Norway’s sovereign wealth fund has sold off its near 1% holding in top US stock General Dynamics, after its ethical advisers recommended banning the aerospace and defence firm because of involvement in the production of nuclear weapons.
Norges Bank Investment Management (NBIM), which runs Norway’s Government Pension Fund Global (GPFG), announced last night that it was excluding a total of six companies, including General Dynamics, on various different ethical grounds. In all this latest batch of exclusions amounts to some €1bn of divestments from the NOK18.3trn (€1.5bn) fund.
The Oslo-based manager said its board has decided to exclude the Indian conglomerate Larsen & Toubro, and General Dynamics, “due to the companies’ production of key components to nuclear weapons”, citing the product-based criterion in the Guidelines for Observation and Exclusion from the Government Pension Fund Global.
“The decision is based on recommendations from the Council on Ethics of 25 April 2024,” NBIM said.
At the end of June, NBIM held NOK8.32bn (€705m) of General Dynamics shares, amounting to 0.98% of the US company’s voting stock.
General Dynamics, a component of the S&P 100 index, was previously blacklisted by NBIM because of cluster munition production for 14 years, but then brought back five years ago because it said the firm had stopped making the weapons.
NBIM had NOK4.23bn invested in the shares of Mumbai-headquartered Larsen & Toubro at the end of June.
Four other companies have been newly blacklisted by NBIM, according to yesterday’s announcement.
These include China State Construction Engineering Corp, due to an “unacceptable risk that the company is contributing to or is itself responsible for gross corruption”, because of an unacceptable risk that it is contributing to severe environmental damage.
The other two new exclusions are Prosegur Compania de Seguridad, “due to an unacceptable risk that the company is contributing to serious and systematic human rights violations”, and Turning Point Brands, because of production of tobacco or tobacco products, NBIM said.
All six exclusions were based on recommendations from the GPFG’s Council on Ethics, the central bank department said.
When contacted by IPE for comment, a spokesperson for Spanish company Prosegur said the firm categorically rejected the accusations, and reiterated its firm commitment to the respect and promotion of human rights.
“In fact, the company has already provided concrete and documented details in relation to the incident in question, demonstrating conclusively that, at all times, it acted within legal limits and with respect for human rights,” they said, in a lengthy email.
“At the time of writing Prosegur has not received any communication from the Norwegian Government Pension Fund Global regarding any divestment decision relating to these issues,” the spokesperson said.
IPE has also contacted General Dynamics and the four other companies for comment.
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