RIO DE JANEIRO, BRAZIL – The Norwegian Central Bank announced on Wednesday the decision to exclude mining company Vale and state-owned energy company Eletrobras from investments made by the world’s largest sovereign fund, which manages a reserve of more than US$1 trillion (R$6 trillion) from oil-generated profits in Norway.
The sanction imposed on seven companies, including the two Brazilian giants, is based on human rights violations and environmental damage caused by mega-developments in the Amazon region and tragedies in mining extraction areas.
As a result, the companies sanctioned will no longer be eligible to benefit from investments in fund resources which, in Brazil alone, have invested almost US$10 billion.
According to the bank’s Ethics Council, in charge of preparing investment guidelines, Vale represents “unacceptable risks due to severe environmental damage”, in reference to the dam ruptures in Brumadinho and Mariana, which, in addition to the environmental impact, left at least 280 dead.
The report points out that Vale holds other dams (currently, more than 150) spread throughout the country and should have been aware of the structural issues that caused the tragedies. In January, a year after the Brumadinho tragedy, the Minas Gerais Prosecutor’s Office indicted ex-president Fabio Schvartsman and ten other company employees for murder and social and environmental crimes.
With respect to Eletrobras, the bank’s board took into account, in particular, human rights violations and environmental impacts as a result of the construction of the Belo Monte plant.
The work, which had its first stage inaugurated in 2016, cost approximately R$40 billion and built the fourth largest hydroelectric plant in the world on the Xingu River, in Pará. However, according to a report from the Norwegian fund, the mega-undertaking resulted in irreparable damage to the indigenous peoples who lived in the region.
“The project has led to increased pressure on indigenous lands, the disintegration of social structures, and the deterioration of indigenous peoples’ livelihoods, resulting in the displacement of at least 20,000 individuals, including people with a traditional way of life who used to live on islands and riverbanks that are now submerged,” the board said.
The body also argues that the Brazilian state-owned energy company has been involved in additional projects and has also indicated its intention to incorporate others denounced for similar violations. In 2019, the company profited R$6 billion but is considered the flagship of the privatization package headed by the Bolsonaro government, which, in November, signed a bill that provides for the capitalization of Eletrobras. The bill still hinges on the approval of Congress.
Although the Ethics Council’s recommendations were introduced more than a year ago, on May 27th, 2019, the Central Bank of Norway only published its decision to exclude the companies from the fund last Tuesday, in the final stage of the process of withdrawing contributions in shares related to these companies.
The other companies sanctioned by the Norwegian organization are the Canadian Natural Resources, Cenovus Energy, Imperial Oil, Suncor Energy, and ElSewedy Electric, based on an unprecedented criterion of pollutants, which assessed gas and carbon emissions “at unacceptable levels,” according to the opinion.
In 2016, Petrobras had been placed under observation by the fund as a result of the corruption scandals uncovered in the wake of Operation Lava Jato. Last year, however, the state-owned company was removed from the list of companies at risk of not receiving investments.
Vale and Eletrobras have yet to comment on the Norwegian sovereign fund’s decision. However, on Wednesday, the multinational mining company issued a statement saying it intends to invest US$2 billion to reduce carbon emissions over the next ten years, in line with the Paris Agreement on the climate crisis.
Source: El País