Norwegian Government Pension Fund updates banned companies list
Published by MAC on 2017-03-10Source: NPF Council on Ethics
Vedanta and many coal companies are out in the cold
Of particular concern to many groups represented by MAC (and the London Mining Network) has been an attempt by Vedanta Resources to argue that grounds for excluding it from the Norwegian Government Pension Fund Global ten years ago, should be re-examined in light of reforms of its practices and policies since.
Essentially, the company urged the Council on Ethics - which advises the Norwegian government - that Vedanta qualified for re-admission to Norway's financial universe of clean, conflict free, and corporately responsible outfits.
The UK-listed company and its Indian associates would obviously have been delighted had the Council accepted the validity of the many submissions made by the company between late 2015 and May 2017.
Doubtless, it would have widely advertised the turn-around, using it to try garnering further investment, including from those firms which have followed Norway's example in 2007. See: Is this the world's most hated company?
But the Ethics Council has stood firm, stating:
“In 2016, the Council performed a particularly thorough assessment of Vedanta Resources, which has been excluded since 2007, but concluded that grounds for exclusion continue to exist”.
You can read the full letter to Vedanta from the Council on Ethics, justifying its rejection of the company's case at: What Norway's Ethics Counci told Vedanta What Norway told Vedanta
Further extracts from the Council's report on coal companies and those reliant on exploitation of Western Sahara phosphates are below.
The Norwegian government pension fund has consolidated its opposition to coal production and use:
“The coal criterion is a product-based criterion, and reads as follows: “(2) Observation or exclusion may be decided for mining companies and power producers which themselves or through entities they control derive 30 per cent or more of their income from thermal coal or base 30 per cent or more of their operations on thermal coal... In addition, importance must be attached to the companies’ plans to reduce their dependence on coal. The criterion does not encompass the companies’ green bonds.
"Responsibility for identifying GPFG companies that fall within the scope of the coal criterion is divided between Norges Bank and the Council on Ethics. Norges Bank has initiated a systematic review of the portfolio, which has so far resulted in the exclusion of 59 companies, while 11 have been placed under observation.”
Western Sahara phosphates
As for companies dependent on extraction from Saharawi territory: “Another matter... relates to companies which buy phosphates mined in [Western Sahara]. In 2010 and 2014, the Council recommended the exclusion of two such companies... [which are] chemicals and fertiliser producers, which use phosphates in their own manufacturing processes. They do not themselves have operations in the contested area. Phosphates from Western Sahara are mined by the state-owned Moroccan enterprise OCP, which then sells it to the companies concerned under long-term contracts. “...The exploitation of natural resources in the area may be acceptable if it is carried out in accordance with the interests and wishes of the local population.
The Moroccan authorities have assured the Council on several occasions that this condition has been met, since Morocco takes care of everyone’s interests in the area through democratic processes. It must also be noted here that a large number of Moroccans have migrated to the area since its de facto annexation by Morocco. “Morocco reckons these people to be part of the area’s population, whose interests must be taken into account.
However, the Council has attached importance to the fact that, in connection with the matter of phosphate mining, the recognised representative of the area’s local population, the Polisario, has neither been consulted nor otherwise taken into consideration. Furthermore, the Council has attached importance to the fact that the OCP’s operations are helping to keep the situation in the territory from being resolved, and draining an already resource-poor area of the little it has in the way of valuable resources.
“...A key factor in these cases is that the companies whose exclusion the Council has recommended not only knew where the phosphates originated, but specified in the contract with OCP that they would only buy phosphates deriving from OCP’s mine in Western Sahara. This is because these phosphates have particular properties. Under these circumstances, the Council deems the companies’ purchasing of phosphates as contributing to a serious violation of ethical norms. The issue relates exclusively to the special situation in Western Sahara. Companies to which OCP sells phosphates not mined in Western Sahara have not been assessed for exclusion”.
List of Companies barred from the Norwegian Pension Fund Global For Environmental Damage
Barrick Gold Corp. Daewoo International Corp. Duke Energy Corp. (including the below wholly-owned subsidiaries) Duke Energy Carolinas LLC. Duke Energy Progress LLC. Progress Energy Inc. Freeport McMoRan Copper & Gold Inc. Genting Bhd. IJM Corp. Bhd. Lingui Development Ltd. MMC Norilsk Nickel POSCO Rio Tinto Plc. Rio Tinto Ltd. Samling Global Ltd. Ta Ann Holdings Berhad Vedanta Ltd. (previously called Sesa Sterlite, into which Madras Aluminium Company and Sterlite Industries Ltd. - both excluded 31 October 2007- were merged) Vedanta Resources Plc. Volcan Compañia Minera SAA WTK Holdings Berhad Zijin Mining Group Co. Ltd.
Barred for Production of coal or coal-based energy
Aboitiz Power Corp. AES Corp./VA AES Gener SA ALLETE Inc. Alliant Energy Corp. Ameren Corp. American Electric Power Co. Inc. Capital Power Corp. CESC Ltd. China Coal Energy Co. Ltd. China Power International Development Ltd. China Resources Power Holdings Co. Ltd. China Shenhua Energy Co. Ltd. Chugoku Electric Power Co. Inc./The CLP Holdings Ltd. Coal India Ltd. CONSOL Energy Inc. Datang International Power Generation Co. Ltd. DMCI Holdings Inc. Drax Group PLC DTE Energy Co. Dynegy Inc. E.CL SA Electric Power Development Co. Ltd. Electricity Generating PCL Emera Inc. Empire District Electric Co. Exxaro Resources Ltd. FirstEnergy Corp. Great Plains Energy Inc. Guangdong Electric Power Development Co. Ltd. Gujarat Mineral Development Corp. Ltd. Hokkaido Electric Power Co. Inc. Hokuriku Electric Power Co. Huadian Power International Corp. Ltd. Huaneng Power International Inc IDACORP Inc. Inner Mongolia Yitai Coal Co. Ltd. Jastrzebska Spolka Weglowa SA Lubelski Wegiel Bogdanka SA MGE Energy Inc. New Hope Corp. Ltd. NRG Energy Inc. NTPC Ltd. Okinawa Electric Power Co. Inc./The Peabody Energy Corp.
Barred for Other Particularly Serious Violations of Fundamental Ethical Norms
Cairn Energy Plc. Elbit Systems Ltd. Kosmos Energy Ltd. Potash Corp. of Saskatchewan San Leon Energy Plc.
List of companies under observation as per 1. March 2017
For Production of coal or coal-based energy
CMS Energy Corp. EDP Energias de Portugal SA Endesa SA Glow Energy PCL Kyushu Electric Power Co. Inc. OGE Energy Corp Pinnacle West Capital Corp. SCANA CORP Southern Co./The Talen Energy Corp. Tohoku Electric Power Co. Inc.
The full report can be read at: http://etikkradet.no/files/2017/03/Etikkraadet_annual_report_2016_web.pdf