Norway fund axes 4 Korean, Malaysian firms on environmental grounds

The companies are excluded based on an assessment of the risk of severe environmental damage, the Norwegian sovereign wealth fund said in a statement released today.

Daewoo, South Korean steelmaker Posco and Malaysian groups Genting and IJM were targeted in Monday’s divestment decision by Norway’s central bank, which manages the wealth fund that owns around 1.3 per cent of all stocks on global equity markets, with stakes in about 9,000 companies.

The exclusions followed a recommendation by the fund’s Council of Ethics, which said the firms or their subsidiaries were involved in the destruction of rain forests in Indonesia and Malaysia. “It is hard to avoid the perception of hypocrisy in Norway’s selective combat against carbon emitters”, the New York Times noted earlier this year in an editorial.

Posco is one of the world’s largest steel companies but also owns 60% of Daewoo worldwide, Korea’s largest trading company.

“The fund has a range of ethics criteria for excluding firms from its portfolio, including severe environmental damage, nuclear weapons making, tobacco production and labour conditions”, said Reuters.

Spokespeople for Daewoo global, Posco and Genting all declined to comment.

Officials at the South Korean and Malaysian companies couldn’t immediately be reached or weren’t immediately able to comment after the close of regular business hours.

The fund also explained that before deciding to exclude a company, Norges Bank considers whether the use of other measures, including the exercise of ownership rights, may be better suited.