1 / 9

Overview

Does Divestment Work? The Case of the Norwegian Government Pension Fund Driving Development: Business as a Force for Good? Global Compact Network Nordic Countries, NHO May 18, 2009 Andreas Føllesdal Norwegian Centre for Human Rights University of Oslo http: //folk.uio.no/andreasf. Overview.

olympia-castaneda
Download Presentation

Overview

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Does Divestment Work? The Case of the Norwegian Government Pension FundDriving Development: Business as a Force for Good? Global Compact Network Nordic Countries, NHO May 18, 2009 Andreas FøllesdalNorwegian Centre for Human RightsUniversity of Oslohttp://folk.uio.no/andreasf

  2. Overview 1. About the Norwegian Government Pension Fund and its Council on Ethics 2. A case of Exclusion: Rio Tinto 3. Does Divestment work? Effects 4. Patterns and Future Trends (AF)

  3. 1. About the Norwegian Government Pension Fund • A Sovereign Wealth Fund • One of the largest single-owned funds in the world. • December 31 2008: Approx 2 275 billion (milliarder) NOK • Is only invested abroad: • small ownership shares in over 7000 individual companies • currently 50 pct. equities and 40 pct. fixed income. • Ethical constraints on investments

  4. A three-track strategy, division of labor A. Exercise of ownership rights (Norges Bank) • to safeguard long-term financial interests, and • pursue the UN’s Global Compact and OECD Guidelines for Corporate Governance Ministry of Finance, on advise from Council on Ethics: B. Negative screening => Exclude companies from the investment universe that produce weapons whose normal may violate fundamental humanitarian principles C. Case by case exclusion of companies => where there is an unacceptable risk of complicity in gross or systematic breaches of certain ethical norms

  5. C) Case by case exclusion To avoid an unacceptable risk of being morally complicit in future: • Serious or systematic human rights violations, such as murder, torture, deprivation of liberty, forced labour, the worst forms of child labour and other forms of child exploitation • Grave breeches of individual rights in situations of war or conflict • Severe environmental degradation • Gross corruption • Other particularly serious violations of fundamental ethical norms

  6. 2 Case: Environmental degradation - Rio Tinto Exclusion recommended February 15, 2008: ”At Grasberg [mine in Indonesia], Freeport mines copper using a natural river system for tailings disposal. Moreover, there is a great risk that acid rock drainage from the company’s waste rock and tailings dumps will cause lasting ground and water contamination. The Council found that continued ownership in Freeport would imply an unacceptable risk of the Fund contributing to severe environmental damage. … Rio Tinto’s response confirms the company’s investments and role in the Grasberg mine, but disputes the Council’s assessment that the mining operation causes severe environmental damage.

  7. 3. Does Divestment work? Effects • On future Norwegian generations: • benefit from the oil wealth while respecting the vital interests of others at some costs: • increased transaction costs, probably reduced yield? • On companies: • Share prices show small dip, corrected within a week • Shaming? • On victims of human rights violations, environmental degradation: • Short term: little? • Though possibly • if ‘shaming’ works … • if risk of exclusion boosts impact of ownership activity • Longer term: Might contribute to standard setting and procedures for shareholder responsibility, to reduce the incentives for competition at the cost of fundamental norms, human rights etc. • Other ‘ethical’ and ‘green’ funds copy the Norwegian Pension Fund • WHY and HOW might standard setting etc matter? • Eg in building a better human rights regime?

  8. 4. Patterns and Trends: Toward more effective regimes? Conditions: • Public standards and decisions. • Predictable and credible threats of divestment • Requires publicity and carefully reasoned decisions. • Substantive norms that enjoy wide spread acceptance • The operationalizations and quasi-judicial judgments must be convincing to the general public and relevant stakeholders. New division of labour: What roles of NGOs, businesses, governments, investors…? Tendencies: • Networks of ethical investors • Consolidation of norms and their operationalization • Beyond ’CSR statements:’ On-the-ground factfinding • Information sharing • Coalitions of investors, consumers, early mover corporations

More Related