Norway’s Ministry of Finance has appointed a committee to review the ethical guidelines for the $1.05 trillion Government Pension Fund Global. It also introduced absolute thresholds for the product-based coal criterion.
The Ministry said that because the fund has grown nearly nine-fold from $119.6 billion since the ethical guidelines were introduced in 2004, it is now invested in a greater number of companies, with larger ownership stakes, and expanded geographical diversification.
“These developments influence both expectations and the implementation of ethical guidelines and responsible investment,” Siv Jensen, Norway’s Minister of Finance, said in a release. “We are therefore now appointing a committee to examine the guidelines.”
The committee will assess whether there is a need for amending the guidelines for observation and exclusion, including whether some criteria should be omitted or new ones added. It will also evaluate whether the current measures are suited for investments in countries whose legislation and regulatory frameworks are in conflict with recognized international conventions and ethical standards, and in countries with limited access to information.
The Ministry said the committee will start out from the fundamental purposes and principles on which the current guidelines for ethical and responsible investment are premised. The review will be based on ethical norms that are broadly supported in Norwegian society and reflect international agreements and initiatives ratified and endorsed by Norway.
“Exclusion is a forceful measure that should be reserved for the most severe violations of norms,” said Jensen. “It is also a fundamental principle that the fund shall not be used as a foreign policy or climate policy instrument.”
The committee will submit its report by June 15, 2020.
Norway also introduced absolute thresholds for the product-based coal criterion, and presented assessments in relation to the conduct-based climate criterion.
This year, the coal criterion has been amended to also capture companies with considerable coal-related operations in absolute terms. The relative 30% thresholds under the criterion are not changed, but are supplemented by absolute thresholds for coal mining and coal power capacity.
The Ministry of Finance has proposed setting the thresholds at 20 million tons for coal mining, and 10,000 MW for coal power capacity. This will result in the criterion also capturing companies with considerable coal-related operations in absolute terms. The Ministry said it will be monitoring the implementation of the absolute thresholds and assess potential threshold reductions.