Norway’s SWF rejects ethical council’s advice to ditch €2bn Rio Tinto stake

Norway’s sovereign wealth fund has decided against the advice of its own ethical council to sell off some €2bn of equities it holds in mining giant Rio Tinto for environmental reasons, instead opting to stick with it and try talking it into change.

Norges Bank Investment Management (NBIM), which runs the NOK18.9trn (€1.6trn) Government Pension Fund Global (GPFG), announced yesterday: “The executive board has decided to ask Norges Bank Investment Management to engage through active ownership with the companies Rio Tinto Plc, Rio Tinto Ltd and South32 Ltd on their work to reduce serious environmental damage over a period of 5-10 years.”

The Oslo-based central bank department said the Council on Ethics had recommended excluding the companies based on the companies’ participation in the joint venture Mineração Rio do Norte (MRN), which operates a bauxite mine in the Amazon rainforest.

According to the latest publicly available figures, the GPFG had NOK22.5bn in the two Rio Tinto companies at the end of 2024, and NOK2.9bn in Perth, Australia-headquartered mining and metals company South32.

NBIM also said it was excluding Israel’s Paz Retail and Energy “due to an unacceptable risk that the company contributes to serious violations of the rights of individuals in war or conflict”, and that the decision was based on a Council on Ethics recommendation.

At the end of December, the GPFG held NOK73m of shares in the Israel-based petrol station and convenience store operator.

Following the exclusion of Bezeq in December, this is the second such blacklisting since the ethical council last August indicated a tougher stance on businesses helping Israel’s operations in the occupied Palestinian territories.

In a letter to the Finance Ministry in August 2024, the council said that in light of the developments in both the fundamental norms and the situation in the occupied territories, it considered that the ethical guidelines provided a basis for excluding slightly more companies from the GPFG than were already banned.

NBIM also said yesterday that it had decided to exclude Mexican state-owned company Petroleos Mexicanos, in which it held NOK451m of bonds and no equity at the end of 2024, due to an unacceptable risk the company contributed to or was responsible for gross corruption, with this decision based on advice from the Council on Ethics.

In other corporate governance moves announced by NBIM yesterday, the organisation said it was revoking the exclusion of Germany’s RWE and placing it under observation.

Having been banned back in 2020 because of its level of coal extraction and production, RWE was now committed to a plan to phase out all lignite extraction and combustion in Germany by 2030, and was building up significant production from renewable energy sources, NBIM said.

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