Norwegian oil fund to engage with Shell over ‘severe’ environmental concerns

Dutch oil giant Shell has escaped potential exclusion from the Norwegian Government Pension Fund Global (GPFG) after a request to place it under observation was denied by the country’s Ministry of Finance.

The Council of Ethics, responsible for monitoring listed companies and recommending whether they should be excluded from the fund’s investment universe, recommended Royal Dutch Shell be placed under observation over its environmental record in Nigeria.

The company’s activities in the Niger Delta are alleged to have led to “severe” environmental damage to the area, due to what the Council deemed “extensive” oil spills.

Instead of placing Shell under investigation, the Ministry of Finance asked Norges Bank Investment Management (NBIM) to include oil spills in its active engagement effort and discuss the matter with the company in which the GPFG owned a 2.34% stake at the end of last year.

The ministry separately decided to include environmental damage in the list of concerns over which the sovereign fund should actively engage with companies, leading to a reprieve for mining company AngloGold Ashanti following a recommendation by the Council that it be excluded.

Instead, NBIM has been asked to monitor AngloGold’s efforts to improve its track record over the next five years, at which point it and the Council will re-assess the company’s position within the GPFG’s investment universe.

In its initial recommendation, the Council stressed there was an “unacceptable” risk AngloGold was the cause of severe environmental damage at its mines in Ghana and had contributed to “serious and systemic” human rights violations.

However, the ministry – now controlled by the new conservative coalition government following the September election – has approved the exclusion of five companies.

Timber company WTK Holdings Berhad, Ta Ann Holdings Berhad, Zijin Mining Group and Volcan Compañia Minera have been excluded over concerns of environmental damage, while Zuari Agro Chemicals was excluded over concerns it was “contributing to the worst forms of child labour”.