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Analysis Criterion – Serious Environmental Damage

The Storebrand Standard


Storebrand shall not invest in companies that contribute to or cause serious environmental damage.

In general, environmental damage involves the act of discharging substances or energy into the environment (water, air, soil) in such quantities or concentrations that they inflict damage on the environment, or on plant or animal life, or that are detrimental to the health or well-being of humans.

The severity of the environmental damage depends on the extent, reversibility and context associated with it. In addition to the severity of the environmental damage, the company’s degree of complicity and the measures which they have implemented to prevent future repeats of the incident are central to the assessment of whether a company should be excluded.

The following issues are regarded as being the most serious:

  • In instances of environmental damage on a local level, there are often one or more companies involved. The cases considered most serious are those where a company is complicit in causing irreversible damage to large or sensitive areas, or to vulnerable people, through some part of their operation, and lacks a systematic approach to reducing its environmental impact.
  • In instances of environmental damage on a global level, a single company's contribution is usually limited. However, certain types of activity contribute more than most, such as the effect on climate change from the burning of coal. When such an activity is part of a company's core business model, it is considered most serious.


Fundamental principles and framework

Storebrand bases its environmental criterion on the main international environmental treaties and principles, which form the basis for most national laws, emission permits and concessions/licences. Two principles are particularly important in this regard:

  1. «The precautionary principle» dictates that a lack of complete scientific certainty or proof should not be used as a reason to postpone implementing cost-effective measures to prevent environmental damage.
  2. «The polluter pays principle» dictates that the party responsible for causing environmental damage should also pay to reduce or reverse it.

Table 1. Relevant international environmental treaties

UN conventions, protocols and declarations

The UNFCCC and the Kyoto protocol

  • The Convention on Biological Diversity and the Cartagena Protocol on Biosafety
  • The Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal
  • The Rio Declaration on Environment and Development
  • The Vienna Convention and the Montreal Protocol
  • The Stockholm Convention
  • The UN Convention on the Law of the Sea
  • CITES (the Convention on International Trade in Endangered Species of Wild Fauna and Flora)
  • The OSPAR Convention
  • The Aarhus Convention

Other conventions

  • The Convention on Nuclear Safety
  • The Bern Convention on the Conservation of European Wildlife and Natural Habitats
  • The Convention on Wetlands of International Importance (the Ramsar Convention)

Assessment criteria

Storebrand shall not invest in companies that contribute to or cause severe environmental damage. What qualifies as being serious enough to warrant exclusion depends on a number of factors. The different factors are weighted differently depending on the issue at hand. Each element is explained in further detail below.

Geographic impact

In principle, the greater the geographical extent of the environmental damage, the more serious the environmental harm is considered to be. A good example of this are mega dams often used for large-scale hydropower generation. These dams can have a huge impact on the environment and the local population. Therefore, Storebrand takes into account the World Commission on Dams (WCD) guidelines for dam building projects to assess to what extent companies are mitigating their environmental and social impact.

Global environmental problems such as climate change are regarded as severe due to the wide geographical scope involved. Such issues will also score high on other factors, such as the fact that they affect a great number of people, as well as vulnerable natural areas and populations. Each individual company’s emissions and responsibility is often a smaller part of the total extent of the environmental damage. However, if the contribution to the environmental damage is caused by a company’s core activities, Storebrand will nonetheless make an assessment of the company’s contribution relative to other companies. The greater the relative damage caused by the company, the more serious the matter.

Environmental damage at local level is usually smaller in scale. Nonetheless, the company’s individual contribution is relatively larger and more specific and can thereforehave a serious impact. To what extent a smaller or larger part of the company is responsible for the detrimental activity is not considered an important factor in our analysis.

The company’s involvement

The extent of the individual company’s direct involvement depends on the extent to which the company’s activities caused the environmental damage. If their activity is a significant contributing factor, the severity of the matter is also determined by whether the environmental damage could have been anticipated. Additionally, company policies and control measures to prevent such environmental damage are assessed. The most serious cases are those where the company’s activities are the main cause of the environmental damage, and where the company should have been able to anticipate the environmental impact, but failed to implement preventive measures.


To what extent the damage is reversible depends on the amount, concentration and properties of the contaminating substance. Extensive, prolonged and lasting damage, where the contamination or emissions exceed nature’s ability to reverse the damage within a reasonable period of time (irreversibility), is considered to be far more severe than cases where the contamination or emissions are limited in time and scope, and where the damage is reversible.¹

Impact on life and health

The severity of the issue depends on the number of people affected and the severity of the damage inflicted on them.


Detrimental environmental incidents are considered to be more severe in areas where local populations are particularly dependent on local natural resources, or are economically and politically vulnerable (e.g. indigenous peoples). The same applies in cases where business operations take place in areas of great ecological importance (e.g. conservation areas), or affect animal or plant species that are particularly vulnerable. The criterion covers species which are classified as endangered by CITES, or species or ecosystems red listed by IUCN. Negative impact by companies on areas on UNESCO's list of World Heritage Sites can add to the seriousness of an event.


When assessing potential violations of Storebrand’s environmental criterion, the extent and reversibility of the environmental damage is evaluated alongside the degree to which the company is involved in causing the damage, the context in which the damage occurs, and the measures taken by the company to prevent future environmental damage.

Given the above-mentioned criteria, a large representation of companies from the Energy and Materials sectors are among the companies assessed and considered for exclusion. For mining companies, practices related to handling and storage of wastes and tailings in dams, rivers and the sea are common.


In the event that subsidiaries of a company are involved in causing severe environmental damage, but are not publicly listed, the closest listed company above the subsidiary in the hierarchy, with a controlling interest, is excluded. In the event that a subsidiary involved is listed, the parent company is also excluded if it has a controlling interest in the subsidiary. If a parent company is involved in causing severe environmental damage, listed subsidiaries are only excluded if they are involved in the same unacceptable activities. Storebrand will also consider exclusion in cases where suppliers or other business partners (such as joint ventures) systematically violate the criterion. Storebrand will not exclude companies based on operations in specific countries, but will assess the manner in which they run their business in the countries where they operate.

¹Documentation on limits that apply to different types of pollution can be retrieved from the publication list of the Norwegian Environment Agency (Miljødirektoratet).


National institutions

The Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime (Økokrim)

Miljødirektoratet (Norwegian Environment Agency)

International environmental treaties

CITES (the Convention on International Trade in Endangered Species of Wild Fauna and Flora)

The UN Convention on the Law of the Sea

The UN Climate Convention

The Convention on Biological Diversity

The Cartagena Protocol on Biosafety

The Convention on Nuclear Safety

The Kyoto Protocol

The Convention on Wetlands of International Importance

International associations and frameworks

International Finance Corporation (IFC)

Document last updated: August 2017

Criterion enforced since: 2005

Analyses of environmental management have been carried out since 1995.

Storebrand Asset Management

This report is provided by Storebrand Asset Management for the purposes of information only. Whilst reasonable care is taken in compiling the information contained herein, Storebrand Asset Management gives no guarantee as to its completeness, accuracy or correctness. All opinions constitute Storebrand Asset Management’s judgment as of the date of this document and are subject to change without notice. Storebrand Asset Management shall not be liable for any loss of profit or indirect or consequential loss arising from any use of information in this report.

Storebrand aims to invest in companies that contribute actively to sustainable development. We believe such practices – when integrated into core business – will be financially rewarded. Furthermore, we have implemented a standard across the Group – the ‘Storebrand Standard’ – that leads to certain companies being excluded from investment, including those involved in practices that cause serious environmental damage.