Selling oil is easier than investing ethically, Norway finds (Norway)

For a people whose deep national pride is bestowing the Nobel Peace Prize, Norwegians are developing a reputation for throwing sharp elbows


OSLO: For a people whose deep national pride is bestowing the Nobel Peace Prize, Norwegians are developing a reputation for throwing sharp elbows.
And the country is doing it in an unexpected way: by pulling investments out of Wal-Mart and other companies for what it claims are ethical failings.
Norway has amassed a fortune in excess of $300 billion over the past decade, thanks to a geyser of profits from its oil exports. Yet few countries are more ambivalent about their vast wealth than this modest, socially conscious Scandinavian society of fewer than five million people.
So rather than managing this monstrous nest egg simply for the best returns, the reluctant billionaires of Norway are using the fund to advance an ambitious ethical code that they established in 2004 for their oil reserve, known as the Government Pension Fund.
Norway's investment choices have grown more controversial in the past nine months over the exclusion of Wal-Mart, the American retailer whose big-box stores do not exist in this pristine country.
Public pension funds on both sides of the Atlantic commonly avoid investing in certain companies on social or ethical grounds. But it is extremely rare for a sovereign state to make such judgments, and rarer still for one to do it in the pointed, public way that Norway has.
Among the first companies to run afoul of Norway's standards were makers of cluster bombs and nuclear weapons or related components - a list that includes Boeing, Lockheed Martin and Northrop Grumman.
Then last June, Norway added Wal-Mart Stores to its blacklist, alleging that the retailer was guilty of tolerating child-labor violations by its suppliers in the developing world and obstructing unions at home. The fund sold off more than $400 million worth of Wal-Mart shares.
That drew a sharp protest from the American ambassador to Norway, Benson Whitney, who accused the government of a sloppy screening process that unfairly singled out American companies.
"An accusation of bad ethics is not an abstract thing," Whitney said. "They're alleging serious misconduct. It is essentially a national judgment of the ethics of these companies."
Whitney, a Minnesota venture capitalist with ties to the Bush administration, said Norway takes aim at companies arbitrarily, based on unreliable third-party reports and, in the case of Wal-Mart, on a cottage industry of Wal-Mart bashers.
A spokeswoman for Wal-Mart, Beth Keck, disputed Norway's allegations, saying they were based on inaccurate and outdated information. After initially disregarding Norway's allegations, Wal-Mart late last year sent two senior executives to plead its case with Norwegian officials, and the two sides continue discussions.
Twelve of the 21 companies on Norway's excluded list are American. But the problem is not just that the blacklist has a red-white-and-blue tinge, according to Whitney. Norway, he said, has not created a consistent policy for separating the good from the bad.
"I'm not sure the Norway government understands the power of being one of the largest investors in the world," he said.
Norwegian officials reject that criticism, saying they have devised a policy that compares well with those of major funds in Europe and the United States that practice so-called socially responsible investing.
"We've managed to combine professional fund management with an ethical approach," said Kristin Halverson, the Norwegian finance minister. "We see them as two sides of the same coin."
Socially responsible investing, she said, had not hindered the fund's performance. In 2006, it generated a return of 7.9 percent, a shade higher than the government's target.
Halverson is an unlikely choice to oversee one of the world's richest funds. She is the leader of the Socialist Left party, which draws support from students, teachers, and left-leaning intellectuals.
Since entering the government in late 2005, she has made it clear she would like to expand Norway's social agenda. Among the next companies in her sights: those that contribute to global warming.
"In a global economy, ownership of companies is the most important way to have influence," Halverson said.
Norwegians have long viewed themselves more as humanitarians than oil barons. The country played a central role in pushing a United Nations treaty banning land mines, and it was host for the Oslo peace talks between Israel and the Palestinians.
Still, as the world's No. 3 oil exporter after Saudi Arabia and Russia, Norway's wealth has become harder to ignore.
The government began salting away its oil proceeds in a special reserve in 1996. Known until last year as the Petroleum Fund, it was renamed the Pension Fund, which is supposed to make Norwegians aware that the fund's purpose to provide for future generations.

Von: 03.05.07 by Mark Landler

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