The manager of Norway’s giant sovereign wealth fund announced it has decided to exclude four Chinese firms from the portfolio due to concerns about endangered species being used in their traditional medicine products, and readmitted a Korean company.

Norges Bank Investment Management (NBIM) said on Wednesday it had decided to exclude China Traditional Chinese Medicine Holdings; Tong Ren Tang Technologies Co and its subsidiary Beijing Tong Ren Tang Chinese Medicine Co, along with China Grand Pharmaceutical and Healthcare Holdings, “due to unacceptable risk that the companies contribute to serious environmental damage”.

NBIM, which runs the NOK11.5trn (€1.15trn) Government Pension Fund Global (GPFG), also said it had decided to revoke the exclusion of the South Korean explosives and machinery firm Hanwha, which had been banned from the portfolio since 2008.

“The Council on Ethics has stated that Hanwha Corp no longer has any activities related to the production of cluster munitions, and that the company has confirmed this,” NBIM said.

All the decisions in the announcement were based on recommendations made earlier this year by the GPFG’s advisory body, the Council on Ethics, NBIM said.

The Norwegian SWF had NOK239m (€23.9m) invested in the four Chinese companies at the end of 2020, according to data on its website.

The Council on Ethics said of all its recommendations to exclude the Chinese companies, that all four manufactured and marketed Traditional Chinese Medicine (TCM), and that products made by all of them contained “body parts from globally threatened species such as horns from saiga antelope, leopard bones and pangolin scales.”

“The use of threatened animal species in TCM products may contribute to illegal wildlife trade and increases the risk of these species becoming extinct,” it said.

The council said in each case, that there had been no information concerning the quantity of body parts of threatened species that the company used, where the animal parts originated from, what stockpiles existed and how these were replenished.

“When such data is not made available, the Council on Ethics concludes that the company contributes to severe environmental damage. The company has not disclosed any specific plans to replace the ingredients based on threatened species with other ingredients,” it said.

IPE has contacted the companies by email and is waiting for responses.

The Council on Ethics said the demand for TCM was growing and it was estimated that the market would be worth $123bn in 2023, with medicines making up around 30-40% of it.

“Although the use of animal parts constitutes a small portion of the ingredients used in TCM, the growing demand for TCM is expected to contribute to biodiversity loss, and, for some species, this is the primary reason why these animals are at risk of becoming extinct,” the council said.

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