Frequently Asked Questions

  1. I have information about a case that I would like to make the Council aware of. How do I proceed?
  2. What is the relationship between the Council on Ethics, Norges Bank and the Ministry of Finance?
  3. In brief, how can a company be excluded?
  4. What is product-based exclusion?
  5. Which factors are decisive for the exclusion of a company based on its conduct?
  6. What criteria may form the basis for exclusion?
  7. In how many companies is the Fund invested?
  8. Which companies are currently excluded from the Fund?
  9. With more than 8 000 companies in the portfolio, how does the Council on Ethics prioritize its work?
  10. ‘Everyone’ knows that the company X is ‘unethical’. Why has it not been excluded from the Fund?
  11. Why are companies not being excluded if they have been excluded by other investors?
  12. Why does the Council on Ethics not explain at what stage in the process a certain company is when being requested to do so by journalists and others?
  13. What happens after the Council on Ethics has recommended exclusion?
  14. Does the Ministry of Finance have to adopt the recommendations from the Council on Ethics?
  15. Is an exclusion from the Fund permanent?
  16. What kind of sources does the Council on Ethics use when it investigates a company?
  17. At what stage does the Council on Ethics contact the company?
  18. Why does the Council on Ethics not recommend that, for example, more money should be invested in ‘green’ companies?
  19. What does it mean to put a company under observation?


______________________

 

 

 

1. I have information about a case that I would like to make the Council aware of. How do I proceed?

The Council on Ethics depends on input from individuals, organizations and others. Please follow this link to access our contact information.

  • Before contacting the Council, please check whether your query has already been answered here.
  • It is more likely that allegations of violations by a company will be looked into if they are backed up by reliable information. We encourage everyone to refer to verifiable facts and sources whenever this is possible.

Back to the top

______________________

 

2. What is the relationship between the Council on Ethics, Norges Bank and the Ministry of Finance?

As the owner of the Fund, the Ministry of Finance is in charge of establishing the overall strategy for responsible investments and the criteria for exclusion of companies based on products and conduct. It is also the Ministry of Finance that, following recommendations from the Council on Ethics, decides whether a company should be excluded or placed on a watch list.

Norges Bank is the Fund’s operational manager and is responsible for the exercise of ownership rights.

The Council on Ethics monitors the Fund’s portfolio with a view to detecting whether companies should be excluded and submits recommendations for the exclusion and observation of specific companies to the Ministry of Finance.

Back to the top

______________________

 

3. In brief, how can a company be excluded?

The Fund must avoid investments that constitute an unacceptable risk of contributing to serious breeches of its norms. The task of the Council on Ethics is to supervise the portfolio with a view to detecting whether companies should be excluded from the Fund’s investment universe and giving the Ministry of Finance advice in this respect. If the Ministry follows the Council’s recommendation, it will instruct Norges Bank to sell its shares or obligations in a given company.

Practices that may lead to exclusion are stated in the Ethical Guidelines and include serious or systematic human rights violations, severe environmental damage, gross corruption, serious violations of the rights of individuals in situations of war or conflict, or other particularly serious violations of fundamental ethical norms.

Back to the top

______________________

 

4. What is product-based exclusion?

The majority of companies excluded from the Fund’s investment universe have been excluded because they produce certain products in contravention of the Ethical Guidelines. Companies that produce key components to weapons which violate fundamental humanitarian principles through their normal use are excluded from the Fund. This includes nuclear weapons, cluster weapons and anti-personnel mines. Following the evaluation of the Ethical Guidelines in 2009, tobacco production has also been included as a criterion for exclusion. Companies that sell military material to the Burmese state are excluded from the portfolio as well.

Back to the top

______________________

 

 

5. Which factors are decisive for the exclusion of a company based on its conduct?

Individual companies may be excluded from the Fund if investing in the company could expose the Fund to an unacceptable risk of contributing to grossly unethical practices. The Council will, among other factors, assess:

  • whether the violations fall within the scope of the Fund’s Ethical Guidelines;
  • whether it is possible to establish a clear connection between the company’s practices and the violations;
  • whether the violations may be regarded as isolated incidents or whether they constitute an indication of present and future practices;
  • whether the violations are serious or systematic;
  • whether the violations will lead to long-term or permanent damage to humans or the environment;
  • whether there is sufficient documentation to substantiate allegations of violations; and
  • whether the company has implemented measures to prevent or remedy the violations.

Back to the top 

______________________

 

  

6. What criteria may form the basis for exclusion?

As mentioned in the Ethical Guidelines, the following will lead to the exclusion of a company from the Fund’s investment universe:

  • production of weapons that violate fundamental humanitarian principles through normal use;
  • tobacco production;
  • sale of weapons or military material to sovereign states mentioned under subsection 3.2 of the Guidelines for Management of the Government Pension Fund Global (Burma).

Similarly, the following types of conduct may also lead to a company’s exclusion from the Fund:

  • serious or systematic human rights violations such as murder, torture, deprivation of liberty, forced labour, the worst forms of child labour and other child exploitation;
  • serious violations of the rights of individuals in situations of war or conflict;
  • severe environmental damage;
  • gross corruption;
  • other particularly serious violations of fundamental ethical norms.

Back to the top

______________________

 

  

7. In how many companies is the Fund invested?

Norges Bank Investment Management (NBIM) publishes the Fund’s holdings on its website annually. As of 31.12.2009 the holdings include more than 8 300 companies.

Back to the top

______________________

 

8. Which companies are currently excluded from the Fund?

Please use the link to see the recommendations from the Council on Ethics and the list of companies that are currently excluded.

Back to the top

______________________

 

 

9. With more than 8 000 companies in the Fund’s portfolio, how does the Council on Ethics prioritize its work?

The Council on Ethics dedicates considerable resources to screening companies and gathering information about them. It has hired a consultancy firm to carry out daily internet-based news searches on all companies in the Fund’s portfolio. The consultant submits a monthly report to the Council with an overview of companies accused of severe environmental damage, contributing to human rights violations, corruption or other violations. Based on these reports, the Secretariat carries out a preliminary assessment of how serious or systematic the violations seem to be. Several companies are often accused of similar violations in the monthly reports. In order to identify the most serious violations, the Council attempts to see such cases in context. In addition to the monthly reports, the Council on Ethics receives enquiries from individuals or organizations requesting it to look into certain issues or individual companies. These requests are treated in the same way as information provided through the Council’s news searches. The more specific such requests are, the easier it is for the Council on Ethics to address them.

The Council also assesses companies on its own initiative. If a situation arises which indicates that the Council should be especially vigilant with regard to a particular sector or country, it may be appropriate to initiate an investigation that is not necessarily based on information about specific companies.

In certain cases, the Ministry of Finance asks the Council to examine individual companies. The Council gives preference to these requests and always submits a recommendation in such cases, including when it does not find grounds to recommend the exclusion of a company.

Back to the top

______________________

 

10. ‘Everyone’ knows that the company X is ‘unethical’. Why has it not been excluded from the Fund?

There are several possible explanations for this. For example, it is possible that the company is currently being assessed by the Council, but that no decision has yet been reached. Sometimes the Council on Ethics follows the developments in cases over time, and it may take several years before it reaches a conclusion. It is also possible that a recommendation has been submitted to the Ministry of Finance. If the Ministry adopts the recommendation from the Council on Ethics, it will instruct Norges Bank to sell its stake in the company, and the recommendation will subsequently be made public. Yet another possibility is that the unethical practices are so recent that the Council has not had the opportunity to assess them so far. Finally, it is common that cases are assessed by the Council without resulting in a recommendation for exclusion. Such deliberations are not normally published, because, among other reasons, they may be seen as a stamp of approval for companies.

Back to the top

______________________

 

11. Why are companies not being excluded if they have been excluded by other investors?

The Council on Ethics evaluates the situation independently of other investors’ choices and must act in accordance with the Fund’s Ethical Guidelines. Other funds may have other guidelines. See question 6 for a description of possible factors on which the Council may base its assessments.

Back to the top

______________________

 

12. Why does the Council on Ethics not explain at what stage in the process a certain company is when being requested to do so by journalists and others?

The task of the Council on Ethics is to submit recommendations to the Ministry of Finance. Even if the Council gladly receives input and information from individuals and advocacy groups, it does not normally comment on recommendations and procedures before any recommendation has been presented.

The Ministry of Finance has established that the Council on Ethics shall not comment on which companies it is assessing; see subsection 4.2.6 Public disclosure in relation to the Ethical Guidelines in Report no. 24 (2006-2007) to the Storting, ‘On the Management of the Government Pension Fund in 2006’.

There are several reasons why the Council on Ethics should be discreet when it comes to commenting on its work related to companies where no recommendation has been made public. Since statements issued by the Council on Ethics may be of significant importance to the company’s reputation and potentially also to the share price, the Council should only issue well-founded statements. Another reason why the Council is careful about making statements is that doing so may, in some cases, be perceived as a form of approval from the Council on Ethics regarding practices that are dubious but still do not reach the threshold for exclusion. This is also a question of setting priorities in relation to the Council on Ethics’ resources. Cases that will probably not lead to exclusion are put aside without generating any conclusive report suitable for publicising.

Back to the top

______________________

 

13. What happens after the Council on Ethics has recommended exclusion?

The Ministry of Finance decides to exclude companies from the Fund’s investment universe following a recommendation from the Council on Ethics. Before reaching a final decision in this respect, the Ministry assesses whether other measures may be more suitable to reduce the risk of violations. It may request Norges Bank’s opinion in the case, including whether Norges Bank’s exercise of ownership rights may be a more effective means than exclusion. The recommendation and the decision regarding exclusion will be made public as soon as Norges Bank has completed the sale of the securities in question. Such divestment will normally take place over a period of two months.

Back to the top

______________________

 

14. Does the Ministry of Finance have to adopt the recommendations from the Council on Ethics?

No. According to the Guidelines, section 2, subsection (4):

In assessing whether a company shall be excluded in accordance with subsection (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.

The recommendation is made public when the securities in question have been sold or when the Ministry has taken a final decision not to adopt it.

Back to the top

______________________

 

15. Is exclusion from the Fund permanent?

No. The Council on Ethics routinely assesses whether the grounds for the exclusion of a company are still valid. If new information indicates that the basis for exclusion has ceased to exist, the Council recommends revoking the exclusion.

Back to the top

______________________

 

 

16. What kind of sources does the Council on Ethics use when it investigates a company?

The Council on Ethics bases its work on a series of different sources. The main rule is that the information taken into account must be verifiable. In order to gather information the Council on Ethics often maintains contact with special interest groups, local and national authorities, international organizations, local and international experts and the company itself. Important information may include documentation such as research and scientific reports, legal sources, environmental impact assessments, reports from non-governmental organizations, the company’s own documents, etc. The Council on Ethics does not have a mandate to subpoena anyone or order the release of documents. In certain cases the Council on Ethics hires external specialists to carry out field studies or other studies if considered necessary to sufficiently document the violations.

In the Council’s recommendations the sources are generally cited; however, in certain cases they may be omitted in order to protect personal safety.

Back to the top

______________________

 

17. At what stage does the Council on Ethics contact the company?

The Ethical Guidelines, section 5, subsection (3), state the following about the Council’s contact with the company:

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.

The primary purpose of the Council on Ethics’ contact with a company is always to establish whether there are grounds for exclusion.

Back to the top

______________________

 

18. Why does the Council not recommend that, for example, more money should be invested in ‘green’ companies?

It falls outside the scope of the Council on Ethics’ mandate to issue recommendations as to where the Fund should invest. The Council is only required to submit recommendations regarding the observation of a company or its exclusion from the Fund.

Back to the top

______________________

 

19. What does it mean to put a company under observation?

In some cases there may be doubts as to whether the conditions for exclusion have been met or as to how a company’s conduct will evolve in the future. In such cases the Ministry of Finance has the opportunity to put the company under observation. The Ministry may do this following a recommendation for observation or a recommendation for exclusion from the Fund. Once a company is placed on the watch list, a plan is prepared concerning how the observation will take place, and both the Council on Ethics and Norges Bank may play a part in monitoring the company.

Back to the top