GLOBAL – Norway's KLP pension fund company is removing French oil stock Total from its portfolio on ethical grounds due to the company's involvement in Western Sahara, the fund said.
Jeanett Bergan, head of responsible investment at KLP Asset Management (KLP Kapitalforvaltning), said: "KLP considers Total's operations on the continental shelf off Western Sahara can be linked to contravention of fundamental ethical norms."
Based on the pension fund's own review, along with urging from the Norwegian authorities and the experience of previous similar cases, KLP said it decided investing in Total risked might flout basic ethical principles.
The stock will therefore be excluded from its investments, Bergan said.
Total subsidiary E&P Maroc was conducting exploration and charting operations of potential oil and gas deposits on the continental shelf off Western Sahara, KLP explained.
Western Sahara is currently occupied by neighbouring Morocco.
Campaign group Western Sahara Resource Watch (WSRW) said international companies should not do business with Moroccan companies or authorities in the occupied territories, as this makes the occupation seem politically legitimate.
"It also gives job opportunities to Moroccan settlers and income to the Moroccan government," WSRW said.
Foreign companies should leave the country until a solution to the conflict is found, it said.
KLP said its decision came as a result of its twice-yearly review of the companies it may invest in according to its ethical criteria.
It said Total's operation was very similar to that of US company Kerr-McGee in 2005.
On that occasion, Kerr-McGee was excluded from both the Norwegian Government Pension Fund Global (GPFG) and KLP, it said.
However, that exclusion was revoked by the Norwegian Ministry of Finance in May 2006 after the company stopped exploring in the area, it said, adding that the company was then brought back into KLP's investment universe during 2006.
Total employs more than 111,000 staff across more than 30 countries.
As part of its latest review, KLP said it had also readmitted three companies to its investment portfolios from June, including Bridgestone Corporation, FMC Corporation and BAE Systems.
It said Bridgestone had resolved the problems of child labour in Liberia that caused it to fall foul of KLP's ethical investment code in December 2006, and that US firm FMC Corporation was no longer buying phosphate from West Sahara – the activity that led to its ban in June 2010.
BAE Systems has been readmitted as it is no longer involved in producing nuclear weapons, KLP said.
The company had been excluded by KLP in January 2006.
Author: Rachel Fixsen
11 juin 2013