Norway Oil Fund Blacklists Funds Based on Ethics

(December 6, 2011) —  Norway’s state pension fund, one of the world’s biggest sovereign wealth funds, has blacklisted investments in Pennsylvania-based chemicals firm FMC Corporation and Canadian fertilizer maker Potash.

A release by the fund stated: “Potash and FMC purchase phosphate from the Moroccan company Office Cherifien des Phosphates (OCP). OCP extracts phosphate in Western Sahara, a territory which is not self-governed and which has no recognised administrator. In 2002, the UN’s legal adviser issued a general legal opinion on the legality of mineral resources extraction in territories which are not self-governed, which also included a specific assessment of this issue with regard to the situation in Western Sahara. The opinion stated that mineral resources extraction in territories which are not self-governed is only acceptable if it benefits the local population of the territory. The Council on Ethics takes the view that the interests of the local population are not served by OCP’s operations, and that it is this unacceptable situation which constitutes the core of the breach of ethical standards in the present case.”

In regards to divestment, the release added: “In its letter of 30 September 2011, the Ministry of Finance instructed Norges Bank to sell its shares in the companies. The share sales have now been completed. At the end of 2010, the GPFG held shares valued at around NOK 300 million in FMC Corporation and around NOK 1 570 million in Potash.”

Last August, Norway’s GPFG excluded two Israeli firms involved in developing settlements, as well as a Malaysian forestry firm, on ethical grounds. Finance Minister Sigbjorn Johnsen said in a news release that the fund sold its shares in Israeli companies Africa Israel Investments and subsidiary Danya Cebus, and the Malaysian company Samling Global. As of December 31, 2010, the fund, which at the time held more than 1% of all global stocks, owned stocks worth 7.2 million kroner in Africa Israel Investments and 8.1 million kroner in Samling Global. In a statement, the ministry said that the oil fund has already sold all its holdings in these companies, as the construction of Israeli settlements in occupied areas “is a violation of the Geneva Convention relative to the protection of civilian persons in time of war.” The divestment was recommended by the ministry’s Council on Ethics, which affirmed that Israeli companies were involved in building settlements in occupied Palestinian territory and that Samling Global, a wood and palm oil company, engaged in illegal logging and other offenses.

Ethical guidelines for the fund are set by the government. The oil fund refuses to invest in companies that produce nuclear weapons or cluster munitions, damage the environment or abuse workers’ rights. 

Read an aiCIO Magazine article on the effects of keeping potash prices artificially high.