Campaigners against dangerous cladding on high-rise residential buildings have appealed to Norges Bank Investment Management (NBIM), manager of Norway’s US$1.4 trillion sovereign wealth fund, to withdraw GBP5.7 billion (US$7.8 billion) of investments in firms implicated in the manufacture and supply of allegedly hazardous building materials.
The cladding scandal arose from the fire at the Grenfell tower block in Kensington, West London which claimed 72 lives in July 2017. The deadly blaze was the worst the UK had faced for over 40 years and was linked to combustible cladding, which has been used on apartments housing three million leaseholders who are now unable to sell their property. Apartment owners are facing bankruptcy as they struggle to pay for remedial work, which campaigners believe should be resolved by the manufacturers and suppliers.
In their letter this week to NBIM’s CEO Nicolai Tangen, the alliance of campaign groups state that the SWF should divest from firms that they allege are responsible, if they refuse to remedy defects and compensate victims, “in line with Norges Bank stated commitment to Human Rights and anti-corruption, as well as Norway’s role as a respected world leader in the promotion of human rights.”
Secretary of State for Housing Michael Gove gave his backing for the campaigners' call to action and urged companies to “do the right thing” to resolve the cladding scandal.
The list of companies accused of constructing buildings in violation of existing safety regulations include major residential property developers.
While NBIM’s proportion of share ownership in these companies is not large (it owns just under 2% of all listed equities worldwide), the fund has sought to exert its influence as the world’s biggest sovereign wealth fund to mobilize other investors behind changing company policies. With strong ethical exclusion policies, NBIM is regarded as a bellwether for ESG in the sovereign investor world. At the very least, exclusion by the oil-financed Norwegian giant can prove to be a stain on a company’s reputation.
In its response to the campaigners, NBIM said it had "raised product safety with several of the companies mentioned in your letter" and it was a topic it would continue to monitor.
NBIM added: "In accordance with the Fund's Ethical Guidelines, companies may be put under observation or be excluded if there is an unacceptable risk that the company contributes to or is responsible for serious or systemic violations of human rights.
"The independent Council on Ethics is responsible for assessing whether our investments are inconsistent with these guidelines. In line with our procedures, we have shared the information you have provided us with the Council of Ethics."
As of December 2021, NBIM had excluded 152 companies from investment with a further 22 under observation. Seven firms are excluded on human rights issues with three under observation.
Human rights are seldom a reason for NBIM’s exclusions, representing just 5% of the total. The largest portion of exclusions relate to the coal industry (48%), followed by environmental damage (16%) and tobacco (11%).
In 2021, just one company was added to the exclusion list for alleged human rights breaches: Honeys Holdings Co in relation to workers’ rights in Myanmar. In addition, two Israeli companies were excluded in relation to activities associated with settlements in the West Bank due to “serious violations of individuals’ rights in war or conflict”.
Picture by Natalie Oxford