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Historical archive

Corporate Complicity in Human Rights Violations

Historical archive

Published under: Stoltenberg's 2nd Government

Publisher Ministry of Finance

Minister of Finance Kristin Halvorsen, opening statement - Council on Ethics' Workshop

Minister of Finance Kristin Halvorsen, opening statement - Council on Ethics' Workshop

Distinguished guests, ladies and gentlemen,

Many people ask: Is it really possible to combine finance and ethics?

I say yes!

It is now almost two years since the Norwegian Government introduced Ethical Guidelines as a part of the framework for the management of the Government Pension Fund – Global, previously known as the Petroleum Fund. While it is still early days, I believe we can say that the guidelines, combined with their implementation, have created an increased awareness about the topic. And since increased awareness and debate is a key ingredient in bringing about change in this field, I would already draw the preliminary conclusion that the ethical guidelines are having positive effects.

The decision to integrate Ethical Guidelines for the Pension Fund was an important political decision. My party – the Socialist Left Party – had put pressure on our colleagues in other Parties over a number of years, so it was in a sense victory when a unanimous Parliament endorsed the guidelines in the autumn of 2004. The fact that we now have a broad political consensus - which I have to admit I am rather proud of - will ensure that ethics remains an integrated part of the management of the Fund also in the long term.

What then is ethics?

In the context of the management of the Pension Fund – Global, we have defined two main ethical obligations:

  • Firstly, the obligation to ensure financial returns so that future generations will benefit from the oil wealth.
  • Secondly, the obligation to respect fundamental rights for those who are affected by the companies in which the Fund invests.

In meeting the first obligation, it goes without saying that the Fund must be managed professionally, have a sound investment strategy and good risk management.

In addition to this, the Guidelines define two mechanisms for meeting the Fund’s ethical obligations:

  1. exercise of ownership rights, and
  2. exclusion of companies.

The exercise of ownership rights has a broad purpose. Its main aim is to safeguard the Fund’s financial interest, as a part of the Fund’s overall investment strategy. At the same time, an owner’s influence may affect changes in companies and encourage companies to put in place systems which will reduce the risk of ethical infringements.

The exclusion of companies is to be used as a tool in cases where there is an unacceptable risk that the Fund may contribute to gross or serious unethical behavior by keeping its holdings in a particular company.

Norges Bank – Norway’s central bank –is operational manager of the Fund and thus responsible for exercising ownership rights. The Bank has laid down principles for its ownership strategy which are in accordance with the UN Global Compact and the OECD Principles of Corporate Governance and for Multinational Enterprises. This mechanism comprises many activities and many areas, from voting at general assemblies to ensure that core corporate principles are respected, to engaging actively with specific companies in areas such as environment and human rights.

Exclusion of companies is a measure of last resort, to be used in cases where the Fund runs an unacceptable risk of being complicit in grossly unethical activities. The fact that the exclusion mechanism is designed to avoid complicity means that it looks to the present and future and should not be used as “punishment” for past behavior. The Council on Ethics for the Fund – which is hosting this important event – is responsible for issuing to the Ministry of Finance recommendations on exclusion, based on specific criteria as set out in the Guidelines. (You will be introduced to these criteria, in particular the criteria relating to human rights violations, in more detail during the seminar.)

The Ethical Guidelines and their implementation build on a broadly defined ethical concept which goes beyond international conventions and standards. The obligations and aspirations laid down by in273441ternational organisations such as the UN, OECD and ILO are all relevant in the implementation of the guidelines, but the ethical considerations are not restricted to convention based standards. The Guidelines focus on what reasonable requirements companies should meet regarding fundamental rights and protection of the environment, human life and health.

Today and tomorrow you will embark on discussions concerning companies and investors’ responsibility with reference to human rights violations. These are complex issues, but nonetheless very important.

I believe that discussing issues of ethics in the business environment will raise awareness among investors and companies alike. Awareness will lead to openness, dialogue and hopefully also to changes. For the Pension Fund – Global, we are still at an early stage of integrating ethical considerations, and we are dependent on communication and dialogue to reach even higher standards in all areas.

I want to thank the Council on Ethics for organising this seminar and I want to thank all the participants who have set aside time to discuss the issue of corporate responsibility in relation to human rights violations. I am confident that you will have fruitful discussions on this very important topic over the next two days.

Thank you

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