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Norway’s SWF blacklists UK’s G4S, shedding €77.6m of its shares

Norges Bank, which runs Norway’s sovereign wealth fund via its subsidiary Norges Bank Investment Management (NBIM), has announced it is excluding UK security firm G4S from its investment universe, on human rights grounds.

All investments in the company have already been sold, a spokeswoman for NBIM, which manages the Government Pension Fund Global (GPFG) confirmed.

According to NBIM’s website, the fund had NOK783.6m (€77.6m) of equities in the company on 31 December 2018.

Norges Bank is following a recommendation from the fund’s Council on Ethics – made at the beginning of April but not disclosed until now – which advised blacklisting the stock.

In a statement, the central bank said: “The Executive Board’s decision on exclusion was made based on a recommendation from the Council on Ethics.

“The recommendation is reasoned with unacceptable risk that the company contributes to or is responsible for serious or systematic human rights violations,” it said, adding that the board had not done an independent assessment of all aspects of the advice but was satisfied the exclusion criteria had been fulfilled.

The bank said that before deciding to exclude a company, it was to consider whether the use of other measures, including the exercise of ownership rights, may be better suited.

“The Executive Board concludes that it is not appropriate to use other measures in this case,” it said.

In its statement on the recommendations, the Council on Ethics said that it had assessed the Qatar and United Arab Emirates operations of G4S – a British company that provides security services in more than 90 countries – where its employees were mostly migrant workers.

The council said that in its assessment, it rested on International Labour Organisation (ILO) standards on labour rights.

“The Council’s investigations show that workers have paid recruitment fees to work for the company, and that workers have taken out loans in their home country to be able to pay the fees,” said the advisory panel, which is chaired by Johan Andresen.

When the workers arrived in the Gulf, they had to spend a significant part of their salary paying off this debt, and therefore had little chance of leaving, the council said.

“Many also received far lower wages than agreed, and in the Emirates, the workers got their passport confiscated,” it said, adding that its investigations had also revealed long working days, a lack of overtime payment and examples of harassment.

KLP may follow suit

Norwegian municipal pensions giant KLP is likely to do the same following the recommendation and divest from the UK security company.

Currently KLP has a total of around NOK44m invested in G4S, including NOK17m in shares and NOK27m in bonds.

The pension fund’s guidelines state that in most cases, it will follow recommendations from the GPFG’s Council on Ethics, though it makes its own individual assessment of the council’s advice each time before deciding what action to take.

“So we are very likely to follow this decision to exclude this company as well,” Jeanett Bergan, head of responsible investment at KLP, told IPE.

Bergan said KLP was familiar with the labour practices referred to by the Council on Ethics as a general concern, but not in the G4S case in particular. As such it was actively following up this issue for other companies operating in Gulf states, she said.

KLP has previously excluded G4S from its investments due to human rights violations, but included the company again after proactive measures and improvements from the firm, Bergan said.

It was, therefore, disappointing, she said, to learn about this unacceptable corporate practice.

“There are a lot of migrant workers in these countries, and we are also asking questions about these practices,” she said.

“Trade unions are not allowed in these countries, there is a lack of free press and there are a lot of different elements contributing to these kinds of situations,” Bergan said.

Referring to the GPFG’s divestment from G4S, she said: “I hope this case will have a preventative effect on other companies.”

 

 

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