March 21, 2017 / 10:38 AM / in 2 years

Norway's wealth fund says ethics profile has cost $1.4 billion in a decade

OSLO (Reuters) - Norway’s $915-billion (734.52 billion pounds) sovereign wealth fund, the world’s largest, is earning less money because of divestments it has made over the past decade due to ethical considerations, it said on Tuesday.

The fund, which funnels the proceeds of Norway’s oil and gas production, invests in close to 9,000 companies worldwide.

It is forbidden by law from investing in firms that produce nuclear weapons or landmines, or are involved in serious and systematic human rights violations, among other criteria.

The fund returned 1.11 percentage points less between 2006 and 2016 as a result of exclusions of companies on ethical grounds, according to a report it published on Tuesday.

The loss was about 12 billion crowns, or $1.42 billion, for the decade, fund CEO Yngve Slyngstad told reporters. Still, he said, he would not want the fund to be allowed to invest again in those companies.

“There is a broad consensus among Norwegians that the fund should not earn money from companies that take people’s lives,” he said.

Some 65 companies are excluded on ethical grounds, based on the recommendation of the fund’s ethical watchdog, the Council on Ethics. Another 69 firms are excluded directly by the fund based on their dependence on thermal coal.

The biggest loss of 1.16 percentage points was caused by not being invested in tobacco producers, followed by manufacturers of specific weapons, such as nuclear weapons, cluster munitions and anti-personnel landmines.

But there was an upside on some types of investments. By being divested from companies that cause severe environmental damage, for example coal mining firms and those that fell rainforests, the fund earned 0.78 of a percentage point more than if it had stayed invested in those companies, the report said.

Reporting by Gwladys Fouche, editing by Ed Osmond

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