September 3, 2020

Norway’s sovereign wealth fund demonstrates the impact of socially responsible investing

On August 31, 2020, the largest sovereign wealth fund in the world, Norway’s Government Pension Fund Global, announced that it would exclude three companies from its investments due to an “unacceptable risk for violation of human rights.”  Pursuant to recommendations by the fund’s Council on Ethics, the GPFG will no longer invest in Formosa Chemicals & Fibre Corp, Formosa Taffeta Co Ltd, and Page Industries Ltd – the Formosa companies because of alleged human rights violations in Vietnam, and Page Industries due to alleged human rights violations related to textile production in India. 

The GPFG holds approximately 1.5 percent of all of the world’s listed companies, and there are nearly 200 companies on the fund’s exclusion or observation list.  Its decisions have both economic and social impact around the world.  For example, the recent decision to exclude Page Industries Ltd, where the Council on Ethics found labor rights violations, including verbal and physical harassment of employees, and occupational health and safety hazards, at one of the company’s 17 production facilities in India. 

Before divestment, the GPFG owned 0.42 percent of Page’s shares.  The company holds exclusive licenses to produce and sell swimwear for two international brands.  One of these is Speedo International Ltd, based in the UK.  Speedo is the world’s top-selling swimwear brand.  According to media reports, the GPFG’s decision to discontinue its investments in Page have prompted Speedo to conduct its own investigation, and potentially to rethink its relationship with the Indian company. 

Such global repercussions and the risks that accompany them are described in this webinar, which addresses the enforcement and litigation risks associated with environmental, social and governance disclosures, and describes best practices for navigating those risks.

NBIM  news release | Council on Ethics Report