The world’s biggest sovereign wealth fund, the Government Pension Fund Global (GPFG) managed by Norges Bank Investment Management (NBIM), has excluded one Chinese company for human rights violations and put three others on “observation” as part of its ethical investment policy.
The US$1.28 trillion fund acts as a giant index-tracker with just under 2% stake in all global equities, but its ethical investment policies act as a bellwether for the rest of the sovereign investor universe.
In its latest statement, the Norwegian investor has excluded a Chinese sportswear firm, Li Ning, due to alleged human rights abuses in Xinjiang, where ethnic Uighurs are accused of being persecuted. At end-2021, NBIM possessed a shareholding worth US$167 million. According to NBIM’s ethical advisers, in 2017 Li Ning “signed a cooperation agreement with a supplier said to manufacture inside an internment camp. The supplier is also said to have taken on many workers via a government-sponsored employment programme targeting ethnic minorities. Li-Ning is furthermore linked to human rights violations through other suppliers.”
Three companies are under “observation”: Bombardier, Adani Ports and Hyundai Glovis. Aircraft manufacturer Bombardier was put on notice “due to unacceptable risk that the company contributes to or is responsible for gross corruption”. The fund has a stake of more than 1% in the Canadian company, which is subject to allegations or suspicions of corruption in six countries over more than a decade, the fund's council on ethics has said. The cases involve bribes or suspicious transactions amounting to more than US$100 million to win contracts for Bombardier’s subsidiaries, according to the ethics council.
India’s Adani Ports, in which the fund has a 0.7% stake, is accused of “serious violations" of human rights because of its involvement in building a port terminal in Myanmar. Although Adani Ports said it was abandoning plans to build a container terminal in the military-controlled country and is expected to fully exit the investment by June, the ethics council has cast doubt on when such a withdrawal can be implemented.
In the case of Hyundai Glovis, in which NBIM has a 0.8% stake, controversy surrounds its disposal of decommissioned vessels which are broken up in Pakistan and Bangladesh by workers allegedly suffering poor working conditions and human rights violations.
On top of these stated exclusions, NBIM is looking to divest from its Russian holdings, which were worth US$2.8 billion in recent estimates – although tanking Russian equities suggest the Norwegian state investor could end up divesting at a fraction of this value.
In Global SWF’s most recent ratings on governance, sustainability and resilience, NBIM enjoyed a high score of 96% alongside New Zealand’s NZ Super and Canada’s CDPQ. However, NBIM does not appear to have acted on calls by housing campaigners in the UK to withdraw GBP5.7 billion (US$7.8 billion) of investments in firms implicated in the manufacture and supply of allegedly hazardous building materials.
In their letter in January to NBIM’s CEO Nicolai Tangen, an 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.
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.” However, the companies were not included in the latest announcement of companies facing exclusion or observation.
San Leon Energy, a Dublin-headquartered oil and gas exploration company – which was blacklisted by NBIM since 2016 because of petrol prospecting in Western Sahara – is being reinstated as a potential GPFG investment because those activities have ceased, according to NBIM.
