Norway’s KLP Pension Announces Divestments From Gulf Countries Over Human Rights

Kommunal Landspensjonkasse, Norway’s largest pension system, will divest from several countries due to environmental, social and governance and human rights concerns. The fund added 12 companies from Saudi Arabia, Qatar, the United Arab Emirates and Kuwait to an exclusion list, forbidding the pension fund from making investments in these companies.

The excluded companies, which are primarily within the real estate and telecom industries, include Emirates Telecom Group, Saudi Telecom, Emaar Properties, Aldar Properties, Etihad Etisalat, Mobile Telecommunications, Dar Al Arkan, Ooredoo, Mobile Telecommunications Co. Saudi Arabia, Mabanee, Barwa Real Estate and oil giant Saudi Aramco.

“KLP has excluded 11 of these companies because it considers that there is an unacceptable, sector-specific risk of contributing to human rights abuses,” stated the pension fund’s report, “Publication of the decision following a due diligence assessment of companies in the Gulf States,” announcing the exclusions.

Several of the real estate firms were added to the exclusion list because of allegations of labor rights violations. Telecommunications firms were excluded due to concerns over freedom of the press and freedom of expression in the countries, according to the pension fund’s report.

Saudi Aramco was excluded for a failure to commit to climate transition plans, according to KLP. The pension fund has a goal of reducing greenhouse gases and becoming net zero by 2050 within its operations and its portfolio. It notes that Saudi Aramco is last in a ranking of oil and gas companies’ climate-related goals and transition plans by the Carbon Tracker Organization, which ranked 25 companies in the sector.

“Based on an overall assessment of the company’s close ties to an authoritarian state and an active position in opposition to KLP’s expectations regarding oil and gas companies’ climate change and energy transition plans, it has been decided to exclude Saudi Aramco from KLP’s investments,” the fund’s report stated.

KLP conducts due diligence on existing and prospective investments to make sure any allocation is aligned with the pension funds’ goals and values. The fund announces exclusions almost monthly and has excluded companies in the alcohol, gambling, weapons, tobacco and coal industries, as well as Russia-linked companies. The fund has made eight such announcements this year. “We believe that being transparent about exclusions, including their rationale, is about taking responsibility for our choices,” according to the KLP website.

“By doing so, we genuinely hope and believe this will lead to change. In the same way that we demand transparency from the companies in which we invest, we must be open about our work in relation to our customers and other stakeholders. We continue to engage in dialogue with excluded companies with the aim of encouraging them to implement the changes needed to be once again suitable for investment.”

KLP currently manages 972.3 billion kroner ($95.839 billion) in assets, as of the end of the third quarter 2023. By the end of the third quarter, the fund has returned 3.9% YTD. The fund’s assets have increased by 72.2 billion kroner ($7.6 billion) through the year’s third quarter.