GLOBAL - The Norwegian Government Pension F - Global today responded robustly to allegations that its equities screening process was arbitrary, opaque and unfair.
The allegations, made by US ambassador Benson K Whitney earlier this month, followed the Norwegian finance ministry's decision in June to divest its €321.7m stake in US giant retailer Wal-Mart. Norway's government claimed the world's largest retailer had been complicit in labour and human rights abuses.
In a speech made at the Norwegian Institute of International Affairs, Whitney said that the ethics committee, which makes recommendations on divestment to the government, disproportionately screened out US companies because greater transparency increased their exposure to negative publicity.
"There is no set standard on how and why it picks a certain individual company for review…so the process is really arbitrary," he said. "Norway found Wal-Mart unethical for allegedly discouraging unions, but the government's pension fund stands silent about firms in its portfolio from countries in which no unions, or only state unions, are allowed.
"In these countries, the workers can't complain, there is no free news media to report violations, and no regulations to violate, so the Norwegian ethics process now ignores them."
Ethics committee spokeswoman Gro Nystuen did not deny that US multinationals were more likely to face public criticism, triggering the committee's decision to investigate. But she claimed that the council screened its entire 4,000-company portfolio monthly.
"We can never be 100% sure that we catch the absolutely worst companies in the portfolio," she said, "but that's not our mandate".
She said criticisms of the process had been "based on misunderstanding and misconstrual", pointing out that Wal-Mart had failed to respond to the allegations before the divestment was made public.
Sweden's Second AP fund announced that it is to divest its stake in Wal-Mart after failing to influence the retailer over employee rights despite a three-year lobbying effort.
Wal-Mart, which has been waging a PR campaign on its record on employment in the US, claimed its working practices comply with stringent international standards.