energy, 6. Use of water, 7. Environmental claims, 8. Quality of environmental management, 9. The environmental qualities of the product. The fund is run by UNI Storebrand in Luxembourg, but the companies are selected in co-operation with the North American fund manager Scudder, Stevens and Clarc, which first perform an economic analysis of the companies. Thereafter, UNI's own analysts perform an environmental analysis of the company, which is based on the companies own annual report, environmental report, interviews with the company's environmental manager, independent environmental consultants, industry sources, environmental reporting services, environmental related publications and contact with independent organisations, NGO's. In addition, UNI sends the companies a questionnaire where the companies have to report back on how they fulfil the guidelines mentioned above.

In the following, NorWatch will print the main elements of the criticism against 7 of the 10 companies where UNI has made the largest investments:

RIO TINTO ZINC
The English mining company Rio Tinto Zinc (RTZ) is the world's largest, and co-operates broadly with other mining companies.

Environmental consequences:
Over half of all RTZ's mines meet resistance from local populations and employees, according to a report on the company by World Development Movements, September 1996.

RTZ owns 12% of the Freeport Mine in Irian Jaya, Indonesia. This gold and copper mine releases 110.000 tons of waste a day, and a total of three rivers are heavily polluted.

The large amounts of heavy metals have left the fresh water undrinkable for the indigenous people in the area, mainly the Amungme and the Komoro people. The indigenous people have also had to stop eating sago, their main supply of nutrients, because of the pollution.

In March 1996, after what they felt as heavy oppression by the company, the indigenous people went to a revolt against the mine, and stopped the operation for three days. Forces from the Indonese government was put in against the revolt, and more than 30 people were killed in the conflict.

Source: Survival International, England, Mineral Policy Institute, 1/96 Australia.

Bourgainville, Papua New Guinea. RTZ mined gold and copper in co-operation with its subsidiary Conzinc Riotinto of Australia, until 1988. When RTZ did not pay compensation for the environmental damage, the indigenous people revolted and closed the mine. Military forces from Papua New Guinea have tried to regain control over the island since. The indigenous people want independence and autonomy. The mining activities have led to large damage to the rainforest, the Jaba river is dead and the Empress Augusta bay is filled with waste to a depth of 30 meters. RTZ wishes to restart its mining operations.

Source: Mineral Policy Institute, Australia, Bourgainville Freedom Movement, 1996, Australia.

The environmental authorities offered RTZ economic help in cleaning up toxic discharges from their copper mine in Bingham Canyon, USA. RTZ rejected the offer and were of the opinion that they would do the job better themselves.

Source: Partizans, 1996, England.

In 1991, RTZ pulled out of plans to mine gold in Poducarpus National Park in Equador after local and international pressure. The park is identified by the UN as one of the World's most worthy of protection. The Norwegian company Ecuanor AS also had to pull out of the park. RTZ still has permission to mine in protected areas in Equador.

Source: Accion Ecologica (Equador), Arcoris (Equador), A-magasinet (January 1993).

Lihir, Papua New Guinea. The subsidiary company CRA is about to extract the large gold resources at the Lihir Island. The mine is planned opened in December 1997. The island is too small for storage of waste, and 89 million tons of waste as well as 330 million tons of rocks will be dumped in the ocean, at 125 m depth. This will release large amounts of heavy metals. The company itself expects that 7 km of the surrounding coral reef will be destroyed. The area contains one of the most diverse marine ecosystems on Earth. The company does not have any overview of the long term effect of such discharges. The mine will also destroy the holy burial sites for the indigenous people on the island.

Source: Mineral Policy Institute, 1/96 Australia.

Nuclear industry:
RTZ runs the Rossing uranium mine in Namibia. The mining Union confirms that several hundreds employees suffers from respiratory diseases and cancer. RTZ resists court cases in England, and maintain that these must be held in Namibia. Until now, this has not happened.

Source: Partizans, 1996, England.

Since 1985, the subsidiary CRA has planned operating the uranium mine Kintyre/Ruddal River in Australia, within the Rudder River National Park. The park is the second largest in Australia. The aboriginals in the area are fighting the mining activities. In 1994, the area where the mine lies was separated from the national park. In 1996, CRA re-started studies of the area, after having been away for some years.

Source: Mineral Policy Institute, 2/96 Australia.

Ozone depletion:
Instead of solving the problems by either stopping the activities or change the production, RTZ in 1990 sold its entire CFC industry to the chemical giant Rhone Poulenc. The sale was strongly criticised.

Source: Partizans, 1996, England.

PRAXAIR
«Praxair cracks air» it says in the company's own advertisement material. Praxair is North American, and one of the world's largest producers of industrial gases.

Environmental consequences:
The World's largest producer of industrial CO2.

Produces the gas Sulphur Hexaflouride, one of the strongest greenhouse gases. Sulphur hexaflouride has a lifetime of 50.000 years in the atmosphere and will, during a period of 100 years, contribute 24.900 times as much to the greenhouse affect as a similar amount of CO2. In addition, the gas depletes the ozone layer. In Norway, work to reduce the use of this gas has been ongoing for several years.

Produces several other important greenhouse gases, which they combine with among other things crude oil and natural gas.

Source: Praxair Inc. (USA) and SFT, Pollution in Norway 1995.

Nuclear Industry:
Through its subsidiary, CBI Services, supplied the nuclear industry with equipment as late as 1991.

Source: Ethical Consumer, England.

MATSHUSHITA
The World's largest producer of electrical consumer goods, 250.000 employees, a turnover the size of a Norwegian budget. Matshushita is parent company to Panasonic, among others.

Environmental consequences:
In 1991, discharged 500 tons toxic waste in the USA, an increase of nearly 300% from 1989.

Source: Council on Economic Priorities, USA: Social Profile on Matsushita Electric Industrial.

Nuclear industry:
Through its subsidiary Panasonic, Matsushita supplies the nuclear industry with computer systems, TDL equipment, neutron detectors, environmental surveillance systems and radioactivity measurement equipment.

Source: Ethical Consumer, 1996, England, Nuclear Engineering International (USA), Yankee Com 1996 (USA).

BAYER AG
Bayer AG is one of Germany's largest companies, and among the world's largest producer of pesticides and chlorine.

Environmental consequences:
Bayer is criticised for not being able to account for the location of their waste. In 1992, a German business man sent 450 tons of very toxic hazardous waste to Albania by ship, and labelling the transport «humanitarian aid». The waste was pesticides produced by Bayer. Several of the compounds was declared illegal in Germany. Greenpeace worked intensively with the issue for more than two years, and in November 1994 the hazardous waste was returned to Germany.

Exports hazardous waste to several developing countries, Guatemala among others.

Sources: Global Pesticide Campaigner, USA, no 4 December 1994 and no 5 1995, and Keycode Bayer October 1995, Germany.

In 1995, Greenpeace identified Bayer and its associated company Buna as large producers and consumers of chlorine. Greenpeace documents the health and environmental effects of chlorine and chlorine organic compounds, and identifies the links between the latter and cancer in humans and animals, and focuses on the role of chlorine in hormone disruptive chemicals, or so-called gender benders. Gender benders is seen as an important cause of reduced sperm quality.

Sources: Ethical consumer, England; Body of Evidence, Greenpeace 1995, Netherlands.

Miscellaneous:
After the second World war, Bayer was separated out as the largest subsidiary of IG Farben, the company which was responsible for much of the forced labour in and the construction of Auschwitz and other nazi concentration camps. At a meeting 21st August 1996, the group Co-ordination Against Bayer Dangers demanded that Bayer must pay its share of the compensation to the concentration camp victims. But the company refuses.

Sources: Keycode Bayer January 1996, Germany. Co-ordination against Bayer Dangers, Germany.

WMX
WMX is American and one of the 100 largest companies in the World, and the largest within waste management. Their turnover is more than 100 billion USD a year.

Environmental consequences:
The subsidiary UK Waste was charged and fined 25.000£ in Cardiff in January 1995 for discharges into the sea. The compensation was put at 12.000£. The discharge in Barry Dock in Cardiff killed several thousand fish.

Between 1980 and 1990, WMX paid 45 million USD in environmental fines and out of court settlements. During the same period, the company was summoned to court more than 600 times for environmental crimes.

In 1992, the subsidiary Chemical Waste Management pleaded guilty to 6 serious crimes by not warning the authorities of discharges of toxic compounds. The company was fined 11.6 million USD. The US Department of Justice described the case as the most serious environmental crime ever.
 
WMX is responsible for the collection and recirculation of plastic materials in several cities in the US, but in 1992, recirculation stood for less than 3% of the turnover. At least a quarter of all collected plastic materials in the US ends at garbage dumps in the Philippines, Bangladesh, Guatemala, Hong Kong and China.

There has been reported numerous illegal discharges from WMX's garbage dumps. In Kettleman City in California, EPA's measurements indicated 2-4D, trichlorethane and radioactive particles. (2-4D was one of the compounds in Agent Orange, a very toxic pesticide used by the Americans during the Vietnam war.) The latter is not allowed dumped at garbage dumps.

After a long battle, and by the use of the legal system, the local population of Kettleman City managed to prevent the construction of an incineration plant.

WMX is accused of environmental racism. Most of their incineration plants and garbage dumps are located in areas populated by Americans with African or Hispanic background. WMX also operated an incineration plant in a North American Indian reservation.

Sources: Political Ecology Group, 1994, USA. 

DAIMLER BENZ
Daimler Benz is Germany's largest industrial company.

Environmental consequences:
According to Critical Shareholder of Daimler Benz, the company does not orient itself towards a future technology based on environmental transport and renewable energy sources. Instead, the company increases its involvement in Formula 1 racing, «toy» cars to the USA and luxury cars for the rest of the World. Sources: Der Spiegel 26/1 1995, Germany Rustungs Informationsburo, Baden Wurtemberg, 1996, Germany.

Arms:
Through Daimler Benz Aerospace (DASA), the company is Germany's largest producer and exporter of arms. Recently, it has developed a new generation weapons for use by offensive Rapid Reaction Forces abroad.

– DASA also produces anti-tank mines, tank engines and is involved in the space industry.

Source: Rustungs Informationsburo, Baden Wurtemberg, 1996, Germany. 

THE SKANDIA GROUP
Skandia is a Swedish insurance company, and is one of Scandinavia's largest companies. Skandia has a number of investment funds.

The below mentioned companies are all companies where Skandia has shares.

Nuclear power:
The following companies which Skandia has shares in, either owns, operates or supplies equipment to nuclear power stations: Sydkraft (Sweden), Matsushita (Japan), Mitsubishi (Japan), Alcatel Alsthom (France), General Electric (USA), Siemens (Germany), Asea (Sweden), Brown Boveri (Switzerland), Hitachi (Japan).

Environmental consequences:
Mitsubishi is a large importer of tropical timber to Japan. The last 15 years, the company has cleared more than 90.000 ha of tropical forest in Sarawak, Malaysia. The company has been subject to boycott campaigns in several countries because of this activity.

Source: Multinational Monitor, USA.

Trough its subsidiary Eidai do brasil Madeiras, the company has cut mahogany in the Brazilian Amazons without permission from the authorities. The cutting has been ongoing in areas which belong to indigenous people.

Source: Rainforest Action Network, USA.

Over the last years, the French oil company Total has been subject to massive criticism for its involvement in Burma. Both from an environmental as well as human rights perspective, this involvement is very controversial.

Source: Samarbeidsutvalget for Burma, 1996 (Norway).

The Swedish/Swiss company ABB (Asea Brown Boveri) recently got the contract for the construction of the very controversial Bakun dam in Sarawak, Malaysia. The work will be done in co-operation with an Australian company. This dam will put 690 square kilometre of rain forest under water, an area the size of Singapore. 9000 people will be forced to relocate. The dam project has been criticised by environmental activists world wide, and in April this year the European Parliament adopted a resolution asking European constructors to seriously consider their participation in the project.

Sources: Rainforest Action Network, USA, International Rivers Network, USA.

Through its subsidiary Vinamul, the English Unilever was convicted in January 1995 for repeated emissions of vinyl, acetate, chlorides and ethylene to the atmosphere. An inspection by the environmental authorities in August the same year, revealed repeated violations of the emission permission.

Sources: Environmental data Services, 1995, England.

The Dutch company Shell has been heavily criticised for its involvement in Nigeria, an involvement which has been ongoing since 1930. The environmental consequences are enormous: Leaks from pipelines, pollution of drinking water, waste spilling into the areas of the local population, air pollution, blow outs, canals stopping local transport and leading to floods, noise and an unwillingness to deal with the damage, is among the problems a report by Pro-Natura in 1995 revealed. At the same time, much of the production is on Ogoni-land. The Nigerian military authorities ignore the protests of the local population, and have gone as far as to execute people opposed to Shell's activities in the country. In 1993 and 1994, one thousand people were killed by the Nigerian authorities which protected Shell's activities.

Sources: Amnesty International, 1996.

Shell was also subject to an international boycott when the company's plans to dump the Brent Spar platform in the North Sea became known. Finally, Shell yielded to the pressure, and Brent spar is currently located in Rogaland, Norway.

Sources: Greenpeace UK, 1996, England.

The Australian mining company Broken Hill Property operates, among other things, the Ok Tedi mine in Papua New Guinea. The mine is seen by many people as the most polluting mine in existence. The copper mine has permanently destroyed 1000 kilometres of the previously virgin Fly river. The life supporting system for the indigenous people are destroyed: The food crops are inedible, the drinking water is poisoned and the original river routes are altered.

Sources: Mineral Policy Institute, 1996, Australia.

In 1992, the Swiss medical company Ciba Geigy AG was considered to be among the 50 companies world-wide with the largest toxic discharges to the sea. Among the toxic compounds are organochlorines, which has been termed very hazardous by the Paris commission.

Sources: Greenpeace UK 1992, England.

Norsk Hydro has been criticised for its bauxite/alumina activity in Brazil and Guinea. In both countries indigenous people have been relocated by force, and large areas have been devastated after mining activities and waste storage. The company now plans the opening of a new plant in India, where 9000 people will be affected by the activity and many must move. The tribal people in the area have used civil disobedience in the struggle against the plans. This has led to arrests.

Source: Agragamee 1996, India, NorWatch/FIVH 1996.

Through its subsidiary Dyno Wesfarmers Ltd, Dyno Industries supplies explosives to a number of mines in Asia, among others the Porgera mine in Papua New Guinea and the Freeport mine in West Papua, Indonesia. Both mines have to a large extent destroyed the environment in the area, poisoned the rivers and made the existence for the indigenous people difficult. During the last half year, both mines have been closed by riots due to the environmental destruction. The authorities in both countries consider the use of military forces to defend the mining operations. At both mines, opponents have been killed in their fight against the mining activities.

Source: Mining Policy Institute, 1996, Australia.

Skandia has also invested in a number of air companies, car producers, oil companies and arms producers.
 
«The love for the wilderness is more than a yearning for what is outside our reach; it is also an expression of loyalty to the Planet which gave us life and which daily gives us the means to live on. The only home we will ever get and the only paradise we will ever need - if we are only able to see it.»

From UNI Storebrand's Environment Policy and Program. By Edward Abbey, American writer with environment as a favourite issue, and guru for the eco-saboteurs of the World.

Norwatch Newsletter 8/96