5 Observation and exclusion of companies

5.1 List of excluded companies as at 31 December 2025

Severe environmental damage

• Astra International Tbk
• Barrick Gold Corp
• Beijing Tong Ren Tang Chinese Medicine Co Ltd
• Bharat Heavy Electricals Ltd
• China Traditional Chinese Medicine Holdings Co Ltd
• Duke Energy Corp (including the wholly owned subsidiaries listed below)
• Duke Energy Carolinas LLC
• Duke Energy Progress LLC
• Progress Energy Inc
• ElSewedy Electric Co
• Freeport-McMoRan Inc
• Genting Bhd
• GMK Norilskiy Nickel PAO
• Grand Pharmaceutical Group Ltd
• Halcyon Agri Corp Ltd
• Jardine Cycle & Carriage Ltd
• Jardine Matheson Holdings Ltd
• NHPC Ltd
• POSCO Holdings Inc
• Posco International Corp
• Power Construction Group of China Ltd
• Ta Ann Holdings Bhd
• Tianjin Pharmaceutical Da Re Tang Group Corp Ltd
• Tong Ren Tang Technologies Co Ltd
• Vale SA
• Volcan Cia Minera SAA
• WTK Holdings Bhd
• Young Poong Corp
• Yunnan Baiyao Group Co Ltd
• Zijin Mining Group Co Ltd

Severe environmental damage | Serious human rights abuses

• Eramet SA
• Evergreen Marine Corp Taiwan Ltd
• Korea Line Corp
• Vedanta Ltd

Serious violations of the rights of individuals in situations of war or conflict

• Adani Ports and Special Economic Zone Ltd
• Ashtrom Group Ltd
• Bank Hapoalim BM
• Bank Leumi Le-Israel BM
• Bezeq The Israeli Telecommunication Corp Ltd
• Caterpillar Inc
• Danya Cebus Ltd
• Elco Ltd
• Electra Ltd/Israel
• FIBI Holdings Ltd
• First International Bank of Israel Ltd/The
• GAIL India Ltd
• Korea Gas Corp
• Mivne Real Estate KD Ltd
• Mizrahi Tefahot Bank Ltd
• Oil & Natural Gas Corp Ltd
• Paz Retail And Energy Ltd
• PTT Oil and Retail Business PCL
• PTT PCL
• Shapir Engineering and Industry Ltd
• Shikun & Binui Ltd

Other serious violations of fundamental ethical norms

• Delek Group Ltd
• Elbit Systems Ltd
• Evraz PLC

Gross corruption or other serious financial crimes

• China State Construction Engineering Corp Ltd
• JBS SA
• Petroleos Mexicanos
• ZTE Corp

Serious or systematic human rights abuses

• Centrais Eletricas Brasileiras SA (Eletrobras)
• Cognyte Software Ltd
• Formosa Chemicals & Fibre Corp
• Formosa Taffeta Co Ltd
• Honeys Holdings Co Ltd
• Li Ning Co Ltd
• Lu Thai Textile Co Ltd
• Page Industries Ltd
• Prosegur Cia de Seguridad SA
• Zuari Agro Chemicals Ltd

Sale of weapons to states engaged in armed conflict that use the weapons in ways that constitute violations of the international rules on the conduct of hostilities

• AviChina Industry & Technology Co Ltd
• Bharat Electronics Ltd

Sale of weapons or military materiel to states that are subject to investment restrictions on government bonds as described in section 2-1(2)(c) of the Management Mandate for the Government Pension Fund Global

• Weichai Power Co Ltd

Unacceptable greenhouse gas emissions

• Canadian Natural Resources Ltd
• Cenovus Energy Inc
• Imperial Oil Ltd
• Suncor Energy Inc

Production of nuclear weapons

• Airbus SE
• BAE Systems Plc
• Boeing Co
• BWX Technologies Inc
• Fluor Corp
• General Dynamics Corp
• Honeywell International Inc
• Huntington Ingalls Industries Inc
• Jacobs Solutions Inc
• L3Harris Technologies Inc
• Larsen & Toubro Ltd
• Lockheed Martin Corp
• Northrop Grumman Corp
• Safran SA

Production of cluster munitions

• Poongsan Corp
• Textron Inc

Production of tobacco

• Altria Group Inc
• British American Tobacco Malaysia Bhd
• British American Tobacco Plc
• Eastern Co SAE
• Gudang Garam tbk pt
• Hanjaya Mandala Sampoerna Tbk PT
• Huabao International Holdings Ltd
• Imperial Brands Plc
• ITC Ltd
• Japan Tobacco Inc
• KT&G Corp
• Philip Morris Cr AS
• Philip Morris International Inc
• RLX Technology Inc
• Scandinavian Tobacco Group A/S
• Shanghai Industrial Holdings Ltd
• Turning Point Brands Inc
• Universal Corp/VA
• Vector Group Ltd

Production of cannabis

• Aurora Cannabis Inc
• Canopy Growth Corp
• Cronos Group Inc
• Tilray Brands Inc

Production of coal or coal-fired energy

• Aboitiz Power Corp
• AES Andes SA
• AES Corp
• AGL Energy Ltd
• ALLETE Inc
• Alliant Energy Corp
• Ameren Corp
• American Electric Power Co Inc
• CESC Ltd
• CEZ AS
• China Coal Energy Co Ltd
• China Power International Development Ltd
• China Resources Power Holdings Co Ltd
• China Shenhua Energy Co Ltd
• Chugoku Electric Power Co Inc/The
• CLP Holdings Ltd
• Coal India Ltd
• CONSOL Energy Inc
• Datang International Power Generation Co Ltd
• DMCI Holdings Inc
• DTE Energy Co
• Electric Power Development Co Ltd
• Electricity Generating PCL
• Emera Inc
• Engie Energia Chile SA
• Evergy Inc
• Exxaro Resources Ltd
• FirstEnergy Corp
• Glencore PLC
• Great River Energy
• Guangdong Electric Power Development Co Ltd
• Gujarat Mineral Development Corp Ltd
• HK Electric Investments & HK Electric Investments Ltd
• Hokkaido Electric Power Co Inc
• Hokuriku Electric Power Co
• Huadian Energy Co Ltd
• Huadian Power International Corp Ltd
• Huaneng Power International Inc
• IDACORP Inc
• Inner Mongolia Yitai Coal Co Ltd
• Korea Electric Power Corp
• Lubelski Wegiel Bogdanka SA
• Malakoff Corp Bhd
• MGE Energy Inc
• New Hope Corp Ltd
• NRG Energy Inc
• NTPC Ltd
• Okinawa Electric Power Co Inc/The
• Otter Tail Corp
• PacifiCorp
• Peabody Energy Corp
• PGE Polska Grupa Energetyczna SA
• Reliance Infrastructure Ltd
• Reliance Power Ltd
• Sasol Ltd
• SDIC Power Holdings Co Ltd
• Shikoku Electric Power Co Inc
• Tata Power Co Ltd/The
• Tenaga Nasional Bhd
• Tri-State Generation and Transmission Association Inc
• Washington H Soul Pattinson & Co Ltd
• WEC Energy Group Inc
• Whitehaven Coal Ltd
• Xcel Energy Inc
• Yankuang Energy Group Co Ltd

5.2 List of companies under observation

Serious violations of the rights of individuals in situations of war or conflict

• KDDI Corp
• Sumitomo Corp

Serious environmental damage

• Marfrig Global Foods SA

Severe environmental damage | Serious or systematic human rights abuses

• Pan Ocean Co Ltd

Other serious violations of fundamental ethical norms

• Semen Indonesia Persero Tbk PT

Gross corruption or other serious financial crimes

• Bombardier Inc
• Petrofac Ltd
• Toronto-Dominion Bank/The

Serious or systematic human rights abuses

• Fincantieri SPA

Production of coal or coal-fired energy

• Berkshire Hathaway Energy Co
• CMS Energy Corp
• Kyushu Electric Power Co Inc
• MidAmerican Energy Co
• NorthWestern Corp
• OGE Energy Corp
• Pinnacle West Capital Corp
• RWE AG
• Tohoku Electric Power Co Inc
• Uniper SE
• Vistra Corp

The list is updated on an ongoing basis and may be found at https://www.nbim.no/ en/responsible-investment/exclusion-of-companies/

5.3 Published recommendations regarding companies

Table 5.1 List of companies on which recommendations were published in 2025

The Council on Ethics has published its recommendations on its website at the same time as Norges Bank has published its decision on the matter. Please find below a summary of the recommendations that were published in 2025. The summaries are drawn from the recommendations whose full text may be found at www.etikkradet.no.

Pursuant to the previous guidelines, Norges Bank was required to consider whether the exercise of ownership rights could be an appropriate way to reduce the risk of continued norm violations or could be more appropriate for other reasons, before making any decision to exclude a company from investment by the GPFG or to place it under observation. On two occasions in 2025, the Bank decided to exercise its influence as a shareholder after receiving a recommendation to exclude from the Council on Ethics. These recommendations concerned the mining companies Rio Tinto PLC/Rio Tinto Ltd (Rio Tinto Group) and South32 Ltd. Norges Bank is therefore responsible for following up these companies.

5.3.1 Brief summary of the year’s recommendations

Bank Hapoalim BM

Issued 2 July 2025

The Council on Ethics recommends that Bank Hapoalim BM (BHBM) be excluded from investment by the Norwegian Government Pension Fund Global (GPFG) due to an unacceptable risk that the company is contributing to serious violations of the rights of individuals in situations of war or conflict.

BHBM is an Israeli bank, which provides financial services and products to businesses and individuals in Israel and the Israeli settlements in the West Bank, including East Jerusalem.

At the close of 2024, the GPFG owned 1.39 per cent of the company’s shares, worth NOK 2.5 billion. The company is listed on the Tel Aviv Stock Exchange (TASE).

BHBM provides financial services in the form of guarantees to building contractors which construct apartment buildings in the West Bank, including East Jerusalem. The guarantees are legally mandatory and are intended to safeguard homebuyers in the event that the building contractor collapses into administration. BHBM has issued such guarantees in connection with residential property projects in the Occupied Palestinian Territory (OPT) on several occasions in recent years, most recently in 2024. The guarantees are a necessary precondition for the construction of residential property in the OPT in violation of international law.

The Council therefore considers there to be an unacceptable risk that BHBM is contributing to the violation of international law in a way that constitutes grounds for exclusion from investment by the GPFG.

Bank Leumi Le-Israel BM

Issued 2 July 2025

The Council on Ethics recommends that Bank Leumi Le-Israel BM (BLLI) be excluded from investment by the Norwegian Government Pension Fund Global (GPFG) due to an unacceptable risk that the company is contributing to serious violations of the rights of individuals in situations of war or conflict.

BLLI is an Israeli bank, which provides financial services and products to businesses and individuals in Israel and the Israeli settlements in the West Bank, including East Jerusalem.

At the close of 2024, the GPFG owned 0.52 per cent of the company’s shares, worth NOK 1 billion. The company is listed on the Tel Aviv Stock Exchange (TASE).

BLLI provides financial services in the form of loans and guarantees to building contractors which construct apartment buildings and develop properties in Israeli settlements in the West Bank, including East Jerusalem. The guarantees are legally mandatory and are intended to safeguard homebuyers in the event that the building contractor collapses into administration. BLLI has issued such loans and guarantees in connection with construction projects in the Occupied Palestinian Territory (OPT) on several occasions in recent years, most recently in 2024. The loans and guarantees are a necessary precondition for the construction of residential property in the OPT in violation of international law.

The Council therefore considers there to be an unacceptable risk that BLLI is contributing to the violation of international law in a way that constitutes grounds for exclusion from investment by the GPFG.

Caterpillar Inc

Issued 2 July 2025

The Council on Ethics recommends the exclusion of Caterpillar Inc. from the Government Pension Fund Global due to an unacceptable risk that the company contributes to serious violations of individuals’ rights in situations of war or conflict.

Caterpillar is an American company that, among other things, manufactures construction machinery. As of the end of 2024, the Government Pension Fund Global held shares in the company valued at NOK 24.4 billion, corresponding to an ownership stake of 1.23 percent. The company is listed on the New York Stock Exchange.

The basis for this case is that bulldozers manufactured by Caterpillar are being used by Israeli authorities in the widespread unlawful destruction of Palestinian property.

In the Council’s assessment, there is no doubt that Caterpillar’s products are being used to commit extensive and systematic violations of international humanitarian law. The company has also not implemented any measures to prevent such use. As deliveries of the relevant machinery to Israel are now set to resume, the Council considers there to be an unacceptable risk that Caterpillar is contributing to serious violations of individuals’ rights in war or conflict situations, pursuant to section 4(b) of the Fund’s ethical guidelines.

Eramet SA

Issued 18 March 2025

The Council on Ethics recommends that Eramet SA be excluded from investment by the Norwegian Government Pension Fund Global (GPFG) due to an unacceptable risk that the company is contributing to, or is itself responsible for, serious environmental damage and gross violation of the human rights of uncontacted Indigenous people.

The Council’s assessment relates to Eramet’s participation in the joint venture PT Weda Bay Nickel (WBN), which extracts nickel on the island of Halmahera in Indonesia.

Eramet is an international mining and metals processing company which is listed on the Euronext Paris stock exchange. At the close of 2024, the GPFG owned 0.74 per cent of the company’s shares, worth NOK 134 million.

Eramet acquired a stake in WBN in 2006 and currently holds a 38.9 per cent indirect shareholding in the joint venture. Development of the mine commenced in 2017 and it went into operation in 2019. The concession area extends across 450 km² . So far, 27 km² has been developed. The mine has an expected lifespan of 25 years. Eramet is its operator.

Mining operations will result in the deforestation of large areas of intact rainforest. The concession area is part of a biodiversity hotspot and overlaps with both a Key Biodiversity Area and an Endemic Bird Area. WBN’s own surveys have identified the entire concession area as a critical habitat, in other words, an area of high conservation value and importance for biodiversity, with many endemic species. The Council attaches importance to the fact that each one of these different classifications emphasises the area’s material contribution to global biodiversity and the importance of its preservation.

WBN will implement measures to reduce the environmental impact of its operations. The measures include, for example, “avoidance zones” and “offset areas” both inside and outside of the concession area. WBN states that the goal of these measures is to achieve a net positive outcome – in other words, a measurably positive impact on biodiversity. Given that the area to be cleared of forest has a high conservation value, it is not clear to the Council how a net gain in biodiversity may be achieved in connection this project.

In this case, the risk of serious environmental damage is closely linked to the rights of Indigenous people. The deforestation and environmental damage associated with to the mining operation could threaten the survival of the O’Hongana Manyawa people, who are one of the last uncontacted Indigenous peoples in Indonesia.

Uncontacted Indigenous people have themselves decided to live isolated from the outside world. Contact with outsiders may have fatal consequences for the group because they do not have immunity to diseases that are common in other communities. The O’Hongana Manyawa people’s livelihood, way of life and culture are based on the resources contained in the Halmahera Forest. Surveys show that the territory of this group of Indigenous people lies both inside and outside of WBN’s concession area.

A decisive factor for the Council has been that deforestation and the fragmentation of forest land as a result of mining operations will increase substantially in the years ahead and that it will result in a corresponding reduction in the O’Hongana Manyawa people’s territory. This encroachment on the land they occupy could increase the risk of their coming into contact with outsiders.

Eramet denies that uncontacted Indigenous people live in or near its concession area. The company points out that the latest investigations to which it has contributed have found no evidence of this. The Council attaches greater weight to the environmental impact assessment carried out in 2010, which found that such groups were present in and around the concession area and that more recent surveys have confirmed this. The Council would also like to point out that mining operations will affect these groups even though they remain exclusively outside the concession area.

The Council considers that WBN and Eramet are failing to exercise the necessary due diligence to prevent their mining operations from causing significant and irreversible harm to the environment and to people. The Council attaches importance to the fact that isolated Indigenous groups are among the most vulnerable populations in the world, and that the O’Hongana Manyawa do not have anywhere else to live than Halmahera’s rainforest. The Council considers that the risk of Eramet contributing to serious environmental damage and gross human rights violations will remain unacceptable for as long as the joint venture’s activities lead to the loss of large swathes of intact rainforest and the territory of uncontacted Indigenous people is not protected.

FIBI Holdings Ltd / First International Bank of Israel

Issued 2 July 2025

The Council on Ethics for the Norwegian Government Pension Fund Global (GPFG) recommends that First International Bank of Israel and the parent company FIBI Holdings Ltd be excluded from investment by the GPFG due to an unacceptable risk that the companies is contributing to serious violation of the rights of individuals in situations of war or conflict.

First International Bank of Israel is an Israeli bank that provides financial services and products to businesses and individuals in Israel and Israeli settlements in the West Bank, including East Jerusalem. FIBI Holdings Ltd owns 48.34 percent of the shares in First International Bank of Israel.

At the close of December 2024, the GPFG owned 0.99 per cent of First International Bank of Israel, worth NOK 553 million, and shares valued at NOK 345 million, corresponding to a 1.68 percent ownership stake in FIBI Holdings Ltd. Both companies are listed on the Tel Aviv Stock Exchange.

First International Bank of Israel provides financial services in the form of guarantees to construction companies building apartment blocks in the West Bank, including East Jerusalem. These guarantees are required by law and are intended to safeguard consumers in the event that the construction company collapses into administration. First International Bank of Israel has issued such guarantees in connection with housing projects in the Occupied Palestinian Territory (OPT) multiple times over the course of the past few years, most recently in 2024. These guarantees are a necessary precondition for the construction of residential properties in the OPT, which is in violation of international law.

The Council therefore considers that there is an unacceptable risk that First International Bank of Israel and the parent company FIBI Holdings Ltd is contributing to the violations of international law in a way that constitutes grounds for recommending that the company be excluded from investment by the GPFG.

Fincantieri SpA

Issued 5 November 2024

The Council on Ethics recommends that the Italian company Fincantieri SpA be placed under observation due to the risk that it is contributing to serious or systematic human rights abuses. This recommendation rests on the risk that migrant workers employed by subcontractors engaged at Fincantieri’s shipyards in Italy are being exploited. Observation entails the Council monitoring the case going forward and making a new assessment at a later date.

Fincantieri is one of the world’s largest shipbuilders. It has shipyards in Italy, Brazil, Norway, Romania, USA and Vietnam. The Italian state owns over 71 per cent of the company’s shares.

At the close of June 2024, the Norwegian Government Pension Fund Global (GPFG) owned 0.52 per cent of Fincantieri’s shares, worth NOK 45.9 million.

The shipyards are vast construction sites, where Fincantieri coordinates a large number of subcontractors. In 2023, over 45,000 workers, employed by around 2,400 different companies, were involved in a variety of production processes at the company’s Italian shipyards. Many of the workers come from non-European countries.

A series of legal proceedings have revealed that several thousand people who have been employed by subcontractors at Fincantieri’s shipyards have been subjected to grossly exploitative working conditions. The workers’ pay and employment terms have deviated sharply from statutory and collectively agreed terms and conditions. This includes non-payment of overtime or supplements for work performed at night and on public holidays. The workers have had to work illegally long working hours and have received no sick pay. The Council accords weight to the fact that these practices have, in particular, impacted immigrants who are dependent on employment contracts to obtain residence permits in Italy. In this very vulnerable situation, they are at the mercy of their employer.

Although the workers are employed not by Fincantieri but by its subcontractors, the Council takes the view that Fincantieri is contributing to the abuses. The Council accords weight to the fact that the work is performed at Fincantieri’s shipyards, access to which is controlled. Furthermore, the Council finds it important that several employees and former employees of Fincantieri have been indicted for complicity in the exploitation of labour and that the company itself stands indicted for failing to have adequate systems in place to prevent this.

In its assessment of future risk, the Council attaches importance to the company’s response when allegations of labour rights violations have come to light, and what the company has done to reduce the risk of such violations.

The Council notes that the company has attempted to silence criticism by taking legal action against journalists, the labour inspectorate and trade union leaders. Nor are the labour rights violations mentioned in the company’s extensive sustainability reports. The Council considers that Fincantieri has persistently provided an overly positive impression of employment conditions at its yards.

The above notwithstanding, the Council acknowledges that Fincantieri has established a system to safeguard labour rights, and accords especial weight to the fact that this system seems to be under development. In the Council’s opinion, the system has, so far, not been sufficiently extensive or targeted, but notes that, in 2023, the company performed its first ever due diligence assessment (on its European operations) in accordance with the UN Guiding Principles for Business and Human Rights. This has enabled the company to draw up an action plan that is intended to reduce the risk. However, no quantitative targets for the company’s initiatives have been disclosed, and the system for monitoring labour rights compliance will not been in place until 2025. The Council therefore considers that uncertainty still attaches to how the situation will develop going forward.

Mizrahi Tefahot Bank Ltd

Issued 2 July 2025

The Council on Ethics recommends that Mizrahi Tefahot Ltd (MTB) be excluded from investment by the Norwegian Government Pension Fund Global (GPFG) due to an unacceptable risk that the company is contributing to serious violations of the rights of individuals in situations of war or conflict.

MTB is an Israeli bank, which provides financial services and products to businesses and individuals in Israel and the Israeli settlements in the West Bank, including East Jerusalem.

At the close of 2024, the GPFG owned 0.63 per cent of the company’s shares, worth NOK 797 million. The company is listed on the Tel Aviv Stock Exchange (TASE).

MTB provides financial services in the form of guarantees to building contractors which construct apartment buildings in the West Bank, including East Jerusalem. The guarantees are legally mandatory and are intended to safeguard homebuyers in the event that the building contractor collapses into administration. MTB has issued such guarantees in connection with housing projects in the Occupied Palestinian Territory (OPT) on several occasions in recent years. The guarantees are a necessary precondition for the construction of residential property in the OPT in violation of international law.

The Council therefore considers there to be an unacceptable risk that MTB is contributing to the violation of international law in a way that constitutes grounds for exclusion from investment by the GPFG.

ORLEN SA

Issued 2 December 2024

At the recommendation of the Council on Ethics, the Polish energy company Orlen was placed under observation in February 2023 due to an unacceptable risk that it was contributing to human rights abuses. The Council’s recommendation rested on Orlen’s acquisition of Polska Press, one of the country’s largest newspaper publishers and a substantial media enterprise in Poland.

At the close of June 2024, the Norwegian Government Pension Fund Global (GPFG) owned 0.19 per cent of Orlen’s shares, worth NOK 390 million. The Polish state owns 49.9 per cent of the company, making it Orlen’s largest shareholder.

The Council’s recommendation was based on the risk that the Polish state, through its controlling interest in Orlen, would exert political influence over Polska Press. This would have implications for press freedom and therefore freedom of expression in Poland. The exercise of political influence on the media is particularly serious in connection with elections. However, because of uncertainty about the extent to which this risk would materialise in connection with the then forthcoming general elections, the Council recommended that the company be placed under observation.

The Council commissioned the monitoring of Polska Press-owned newspapers’ election coverage in 2023, compared with media coverage of the election campaign in 2019. In the Council’s opinion, both this study and other available information have confirmed that Orlen’s ownership of Polska Press led to the editorial content of Polska Press’s newspapers being subjected to political influence, and that this restricted freedom of the press in Poland.

In March 2024, Orlen’s board of directors and executive management were replaced, and the company has subsequently decided to divest its ownership of Polska Press. The Council also attaches importance to the fact that guidelines forbidding the group from participating in political activity are currently being introduced. The commercial management of Polska Press has, moreover, been disconnected from editorial decision-making, while new editors of regional newspapers have been recruited via open recruitment processes. This could strengthen editorial freedom going forward.

The Council considers that the changes implemented at Orlen and Polska Press following the 2023 general elections indicate that there is no longer an unacceptable risk that the company is helping to restrict press freedom and freedom of expression in Poland.

The Council therefore recommends that observation of Orlen SA be terminated.

Paz Retail and Energy Ltd

Issued 19 December 2024

The Council on Ethics recommends that Paz Retail and Energy Ltd (Paz) be excluded from investment by the Norwegian Government Pension Fund Global (GPFG) due to an unacceptable risk that the company is contributing to serious violation of the rights of individuals in situations or war or conflict.

Paz is an Israeli company which operates filling stations. The company is listed on the Tel Aviv Stock Exchange. At the close of June 2024, the GPFG owned 0.57 per cent of the company’s shares, worth NOK 58.6 million.

Paz owns and operates filling stations in nine Israeli settlements in the West Bank, thereby supplying the settlements with fuel. Several of these settlements have been built far inside the Occupied Palestinian Territory (OPT) and are linked to Israel by dedicated access roads.

By operating infrastructure for the supply of fuel to the settlements, Paz is contributing to their perpetuation. The settlements have been established in violation of international law, and their perpetuation constitutes an ongoing violation thereof. The Council therefore considers that Paz is contributing to the violation of international law in such a way as to give grounds for recommending its exclusion from investment by the GPFG.

Petroleos Mexicanos

Issued 18 November 2024

The Council on Ethics recommends that Petroleos Mexicanos (Pemex) be excluded from investment by the Norwegian Government Pension Fund Global (GPFG) pursuant to the criterion relating to gross corruption or other serious financial crime set out in the Guidelines for Observation and Exclusion of Companies from the Government Pension Fund Global.

Pemex is a fully integrated oil and gas company, with a total workforce of approximately 130,000. The company is wholly owned by the Mexican state. Through its three divisions/subsidiaries, Pemex Exploration and Production, Pemex Logistics and Pemex Industrial Transformation, Pemex engages in the exploration, production, refining, sale, storage and transport of oil and gas, as well as the development and production of other petrochemical products. At the close of June 2024, the GPFG owned fixed-income securities in the company worth around NOK 1,443 million.

The Council’s investigations have revealed that Pemex may be linked to multiple allegations or suspicions of corruption in Mexico in the period 2004–2023 where a significant number of employees in the company are supposed to have received bribes. The allegations and suspicions encompass many former Pemex employees, and several of the cases have led to legal settlements in the USA. It is still unclear how many of the cases concerned have ended in penalties being imposed on those involved in Pemex. Nor is it clear how much in total is supposed to have been paid in bribes. However, given that Pemex’s former CEO is alleged to have received almost USD 14 million in bribes, the indications are that substantial sums have been involved.

As a state-owned company, Pemex has a governance system that enables normal control mechanisms to be more easily set aside. This represents a major inherent risk of corruption. The important factor is therefore whether Pemex clearly signals that it takes allegations of corruption seriously. The Council considers that Pemex’s information about possible corruption and other financial irregularities relating to contracts is insufficiently transparent. Rather than providing information on the cases that have been highlighted in the media, the company rejects information published in the media out of hand, calling it untrue and sensationalised. This weakens trust in whether the company has an adequate response to these cases. In this connection, the Council on Ethics will also point out that the situation for journalists who write about corruption in Mexico is extremely challenging.

Given that the company’s former CEO has been under investigation since 2017, and that the company may be linked to a substantial number of corruption cases over the past 20 years, the Council considers that the “tone from the top” at Pemex is too passive with respect to corruption.

Pemex has an anti-corruption system that appears to contain many of the elements required by internationally recognised recommendations. At the same time, however, the Council considers that the company grants too little insight into how this system works in practice. Pemex has not shared any detailed information about the most important findings of its latest corruption risk assessment, how the company’s anticorruption work is organised and performed in practice, or how many employees are actually engaged in the prevention of corruption. Nor has Pemex shared documentation about the way it handles specific contracts or whistleblowing reports, as requested by the Council.

Furthermore, the Council considers it vital that corrupt acts are met with an adequate response – either from the company itself or from the responsible authorities – and in a timely fashion. It is the Council’s understanding that fraud is primarily penalised by bodies external to Pemex, since the company discloses that it has no information about how specific cases are followed up. In light of this, the Council considers that Pemex does not accord sufficient weight to the enforcement aspect of the fight against corruption. In this connection, the Council would also like to highlight the more overarching risk picture. Here, Mexico has a very low standing on the corruption indexes issued by both the World Bank and Transparency International, while Freedom House and other organisations report weak enforcement and a high level of impunity in the country.

Taken together, this does not provide reasonable assurance that Pemex has implemented adequate measures to prevent, detect and respond to corruption, or that this is something that is adequately prioritised by the company’s board and executive management. The Council therefore deems the risk of gross corruption in relation to Pemex’s operations to be unacceptably high.

Rio Tinto Ltd and Rio Tinto PLC

Issued 5 November 2024

The Council on Ethics recommends the exclusion of Rio Tinto PLC and Rio Tinto Ltd (Rio Tinto Group) from investment by the Norwegian Government Pension Fund Global (GPFG) due to an unacceptable risk that the company contributes to severe environmental damage. The Council’s recommendation is based on Rio Tinto’s participation in the joint venture Mineração Rio do Norte (MRN), which operates a bauxite mine in the Amazon rainforest.

Rio Tinto is a global mining company with a dual-listed corporate structure, managed as a single economic unit. Rio Tinto PLC and Rio Tinto Ltd are listed on the stock exchanges in London and Australia, respectively. At the end of June 2024, the GPFG owned 2.2 per cent of the company’s shares, worth approximately NOK 25 billion.

MRN is a joint venture between Rio Tinto (22 per cent), Glencore (45 per cent) and South32 Ltd (33 per cent). In accordance with previous recommendations, the Council assumes that all participants in a joint venture are responsible for its business activities.

MRN has operated the bauxite mine in the Saracá-Taquera National Forest in the Brazilian Amazon since the late 1970s and is planning to expand the mine with effect from 2026. The new project will occupy an additional 100 km² and an area of approximately 64 km² will be completely deforested during the project’s lifespan. The new mine area is located in currently intact rainforest.

Knowledge about biodiversity and the importance of nature conservation and ecosystem services has significantly increased since the 1970s The Council on Ethics refers to the Global Assessment Report published by the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) and the Kunming-Montreal Global Biodiversity Framework, which both conclude that halting the loss of biodiversity is crucial. At the same time, there is an ongoing and drastic decline in biodiversity globally. The Amazon rainforest is the largest on Earth and harbours more than a tenth of the world’s biodiversity. Due to its vast size, it plays an important role in climate regulation, both regionally and globally. The rainforest is under enormous pressure from legal and illegal business activities, and from climate change. Brazil is responsible for the majority of the deforestation in the Amazon, with an estimated loss of 700,000 km² in the period to 2018.

The Council attaches importance to the fact that MRN’s expansion of the mine will result in the deforestation and degradation of intact areas of the Amazon, with consequent adverse impacts on biodiversity, including both discovered and undiscovered species.

The Council notes that MRN uses the mitigation hiearchy developed by the International Finance Corporation (IFC), and has made decisions that will, to some extent, reduce the scale of its land use.

Rio Tinto points out that it through its participation in MRN, the company is promoting “best practice” with respect to environmental and human rights issues. The Council considers that this is something to be expected from any company and that the company’s proposed measures do not materially alter the fact that expansion of the mine will result in the clearance of substantial tracts of intact tropical rainforest in an area of globally significant environmental value.

The Council also presumes, as Rio Tinto points out, that MRN is doing what it can to restore deforested areas. The Council attaches importance to studies showing that even with the application of the most advanced methods for forest restoration, it will take decades before the forest has a profile similar to today’s, if that is at all possible. The Council therefore considers that such restoration will be insufficient to mitigate the environmental damage resulting from the removal of intact forest.

The Council on Ethics concludes that the Fund’s investments in companies that contribute to deforestation and degradation of intact rainforest located in part of an ecosystem of crucial importance to the conservation of a significant share of the world’s biodiversity, must be considered to contravene the ethical guidelines.

RLX Technology Inc

Issued 26 June 2024

The Council recommends that RLX Technology Inc be excluded from the GPFG because of the company’s production of tobacco or tobacco products.

RLX Technology Inc is a holding company registered in the Cayman Islands. RLX is the company behind Relx, the leading brand in the Chinese e-cigarette market. On the basis of the information available, the Council has assessed whether RLX Technology Inc or entities under its control produce tobacco or tobacco products. The Council finds that RLX Technology Inc controls Shenzhen Wuxin Technology Co Ltd, whose subsidiary Shenzhen Fangxin Technology produces e-liquid containing nicotine from tobacco plants.

South32 Ltd

Issued 5 November 2024

The Council on Ethics recommends the exclusion of South32 Ltd from investment by the Norwegian Government Pension Fund Global (GPFG) due to an unacceptable risk that the company contributes to severe environmental damage. The Council’s recommendation is based on South32 Ltd’s participation in the joint venture Mineração Rio do Norte (MRN), which operates a bauxite mine in the Amazon rainforest.

South32 Ltd is a diversified metals and mining company. The company runs operations in Australia, Africa, South America, the Netherlands, UK and Singapore. South32 Ltd is listed on the Australian stock exchange, and at the end of June, 2024, GPFG owned 1.78 per cent of the company’s shares, worth approximately NOK 2 billion.

MRN is a joint venture between South32 Ltd (33 per cent), Glencore (45 per cent) and Rio Tinto (22 per cent). In accordance with previous recommendations, the Council assumes that all participants in a joint venture are responsible for its business activities.

MRN has operated the bauxite mine in the Saracá-Taquera National Forest in the Brazilian Amazon since the late 1970s and is planning to expand the mine with effect from 2026. The new project will occupy an additional 100 km² and an area of 64 km² will be completely deforested during the project’s lifespan. The new mine area is located in currently intact rainforest.

Knowledge about biodiversity and the importance of nature conservation and ecosystem services has significantly increased since the 1970s The Council on Ethics refers to the Global Assessment Report published by the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) and the Kunming-Montreal Global Biodiversity Framework, which both conclude that halting the loss of biodiversity is crucial.

At the same time, there is an ongoing and drastic decline in biodiversity globally. The Amazon rainforest is the largest on Earth and harbours more than a tenth of the world’s biodiversity. Due to its vast size, it plays an important role in climate regulation, both regionally and globally. The rainforest is under enormous pressure from legal and illegal business activities, and from climate change. Brazil is responsible for the majority of the deforestation in the Amazon, with an estimated loss of 700,000 km² in the period to 2018.

The Council attaches importance to the fact that MRN’s expansion of the mine will result in the deforestation and degradation of intact areas of the Amazon, with consequent adverse impacts on biodiversity, including both discovered and undiscovered species.

The Council notes that MRN uses the mitigation hiearchy developed by the International Finance Corporation (IFC), and has made decisions that will, to some extent, reduce the scale of its land use. However, the Council also notes that the company’s proposed measures do not materially alter the fact that expansion of the mine will result in the clearance of substantial tracts of intact tropical rainforest in an area of globally significant environmental value.

The Council on Ethics concludes that the Fund’s investments in companies that contribute to deforestation and degradation of intact rainforest located in part of an ecosystem of crucial importance to the conservation of a significant share of the world’s biodiversity, must be considered to contravene the ethical guidelines.

Toronto-Dominion Bank/The

Issued 5 March 2025

The Council on Ethics recommends that Toronto-Dominion Bank (TD) be placed under observation pursuant to section 4(g) of the Guidelines for Observation and Exclusion of Companies from the Government Pension Fund Global (the ethical guidelines), which addresses gross corruption and other serious financial crime.

TD is one of Canada’s largest banks. Headquartered in Toronto, it has more than 95,000 employees worldwide. The company has a significant presence and activity along the USA’s eastern seaboard. TD is listed on the Toronto Stock Exchange (TSX) and the New York Stock Exchange (NYSE). As at 31 December 2024, the Norwegian Government Pension Fund Global (GPFG) owned 1.05 per cent of the company’s shares, worth just over NOK 11 billion.

The Council’s inquiries have found that TD may be linked to multiple allegations of financial crime and money laundering. In 2024, the company was fined USD 3 billion by the authorities in the USA and over CAD 9 million by the authorities in Canada for wide-ranging failings in its anti-money laundering (AML) programme. In addition, the US authorities’ investigation led to TD’s wholly owned US subsidiary pleading guilty to offences relating to non-compliance with regulatory requirements and anti-money laundering provisions in the period 2014 to 2024. For example, TD is alleged to have laundered proceeds of crime worth more than USD 600 million, primarily related to the sale of narcotics. TD received a civil, administrative fine for similar, though less serious, offences in 2013.

Because the GPFG’s ethical guidelines are forward looking, the issue under assessment is whether there is an unacceptable risk that the company will contribute to, or be responsible for, equivalent norm violations in the future. When assessing whether an unacceptable risk exists, the Council attaches importance not only to the measures and systems a company has implemented to prevent further incidents, but also the extent to which its previous history may, overall, establish a pattern of behaviour that raises the risk of new financial crimes being committed to an unacceptable level.

In its assessment of TD, the Council has attached considerable importance to the fact that employees at various branches of the bank have, independently of each other, been able to help several criminal networks to launder money over multiple years. The Council considers that this, combined with the US investigation’s allegation that leading employees knew about the company’s failings, is indicative of ingrained systemic and cultural problems at the company. Furthermore, the Council considers that the repeated fines imposed on TD and multiple allegations relating to financial crime, including failure to properly comply with regulatory requirements in relation to money laundering, could indicate a pattern of behaviour that raises the risk of new financial crimes being committed to an unacceptable level.

The above notwithstanding, the Council has decided to recommend that TD be placed under observation rather than be excluded from investment by the GPFG. This is because the fines imposed on TD in 2024, combined with requirements for improvement, provide an incentive for the company to avoid future episodes of this type. Furthermore, TD has made wide-ranging personnel changes and announced investments and measures intended to prevent anything similar happening again. At the same time, the company recognises that it may not succeed in achieving certain critical targets in its improvement plan. The Council therefore considers that uncertainty attaches to developments going forward, see section 6(5) of the ethical guidelines.

Observation of TD will enable the Council to obtain information about the company’s improvement process and monitor whether new information linking TD to financial crime comes to light.