Norway’s main municipal pensions provider KLP announced it has decided to exclude 16 companies from its portfolio, which have connections to Israeli settlements in the West Bank, selling off NOK275m (€27m) of assets on human rights grounds.
Kiran Aziz, senior analyst at the pension fund’s asset management division KLP Kapitalforvaltning, said: “Our assessment is that there is an unacceptable risk that the excluded companies will contribute to the violation of human rights in war and conflict situations through their connection to the Israeli settlements in the occupied West Bank.”
The assessment was based on the rules on occupation in the Hague Regulations and the Fourth Geneva Convention, she said.
KLP said it had been scrutinising the companies since the UN High Commissioner for Human Rights published a list of companies with activities linked to the Israeli settlements in the occupied Palestinian territory in February 2020.
The largest of this new batch of divestments by the Norwegian pension fund is US telecoms firm Motorola, with KLP selling NOK97.4m of its stock, according to the announcement. Other stocks being sold include Alstom, Bank Leumi Le-Israel and First International Bank of Israel, the provider said.
KLP said it had first contacted all the companies concerned to establish a dialogue.
“We always want to have a dialogue with the companies in order to be able to influence them through our ownership. That did not yield results, so we chose to exclude the companies,” Aziz said.
The Norwegian pension fund said that like its recent divestment of India’s Adani Ports, these 16 exclusions had been assessed based on its new due-diligence criterion, which was introduced in 2019.
“The value of due-diligence divestment is that risks related to country and sector can also be taken into account in addition to a company’s practice, so it will be a combination of risks at company, sector and country level,” Aziz said.
In May, the manager of Norway’s SWF announced it was adding Shapir Engineering and Industry and Mivne Real Estate to its blacklist, after the fund’s Council on Ethics said the Israeli companies had been involved in building and letting property, respectively, in Israeli settlements in the West Bank, contributing “to the continuation of an illegal state”.
Municipalities eye cheaper pensions alternatives
In other Norwegian pensions news, three municipalities currently using KLP as their staff pension provider have now decided to put their contracts out to tender.
According to a report in Norwegian specialist news service Kommunal Rapport, Ålesund, Øygarden and Ullensvang councils have all taken decisions recently to launch procurement processes, citing potential cost savings as the reason.
KLP has long had a virtual monopoly in the country’s municipal pensions market, but the re-entry of Storebrand to the sector last year has increased potential competition.
Erlend Nævdal Bolstad, leader of the Conservative party (Høyre) in Ullensvang, said in the news report: “Our financial situation is under strain, so we need to turn every stone.”
The news service said Ålesund municipality needed to save NOK141m (€14m) next year.
Dag Olav Tennfjord, leader of the Conservatives there, who put forward the pensions tendering proposal, told Kommunal Rapport: “We have received good documentation that there is money to be saved by putting the municipality’s pension delivery out to tender.”
A similar proposal he put forward in April did not get a majority, but this time it was passed by the council, according to the report, by 54 to 23.
Meanwhile, the municipality of Øygarden – which chose KLP as its pensions manager in 2019 when the municipality was first formed following a merger of councils – was reported as narrowly having passed a proposal in June to put the scheme out to tender.
The proposal had been backed by a report from Aon Norway which was presented to the council, in which the consultancy said transferring its pension scheme away from KLP would result in the release of some NOK118m of buffer capital and NOK16.5m in employers’ contribution for Øygarden.
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