Norway excludes a Chinese group from its sovereign fund for ethical reasons

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The Norwegian sovereign wealth fund, the largest in the world, has excluded from its portfolio of nearly $1 trillion a Chinese group on the basis of human rights violations, announced Thursday the Bank of Norway.

Producer of fishing nets, fabrics and textiles, Texwinca is pilloried because of its majority stake in the group Megawell Industrial, heavily criticised for the working conditions in its factories in Vietnam. The Board of Ethics, in charge of assisting the Bank of Norway has invoked the discrimination of female employees, health and safety risks in the workplace, and restrictions on freedom of association as the reason for the exclusion.

The Central Bank has concluded “an unacceptable risk that the company is guilty of serious or systematic violations of human rights“. According to the latest available data, the fund held 1.01% of Texwinca at the end of 2017 for a value of $7.7 million. Invested in some 9,000 companies around the world – but also in bonds and real estate – the fund is governed by a set of ethical rules adopted by Parliament.

These rules prohibit the fund from investing in companies guilty of serious human rights violations, those who manufacture nuclear weapons or are “particularly inhumane“, tobacco producers and coal mining companies are excluded as well. Under this last criterion, the Central Bank also announced Thursday the exclusion of American groups Evergy and Australian Washington H. Soul Pattinson. Fueled by state oil revenues, the Norwegian fund currently weighs around 8,412 billion kroner ($983 billion).

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