OSLO (Reuters) - Norway’s $1.1 trillion (£859.6 billion) wealth fund can no longer invest in G4S (GFS.L) because of the “unacceptable risk” that the security services company contributes to, or is responsible for human rights violations, the central bank said on Thursday.
Norway’s fund held a 2.33% stake in G4S at the end of 2018, worth some $90 million at the time, according to fund’s own data.
G4S shares fell on the news. They stood at 204.8 pence just before the 0900 GMT announcement and fell to 200.8 shortly after. At 1245 GMT they were trading at 205.7 pence, down 1.296%.
Norway’s sovereign wealth fund, the world’s largest, operates under ethical guidelines set by parliament.
It has excluded 156 firms so far, including for producing tobacco, nuclear weapons, causing severe environmental damage, or deriving more than 30% of revenues from coal.
In response, G4S said it had been engaging with the fund’s Council on Ethics for the past three years on the issue.
“We carried out a robust investigation into the issues raised by the Council on Ethics into G4S’s employment practices in Qatar and the UAE,” a company spokeswoman said.
“We are making good progress on our action plan to reinforce our high standards in relation to employee recruitment and welfare provisions in the Middle East.”
The spokeswoman said the company had appointed a full-time Migrant Worker Co-ordinator whose primary role is to conduct research into recruitment agencies, their practices and fees in each of the countries of origin, ensuring strict compliance with the company’s code and that its policies and standards of employment are upheld.
G4S’s exclusion from the fund was based on an assessment of the company’s operations in Qatar and the United Arab Emirates, the fund’s ethics watchdog, the Council on Ethics, said in a separate statement.
Many of G4S’s employees in the two Gulf countries are migrant workers who paid recruitment fees to join the company, the council said.
“When the workers arrive in the Gulf, they must spend a significant part of their salary to pay off this debt, and therefore have little chance of leaving. Many also received far lower wages than agreed, and in the Emirates, the workers got their passport confiscated,” the Council of Ethics statement said.
“The Council’s investigations also revealed long working days, a lack of overtime payment and examples of harassment.”
G4S employs around 18,000 workers in the two countries, the ethics council said, quoting a letter it received from the company this year. The company is the world’s largest private security company with more than half a million employees in 90 countries, its website said.
The fund, created with the wealth from Norway’s oil industry, owns shares in 9,158 companies, 1.4% of the world’s listed equity, so decisions to drop or reinstate companies from its investments carry considerable weight among investors.
The issue of human rights in the Gulf States has long been on the agenda of the fund’s ethics watchdog. It had looked previously at the practice of the construction companies working in Qatar and the United Arab Emirates, among other companies.
In March, the chair of the Council on Ethics Johan H. Andresen told Reuters one of its recommendations could involve a company breaching the human rights of its workers in the Gulf states.
The fund gradually sells shares in any company it wishes to drop, before any announcement is made. The main aim is to remove the ethical risk.
Editing by Mark Potter/Dale Hudson/Jane Merriman