Stockholm (NordSIP) – Norges Bank, manager of the $1 trillion Norwegian Sovereign Wealth Fund, has divested from six companies and excluded 11 new companies that failed to meet its ESG standards following the release last month of its annual Responsible Investment report.
Norges Bank Investment Management (NBIM) currently invests in 9,000 companies across 72 companies. Companies are placed on its exclusionary list for reasons ranging from alleged violations of individual rights and ethical norms to water pollution and the production of nuclear weapons.
The latest RI report lists new companies excluded from investments due to thermal coal mining or coal-based power production. These include CEZ AS, Eneva SA, Great River Energy, HK Electric Investments & HK Electric Investments Ltd., Huadia Energy Co Ltd., Korea Electric Power Corp., Bhd, Otter Tail Corp., PGE Polska Grupa, Energetyczna SA, and SDIC Power Holdings Co. Ltd and Bharat Heavy Electricals Ltd, which was excluded due to “severe environmental damage”. For the latest report, the Ministry of Finance added to the guidelines for observation and exclusion which related to mining companies that derive 30% or more of their income from, and power companies that base 30% of their power on, thermal coal.
The companies placed under observation for thermal coal mining or coal-based power production were: NorthWestern Corp. and Portland General Electric Co. Hansae Yes24 Holdings Co Ltd was placed under observation for “serious or systematic human rights violations.” PetroChina Co Ltd and Leonardo SpA were placed under observation for alleged gross corruption.
Raytheon, which was excluded from the Government Pension Fund Global in 2005, was re-included already last year on the basis of having convinced the bank’s Council on Ethics that the company no longer has any activities associated with the production of cluster munitions.
“We expect company boards to understand the broader environmental and social consequences of their business operations. Companies should address the risks and opportunities related to sustainability in their business management,” NBIM CEO Yngve Slyngstad wrote in the bank’s Responsible Investment Government Pension Fund Global Report, released last month.
Following criticisms that NBIM was not doing enough to integrate ESG considerations into its investment processes, the investment manager has stepped up its game considerably in the past year. For example, late last year it also increased its number of votes against management compensation proposals in the companies it invests to curb excessive top-management pay.
NBIM’s $11.29 billion investment in environmental equities for 2017 yielded a return of 21.7%.
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