Norway’s NOK8.4trn (€874bn) sovereign wealth fund is to sell its 1.47% stake in UK-listed BAE Systems after formally excluding the stock on ethical grounds due to its nuclear weapons involvement.
The company was one of nine firms in the latest batch of blacklistings to be announced by the Government Pension Fund Global (GPFG) and the largest of the resulting divestments.
BAE Systems has been excluded by the GPFG before because of links to nuclear weapons production, but was later readmitted.
In 2015, the company signed an eight-year contract with the US to maintain and upgrade the US Trident and Minuteman III missiles. As a result, the council last year recommended the firm’s exclusion from GPFG’s portfolio “due to the company’s production of key components of nuclear weapons”.
At the end of 2016, the GPFG had NOK2.9bn invested in BAE Systems equities, amounting to a 1.47% stake in the company.
In its recommendation to the oil fund’s manager, Norges Bank, to exclude BAE Systems, the Council on Ethics said BAE Systems had argued it was not directly responsible for the development work linked to the upgrading of the missiles in question.
But the Council decided that this was not important, since production or upgrading could also mean the production or upgrading of something that others had developed.
The Council’s recommendation was made last March, but only revealed by Norges Bank this week.
The latest list of nine exclusions includes three other companies banned because of nuclear weapons production: AECOM, Fluor Corp and Huntington Ingalls Industries.
The fund had already blacklisted 12 other companies on the same grounds.
A week ago, major Dutch pension fund ABP announced it will divest all of its of holdings in tobacco and nuclear weapons, estimated to be worth around €3.3bn.
Meanwhile, Norges Bank said Evergreen Marine Corp (Taiwan), Korea Line, Precious Shipping and Thoresen Thai Agencies have also been excluded from the GPFG’s investment universe based on an assessment of the risk of severe environmental damage and serious or systematic violations of human rights.
In addition, Pan Ocean has been placed under observation based on the same criteria. The company Atal has also been excluded due to unacceptable risk of serious or systematic violations of human rights, the bank said.
In total, the GPFG’s list of banned stocks includes 142 companies, with a further 20 currently under observation.