Historical archive

Exclusion of metallurgical and mining company

Historical archive

Published under: Stoltenberg's 2nd Government

Publisher Ministry of Finance

On the advice of the Council on Ethics for the Government Pension Fund – Global, the Norwegian Ministry of Finance has decided to exclude the Russian metallurgical and mining company Norilsk Nickel. The Council on Ethics finds it probable that Norilsk’s operations are contributing to extensive environmental damage.

On the advice of the Council on Ethics for the Government Pension Fund – Global, the Norwegian Ministry of Finance has decided to exclude the Russian metallurgical and mining company Norilsk Nickel. The Council on Ethics finds it probable that Norilsk’s operations are contributing to extensive environmental damage that will have effects far into the future. This is deemed to be in breach of the ethical guidelines for the Fund.

The Council on Ethics has assessed Norilsk Nickel’s Polar Division on the Taymyr Peninsula in Siberia and the pollution problems connected with operations there.

In its recommendation the Council on Ethics emphasises inter alia that many years of especially high emissions of SO2 and heavy metals from Norilsk’s activities on the Taymyr Peninsula have inflicted extensive, lasting damage on the environment, which the forest, vegetation and waters surrounding the operations clearly bear signs of. The Council finds that the emissions from the company are the direct cause of forest death and other serious, visible damage to the natural environment in the Norilsk area on the Taymyr Peninsula.

Furthermore the Council on Ethics emphasises that the over 200,000 people who live in the vicinity of the company’s industrial operations on the Taymyr Peninsula are continuously exposed to high concentrations of pollutants in the air, soil and water. Health problems and illnesses among persons subjected to prolonged exposure to SO2, nickel and heavy metals are well established. The Council attaches particular weight to the impacts on the health of children and infants, who are especially vulnerable to high levels of air pollution.

The Council on Ethics has obtained information from a broad range of sources, including investigations and statements regarding Norilsk Nickel by the Russian authorities, scientific studies under the auspices of the UN and the World Bank, and articles in Russian and international scientific journals. The Council has amongst others placed importance on reports prepared by the Russian environmental protection agency (Rosprirodnadzor), which is subordinate to the Ministry of Natural Resources, reports issued by the Russian Academy of Sciences, and scientific and technical assessments made by the Arctic Monitoring Program (AMAP).

Norilsk Nickel has replied to an enquiry from the Council pertaining to the case at hand. Though acknowledging that the environmental damage is severe, the company believes that the implementation of the action plan for reducing emissions set for the period until 2015 is a success. According to the company, a speedy and effective solution of the environmental problems is impossible without shutting down operations for a lengthy period, which would have substantial social and economic drawbacks. In the view of the Council on Ethics the arguments made by the company are in part difficult to check, and the final targets the company has set are unrealistic. For that reason the Council does not regard it as probable that the extensive emissions reductions that are necessary to reduce serious harm to the environment and human health will take place in the near future.

Even if a part of the pollution problem is due to plant operation before Norilsk entered the picture, the Council does not regard the company’s actions to reduce emissions and discharges of metals now and in the future as being adequate. To the Council’s knowledge, the company’s ambitious targets for emissions reductions adopted in 2003 have not been realised, and the Russian authorities have pointed out that the company’s emissions to the air and discharges to rivers etc. exceed permitted thresholds. Nor does the company have plans to clean up the contamination of the soil by heavy metals in and around the city of Norilsk. It is clear to the Council on Ethics that the company has not done enough to prevent or reduce environmental damage.

The Council is aware that there have been criticisms in regard to the Kola Peninsula operations on the northern border of Norway, claiming that the company has been causing serious environmental damage over a long period of time without taking measures to reduce emissions from its smelter operations. The Council has not assessed the company’s operations on the Kola Peninsula.  

The Ministry endorses the Council’s assessments and has therefore decided, pursuant to the Fund’s ethical guidelines, to remove Norilsk Nickel from the investment universe of the Government Pension Fund – Global.  

On 31 August 2009, the Ministry of Finance instructed Norges Bank that Norilsk Nickel should be excluded from the Government Pension Fund - Global and gave 31 October 2009 as the deadline for completion. The sale of all shares in the company has now been completed. The decision to sell is being made public after the shares were sold, so as not to affect the sale.

The recommendation from the Council on Ethics is available here.

Read more about the Council on Ethics for the Government Pension Fund – Global:

www.etikkradet.no/english

List of companies excluded from the fund's investment universe.