Pension Funds Insider

Pension Funds Insider brings the latest pensions news and industry insights; from investment and governance updates to new mandate appointments and pensions regulatory information.

Norwegian fund divestment over environmental concerns

20 August 2015

Image for Norwegian fund divestment over environmental concerns

Norway's sovereign wealth fund is removing four Asian companies from its investment portfolio for ethical reasons.

The fund, officially known as the Government Pension Fund, is financed by profits, taxes and fees from Norway's offshore oil and gas sector.

It said it was divesting from South Korean steelmaker Posco, its subsidiary Daewoo International Corp, and two Malaysian companies, Genting Berhad and IJM Corporation Berhad, citing the damage they are causing by turning rain forests in Indonesia and Malaysia into palm oil plantations.

The decision to sell came from the fund's ethical council and the four companies are the latest to join a blacklist of more than 60 companies that have been excluded from the fund's portfolio for a variety of environmental, social or governance reasons.

Earlier this year, the Norwegian parliament approved plans to sell off USD 8billion in coal investment as it divests from fossil fuels.

The move is indicative of the country's increasing concern for environmental issues, although critics have noted the fund's decisions at odds with the source of its wealth.

The USD 870billion fund is the biggest in the world and as of last year it held about 1% of global stocks and bonds.

In 2014 it shifted its strategy to investing in property and emerging markets.

It has an ethical criteria that it follows to exclude companies from its investment, which in addition to environmental damage include nuclear arms and tobacco production.

Retail giant Walmart is among the companies Norway will not invest in, due to its history of alleged labour rights abuses.

The fund announced a negative return on investments in the second quarter of this year, losing 73 billion Norwegian crowns, a reversal from the record 401 billion crown return seen January-March.

First published 20.08.2015

Lindsay.sharman@wilmingtonplc.com