This translation is for information purposes only. Legal authenticity remains with the original Norwegian version.
Adopted by the Ministry of Finance on 1 March 2010 pursuant to Act no. 123 of 21 December 2005 relating to the Government Pension Fund, section 7
Section 1. Scope
(1) These guidelines apply to the work of the Ministry of Finance, the Council on Ethics and Norges Bank concerning the exclusion and observation of companies.
(2) The guidelines cover investments in the Fund’s equity and fixed income portfolio, as well as instruments in the Fund’s real-estate portfolio issued by companies that are listed in a regulated market.
Section 2. Exclusion of companies from the Fund’s investment universe
(1) The assets in the Fund shall not be invested in companies which themselves or through entities they control:
a) produce weapons that violate fundamental humanitarian principles through
their normal use;
b) produce tobacco;
c) sell weapons or military material to states that are affected by investment
restrictions on government bonds as described in the management mandate
for the Government Pension Fund Global Section 3-1 C).
(2) The Ministry makes decisions on the exclusion of companies from the investment universe of the Fund as mentioned in paragraph 1 on the advice of the Council on Ethics.
(3) The Ministry of Finance may, on the advice of the Council of Ethics, exclude companies from the investment universe of the Fund if there is an unacceptable risk that the company contributes to or is responsible for:
a) serious or systematic human rights violations, such as murder, torture,
deprivation of liberty, forced labour, the worst forms of child labour and other
b) serious violations of the rights of individuals in situations of war or conflict;
c) severe environmental damage;
d) gross corruption;
e) other particularly serious violations of fundamental ethical norms.
(4) In assessing whether a company shall be excluded in accordance with paragraph 3, the Ministry may among other things consider the probability of future norm violations; the severity and extent of the violations; the connection between the norm violations and the company in which the Fund is invested; whether the company is doing what can reasonably be expected to reduce the risk of future norm violations within a reasonable time frame; the company’s guidelines for, and work on, safeguarding good corporate governance, the environment and social conditions; and whether the company is making a positive contribution for those affected, presently or in the past, by the company’s behaviour. (5) The Ministry shall ensure that sufficient information about the case has been obtained before making any decision on exclusion. Before deciding on exclusion in accordance with paragraph 3, the Ministry shall consider whether other measures may be more suitable for reducing the risk of continued norm violations or may be more appropriate for other reasons. The Ministry may ask for an assessment by Norges Bank on the case, including whether active ownership might reduce the risk of future norm violations.
Section 3. Observation of companies
(1) The Ministry may, on the basis of advice from the Council on Ethics in accordance with section 4, paragraphs 4 or 5, decide to put a company under observation. Observation may be chosen if there is doubt as to whether the conditions for exclusion have been fulfilled, uncertainty about how the situation will develop, or if it is deemed appropriate for other reasons. Regular assessments shall be made as to whether the company should remain under observation.
(2) The decision to put a company under observation shall be made public, unless special circumstances warrant that the decision be known only to Norges Bank and the Council on Ethics.
Section 4. The Council on Ethics for the Government Pension Fund Global – appointment and mandate
(1) The Ministry of Finance appoints the Council on Ethics for the Government Pension Fund Global. The Council shall consist of five members. The Council shall have its own secretariat.
(2) The Council shall monitor the Fund’s portfolio with the aim of identifying companies that are contributing to or responsible for unethical behaviour or production as mentioned in section 2, paragraphs 1 and 3.
(3) At the request of the Ministry of Finance, the Council gives advice on the extent to which an investment may be in violation of Norway’s obligations under international law.
(4) The Council gives advice on exclusion in accordance with the criteria stipulated in section 2, paragraphs 1 and 3.
(5) The Council may give advice on whether a company should be put under observation, cf. section 3.
Section 5. The work of the Council on Ethics
(1) The Council deliberates matters in accordance with section 4, paragraphs 4 and 5 on its own initiative or at the behest of the Ministry of Finance. The Council on Ethics shall develop principles that form the basis for the Council’s selection of companies for closer investigation. The principles shall be made public.
(2) The Council shall obtain the information it deems necessary and ensure that the case has been properly investigated before giving advice on exclusion from the investment universe.
(3) A company that is being considered for exclusion shall be given the opportunity to present information and viewpoints to the Council on Ethics at an early stage of the process. In this context, the Council shall clarify to the company which circumstances may form the basis for exclusion. If the Council decides to recommend exclusion, its draft recommendation shall be presented to the company for comment.
(4) The Council shall describe the grounds for its recommendations. These grounds shall include a presentation of the case, the Council’s assessment of the specific basis for exclusion and any comments on the case from the company. The description of the actual circumstances of the case shall, insofar as possible, be based on material that can be verified, and the sources shall be stated in the recommendation unless special circumstances indicate otherwise. The assessment of the specific basis for exclusion shall state relevant factual and legal sources and the aspects that the Council believes ought to be accorded weight. In cases concerning exclusion pursuant to section 2, paragraph 3, the recommendation shall, as far as is appropriate, also give an assessment of the circumstances mentioned in section 2, paragraph 4.
(5) The Council shall routinely assess whether the basis for exclusion still exists and may, in light of new information, recommend that the Ministry of Finance reverse a ruling on exclusion.
(6) The Council’s routines for processing cases concerning the possible reversal of previous rulings on exclusion shall be publicly available. Companies that have been excluded shall be specifically informed of the routines.
(7) The Ministry of Finance publishes the recommendations of the Council on Ethics after the securities have been sold, or after the Ministry has made a final decision not to follow the Council on Ethics’ recommendation.
(8) The Council shall submit an annual report on its activities to the Ministry of Finance.
Section 6. Exchange of information and coordination between Norges Bank and the Council on Ethics
(1) The Ministry of Finance, the Council on Ethics and Norges Bank shall meet regularly to exchange information about work linked to active ownership and the Council on Ethics’ monitoring of the portfolio.
(2) The Council on Ethics and Norges Bank shall have routines to ensure coordination if they both contact the same company.
(3) The Council on Ethics may ask Norges Bank for information about how specific companies are dealt with through active ownership. The Council on Ethics may ask Norges Bank to comment on other circumstances concerning these companies. Norges Bank may ask the Council on Ethics to make its assessments of individual companies available.
Section 7. Notification of exclusion
(1) The Ministry of Finance shall notify Norges Bank that a company has been excluded from the investment universe. Norges Bank shall be given a deadline of two calendar months to complete the sale of all securities. Norges Bank shall notify the Ministry as soon as the sale has been completed.
(2) At the Ministry’s request, Norges Bank shall notify the company concerned of the Ministry’s decision to exclude the company and the grounds for this decision.
Section 8. List of excluded companies
The Ministry shall publish a list of companies that have been excluded from the investment universe of the Fund or put under observation.
Section 9. Entry into force
These guidelines come into force on 1 March 2010. The Ethical Guidelines for the Government Pension Fund Global, adopted by the Ministry of Finance on 19 November 2004, are repealed on the same date.