Nordea is a shareholder in Finnish-Swedish pulp and paper manufacturer Stora Enso. After a field visit in China in 2013, Nordea downgraded Stora Enso due to social issues and the share has not been investable for any of our Stars funds since then.

Over the last couple of years the company has had reoccurring incidents concerning child labor in the supply chain of its joint venture operation in Pakistan and land conflicts in China and Brazil.

As active investors we want to ensure that there is an understanding between local communities and companies such as Stora Enso. So, in February 2016 we visited Stora Enso’s joint venture corporation Veracel in the Bahia region in eastern Brazil to get a better understanding of how they conduct responsible business in an area like this.

As active investors we want to ensure that there is an understanding between local communities and companies

The Bahia region is known for the Atlantic Forest that is extraordinarily lush in biodiversity and endangered endemic species. The region has a history of political conflicts and high inequality in terms of income distribution and ownership of land. In other words, Veracel operates on highly fragile land.

The company admits that it hasn’t been able to meet challenges in a responsible way causing huge clashes with both local communities and the so-called Landless movement – an influential social movement with political links.

Veracel has deemed it to be in their own interest to reach out and establish dialogues with opposing stakeholders in the region. Both sides have agreed that collaboration will yield the best outcome.

Based on our visit we think that Veracel shows good understanding of the environmental and social risks and challenges associated with operating in the area. Today, Veracel seems to have an acceptable relation with the indigenous people stakeholders and the Landless movement.

The plan is to visit Stora Enso's joint operations in Pakistan in 2017. In the meantime, Nordea will not change its position on Stora Enso from an ESG perspective.