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Thursday, June 13, 2024

Oil fund faces ethical probe

Norway’s co-called “oil-fund,” one of the world’s largest sovereign wealth funds that prides itself on making ethical investments, is under investigation for violating OECD guidelines for responsible business. The alleged violations concern its investments in South Korean steel giant Posco, a company widely believed to violate human rights.

A trading room for the oil fund. PHOTO: Norges Bank Investment Management
A trading room for Norway’s oil fund. PHOTO: Norges Bank Investment Management

The guidelines of the OECD (Organisation for Economic Co-operation and Development) amount to recommendations to international enterprises for responsible business conduct that seeks to promote sustainable development. As a member of the OECD, Norway is required to establish a National Contact Point (NCP) that handles complaints about possible breaches of these guidelines.

Hans Petter Graver, law professor at the University of Oslo and head of NCP Norway, told newspaper Aftenposten that the oil fund is obliged to follow the internationally approved principles for responsible investments.

“This means that the fund should do whatever possible to prevent that the company it’s investing in is violating human rights,” Graver said. The Norwegian oil fund holds 0.8 percent of all shares in Posco.

“The oil fund presents itself as leading in responsible investments,” Gunhild Ørstavik, senior advisor in the Norwegian think tank Forum for Environment and Development (ForUM), told Aftenposten. “We want to know how they can be involved in a contested company such as Posco and how they have used their active ownership to prevent violations of human rights.”

Posco expansion threatens homes
The complaints involve allegations of human rights violations at a steel plant in India. Posco’s USD 12 billion expansion plans to build a gigantic steel plant are controversial and have been met with strong resistance from the local community. Many have been or will be forced to move from their homes because of the plans.

“Indian authorities have welcomed the project, and the conflict with the local community has been extraordinarily brutal,” Ørstavik said. “There have been armed attacks and serious injuries.”

Ørstavik doesn’t believe Posco has done enough to prevent clashes that arose after the company announced its expansion plans. “Instead of trying to prevent violations of human rights … Posco has silently witnessed it all,” she said.

The complaints come from four non-profit organizations, among them ForUM, a network of 52 environmental, peace and development groups. Posco and a Dutch pension fund have also been reported for the same reason.

Several Norwegian companies have earlier been under investigation, but this is the first time the oil fund is under probe.

Not necessary to pull out
Ørstavik said her group’s goal is not to force the oil fund to pull its investments out of Posco. “We believe the oil fund should go in and be clear about their ownership. They should raise these ethical considerations in the annual general meeting. If they don’t succeed, they can pull out,” she told Aftenposten.

The Norwegian oil fund has earlier excluded around 50 companies from its investment portfolio. According to its own ethical guidelines, the fund cannot invest in companies involved in contributing to killing, torture and deprivation of freedom or other violations of human rights in conflict situations or wars. Weapons such as nuclear arms are also banned by the ethical guidelines as investment objects.

Views and News from Norway/Aasa Christine Stoltz

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