Exclusive: Ethics watchdog for Norway's $830 billion wealth fund sees increase in bans on firms

Fri Mar 11, 2016 7:18am EST
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By Joachim Dagenborg and Gwladys Fouche

OSLO (Reuters) - The ethics watchdog for Norway's $830-billion wealth fund will focus this year on identifying corruption in telecoms, arms and energy companies and expects to recommend that an increasing number of firms across all sectors be barred from investment.

By the end of this year, the fund which invests income from Norway's oil and gas production could add the first companies to its blacklist for emitting too much climate changing gas, said the chairman of its independent ethics panel, Johan H. Andresen.

The ethics panel will also look into allegations of human rights abuses in Qatar's building sector, Malaysia's electronics goods industry, and textile factories in some Asian countries, Andresen told Reuters.

The fund is the world's biggest sovereign wealth fund, owning 1.3 percent of all listed company equity on earth. As of the end of last year it owned shares in 9,050 firms worldwide.

It is forbidden by law from investing in firms that produce nuclear weapons or anti-personnel landmines, or are involved in serious and systematic human rights violations, among other ethical criteria.

Norway's parliament has set a new mandate from this year to restrict investment in companies that emit excessive climate changing gases. Andresen said his panel was still looking into the criteria for such judgments but its first recommendations on climate criteria could come by the end of the year.

Some 66 companies have so far been excluded from the wealth fund on ethics grounds, and two are under observation, including, since January, Brazil's state oil company Petrobras (PETR4.SA: Quote), under scrutiny for alleged corruption.

"Most of the corruption cases come from the industry studies within defense, telecoms and energy. Those three (sectors) seem to keep us very busy," Andresen, the council's chairman, said in an interview. "We will of course look into other companies, should we be made aware of them."   Continued...

Norwegian investor Johan H. Andresen, the head of the Council on Ethics for the Norwegian sovereign wealth fund, poses for a picture at the Council’s office in Oslo, Norway March 8, 2016. Picture taken March 8, 2016. To match Exclusive NORWAY-SWF/ARMS. REUTERS/Gwladys Fouche