Norges Bank Investment Management (NBIM), which runs Norway’s NOK7.1trn (€776n) Government Pension Fund Global (GPFG), is excluding several stocks after the Council on Ethics advised their activities in tropical forests posed unacceptable environmental risks.

The companies, two Malaysian-based firms – IJM Corp Bhd and Genting Berhad – and South Korean steel-maker POSCO and Daewoo International Corp were being excluded from the investment universe of the former oil fund, NBIM said.

It said: “The companies are excluded based on an assessment of the risk of severe environmental damage.”

In letters to NBIM, the Council on Ethics cited the conversion by Genting Berhad subsidiary Genting Plantations of tropical forest into oil palm plantations in Indonesia and Malaysia as a reason to consider exclusion.

At issue was, among other things, the fact the subsidiary had not set aside enough space for environmental conservation in forest it was converting to oil palm plantations.

Meanwhile, POSCO subsidiary Daewoo owned 85% of Indonesian plantation company PT Bio Inti Agrindo, which was converting tropical forest into oil palm plantations in the province of West Papua, Indonesia, the council said in a letter.

“The scale of conversion and the fact that the concession area lies in a region of unusually rich and unique biodiversity entails an obvious risk that conversion will cause severe environmental damage,” it said.

The council said that the lack of data reinforced this risk further.

NBIM has previously been criticised for its holdings in POSCO and last year pension provider KLP also excluded POSCO from its portfolio