Historical archive

Metals and mining company excluded from the investment universe of the Norwegian Government Pension Fund - Global

Historical archive

Published under: Stoltenberg's 2nd Government

Publisher Ministry of Finance

The Ministry of Finance has excluded the British company Vedanta Resources Plc. from the investment universe of the Norwegian Government Pension Fund – Global, based on a recommendation from the Council on Ethics for the Fund.

The Ministry of Finance has excluded the British company Vedanta Resources Plc (Vedanta) from the investment universe of the Norwegian Government Pension Fund – Global, based on a recommendation from the Council on Ethics for the Fund.

According to the Council on Ethics the Fund runs an unacceptable risk of contributing to severe environmental damages and serious or systematic violations of human rights by continuing to invest in the company.

- Excluding a company from the Fund is an expression of not wanting to contribute to grossly unethical practices. The Council on Ethics has concluded that Vedanta causes serious damages to people and the environment as a direct consequence of their activities in India. Norges Bank does not regard the exercise of ownership rights as a tool by which Vedanta’s behaviour can be influenced in a positive direction. We cannot hold shares in such a company, says Minister of Finance Kristin Halvorsen.

Vedanta is a British metals- and mining company. Its core business is linked to mining and production of copper, aluminium, and zinc in India. The Council on Ethics has examined four Vedanta subsidiaries that operate in India: Sterlite Industries, Madras Aluminium Company, Bharat Aluminium Company, and Vedanta Alumina. Vedanta holds a majority share in all these companies.

The Council has assessed the risk of the Fund’s contributing to two breaches of the Ethical Guidelines, through its investment in Vedanta Resources. These are: severe environmental damage and serious or systematic human rights violations.

According to the Council’s assessment: …the allegations levelled at the company regarding environmental damage and complicity in human rights violations, including abuse and forced eviction of tribal peoples, are well founded. In the Council’s view the company seems to be lacking the interest and will to do anything about the severe and lasting damage that its activities inflict on people and the environment. As described in Chapter 5, the violations against the environment and human rights that have been revealed are recurrent at all the subsidiaries subject to investigation and have taken place over many years. In the Council’s view, they indicate a pattern in the company’s practices where such violations are accepted and make up an established part of its business activities. Such a pattern of conduct constitutes an unacceptable risk that the company’s unethical practices will continue in the future. After an overall assessment the Council finds that the criteria for severe environmental damage and gross or systematic human rights violations have been met in this case.

The Council’s recommendation is based on surveys and investigations conducted or commissioned by Indian authorities, reports from national and international non-governmental organisations, articles in Indian and international newspapers, and documentaries. In addition to this, the Council has commissioned its own reports and studies by external Norwegian, British, and Indian consultants. Furthermore, the Council has gained access to letters and orders from Indian authorities to the company.

Active ownership may in some cases be suitable as a means of influencing companies for the purpose of redusing the risk of contribution to unethical activities. Responsibility for exercising ownership rights for the Fund lies with Norges Bank (Norway’s Central Bank). The Ministry of Finance has asked Norges Bank whether active ownership vis-à-vis Vedanta may lead to better behaviour on its part. In a letter dated 15 June 2007, Norges Bank states that they have not been in direct contact with either Vedanta’s management or board, or had any separate sources of information about the company. The bank’s assessment is therefore primarily based on the recommendation from the Council on Ethics, and Council’s own sources. Against this background, the bank perceives no imminent possibility of influencing the company through active ownership. Norges Bank does not have concrete plans at this time of entering into a dialogue with this particular company, considering that the aspects dealt with in the recommendation do not fall within the key areas that the bank has committed to pursuing through active ownership, and seeing that ownership in the company is minor.

Based on the reccomendation from the Council on Ethics and the assessment done by Norges Bank [as to the possibility of exercising ownership rights], the Ministry of Finance has decided to exclude Vedanta from the Fund’s investment universe pursuant to the Fund’s Ethical Guidelines. The Ministry has also decided to exclude Vedanta’s two listed subsidiaries; Sterlite Industries Ltd and Madras Aluminium Company Ltd from the investment universe. The Fund held no shares in these two companies at the time when the Ministry of Finance received the recommendation from the Council on Ethics.

The Ministry of Finance requested Norges Bank by letter of 28 August to divest from Vedanta by the end of October 2007. The divestment process is now concluded. As of 30 April 2007, the Government Pension Fund – Global held shares in Vedanta valued at about NOK 70 million. The publication of the decision has been deferred to ensure an appropriate divestment process.

Find the recommendation of the Council on Ethics here

Read more about the Council on Ethics

List of companies excluded from the investment universe



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