Norway wealth fund's watchdog to probe shoemakers, crypto firms over ethics in 2025
02/12/2024 16:11
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Norway has world's largest sovereign wealth fund
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Operates under ethical guidelines set by parliament
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Fund divests from firms found in breach of guidelines
(Updates throughout)
By Gwladys Fouche
OSLO, Dec 2 (Reuters) - The Norwegian sovereign wealth
fund's ethics watchdog will next year investigate shoemakers,
crypto firms and gambling operators in which the fund has
holdings for potential ethical breaches, which could lead the
influential investor to sell its shares.
The world's largest sovereign wealth fund, which owns 1.5%
of listed shares across 8,700 companies globally, operates under
ethical guidelines which are set by Norway's parliament.
The $1.8 trillion fund's Council on Ethics investigates
companies in which it has money invested to ensure these are
respected. If they are not, the ethics watchdog recommends the
fund divests from them or puts them on a public watch list.
A document drafted by the council and sent to the finance
ministry on Oct. 10, which was seen by Reuters, said that next
year it "will investigate work conditions at a significant
number of shoe producers", without naming any.
Working conditions at shoe factories in Asia have been under
the spotlight for decades, with issues ranging from long hours
and low pay to the right to form unions.
The document outlining the plan for 2025, which has not been
previously reported, says: "companies have a direct
responsibility for working conditions within their own
operations and gross, systematic breaches of workers' rights can
lead to exclusions from the fund".
The watchdog said in an emailed statement that its programme
"indicates that these are issues the Council will look into",
adding: "It is not possible for the Council to predict the
outcome of the investigations".
CRITERIA
Norway's fund currently excludes 189 companies on ethical
grounds, including Airbus AIR.PA and Boeing BA.N for making
nuclear weapons and Glencore GLEN.L and RWE RWEG.DE for
producing coal or coal-based energy.
Other criteria which dictate its investment decision-making
include violation of human rights, severe environmental damage,
gross corruption or producing tobacco and cannabis.
The fund invests in some of the biggest shoe manufacturers,
including Nike NKE.N , with a 0.9% stake worth $1 billion,
Adidas ADSGn.DE , with a 3.6% stake worth $1.5 billion and Puma
PUMG.DE , with a 1.5% stake worth $100 million.
Others include Deckers DECK.N , in which the fund has a
1.2% stake worth $300 million, Asics 7936.T , where its holding
of 2.7% is worth $310 million, Birkenstock, in which it has 1.7%
worth $170 million and Crocs, with 1.2% worth $100 million.
Adidas said last week it had taken "a variety of measures to
ensure fair and safe working conditions for workers in its
supply chain" over the past 25 years, including conducting 1,200
factory audits last year.
Puma said it had invested "a vast amount of time and
resources ... to ensure a very high standard regarding ESG
topics" for the past 20 years, including requiring all suppliers
to sign up to a legally binding code of conduct and actively
investigating breaches reported.
Nike, Deckers, Asics, Birkenstock and Crocs did not
immediately respond to Reuters requests for comment.
CRYPTO, GAMBLING
The document outlines work the ethics watchdog has already
started, as well as new areas for investigation next year.
"The Council on Ethics in 2025 will take a closer look at
companies involved in cryptocurrencies and gambling/casino,
where there is a significant risk of money laundering," it said.
Norway's fund is invested in cryptocurrency exchange
Coinbase COIN.O , with a 0.83% stake worth $453 million as well
as gambling firms Flutter Entertainment FLTRF.L , in which it
has a 2.13% stake worth $691 million and MGM Resorts MGM.N ,
where its 0.87% stake is worth $121 million.
Coinbase, Flutter Entertainment and MGM Resorts did not
immediately reply to requests for comment.
Elsewhere, the watchdog will continue to investigate
"several companies" that could be breaching human rights in the
occupied West Bank, as previously reported by Reuters.
The Council on Ethics makes recommendations to the board of
the central bank, which operates the fund. The bank often
follows the watchdog's advice to exclude firms, but not always.
It can also put a company on notice to change its behaviour
or ask the fund's management to engage directly. Those
designated for divestment are not named until the fund has sold.
The length of time to divest can range from weeks to months,
depending on the size of the company. The fund divests from a
company progressively so as not to alert markets.
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EXCLUSIVE-Norway wealth fund may divest companies that aid
Israel in Gaza war, occupied territories urn:newsml:reuters.com:*:nL6N3KK0EJ
Norway wealth fund's ethics watchdog to probe companies over
Gaza war urn:newsml:reuters.com:*:nL5N3FX3I9
Market value of Norway's wealth fund https://tmsnrt.rs/3iZIGOn
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(Reporting by Gwladys Fouche in Oslo; Editing by Terje Solsvik
and Alexander Smith)
((gwladys.fouche@tr.com;))