January 16, 2008 / 6:42 PM / 12 years ago

Tobacco, gambling, sex face Norway oil fund test

OSLO, Jan 16 (Reuters) - Norway plans an extensive review this year into the ethics of its $380 billion pension fund investments officials said on Wednesday.

The Government Pension Fund — Global, familiarly known as the “oil fund”, is one of the world’s biggest sovereign wealth funds. It invests Norway’s oil and gas income in overseas stocks and bonds to save for a future when the black gold runs out.

Finance Minister Kristin Halvorsen said the ethical guidelines review will result in a report to parliament next year, and she expected non-governmental organisations (NGOs) to raise a range of topics in hearings this spring.

“Production of tobacco, gambling for instance, nations that break human rights ... the sex industry — these are entirely concrete issues” that will come up, Halvorsen told reporters during a two-day ethical investment conference.

Some groups have also proposed excluding investment in companies with activities in Palestinian territories occupied by Israel, Halvorsen said.

She later told Reuters there may also be a push for more investment into “green” technologies.

So far the fund, which is invested in 7,000-7,500 foreign companies, has excluded just 25 — 20 arms producers, three for environmental damage and two for human or worker rights abuses — from its “investment universe” on ethical grounds.

Just last week, it ejected South Korea’s Hanwha Corp (000880.KS), Britain’s Serco Group (SRP.L) and U.S. company GenCorp GY.N from its investments for being engaged in cluster munitions and nuclear weapons production.

Other companies to be dropped from the fund include British mining and metals group Vedanta Resources VED.L for environmental reasons and the world’s biggest retailer Wal-Mart (WMT.N) for human and worker rights violations.

The finance ministry bases the exclusions on guidelines established in 2004 and on recommendations from a Council on Ethics that screens the companies.

Halvorsen’s Socialist Left (SV) party had wanted tobacco stocks excluded from the fund when the rules were drawn up, but failed then to muster enough support.

“The conclusion was that we shouldn’t (exclude tobacco) because it is a legal drug in Norway. I think a lot of people will agree with that in 2008,” Halvorsen said.

Halvorsen said Norway’s central bank, which manages the oil fund for the government, had decided to support the Carbon Disclosure Project, a global non-profit organisation that unites institutional investors to work for a low-carbon economy.

She noted proposals from some citizen groups that part of the fund should be invested in companies that develop new technologies in the fields of clean energy or environmental protection.

“This is one the issues that I think will have broad support among many different Norwegians,” Halvorsen told Reuters. (Reporting by John Acher; editing by Elaine Hardcastle)

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