OSLO -(Dow Jones)- Norway's Government Pension Fund-Global has divested its holdings in a cluster munitions company and two nuclear weapons producers in line with its ethical guidelines the country's finance ministry said Friday.
The council on ethics for the $2-trillion fund, in which Norway invests its surplus oil money, has decided to pull investment in South Korea's Hanwha Corp. (Korea:000880) (000880.SE), the U.K.'s Serco (LSE:SRP) group (SRP.LN) and U.S. company GenCorp Inc. (NYSE:GY) (GY) because they produce cluster munitions and nuclear weapons respectively, Finance Minister Kristin Halvorsen said.
A fourth company, Rheinmetall AG (XETRA:RHM) (RHM.XE) was also examined by the council, but was found not to produce cluster weapons, and so remains in the fund's investment portfolio.
The director general of the asset management department of the ministry of finance Martin Skancke told Dow Jones Newswires that the exclusions are the result of "an ongoing search for companies that violate the Fund's guidelines."
"It also reflects the fact that during 2007, we increased the scope of the fund's benchmark by adding the small (market) capitalization segments," Skancke added.
During 2007, the pension fund diversified its investment portfolio to include 7,500 companies from 3,500. "This is (about) a shift within the fund's equity portfolio," Skancke said.
In 2007, Norway's finance ministry announced that the fund would increase its overall investment in equities to 60% from the current 40%, and conversely lower its fixed investment to 40% from 60%. That process is ongoing, and updated figures on the precise extent of the shift will be released in February when the annual investment portfolio is published, Skancke noted.
As the fund's value has increased over time, so has its investment, meaning that the addition of 4,000 more companies to the portfolio during 2007 won't necessarily have diluted the fund's holdings in larger market capitalization companies. In addition shifting 20% of its value from fixed to equities investment has freed up capital, Skancke said.
Seven other producers of cluster weapons and nine of nuclear weapons have been previously rejected for investment by the fund.
The ministry of finance said the disposal of shares in the three latest companies to violate the fund's ethical guidelines, has been completed.
In November, the fund divested its shares in U.K.-listed metals and mining group Vedanta Resources PLC (LSE:VED) (VED.LN) on the grounds that to continue to invest would risk it contributing to environmental damage and human rights violations.
Ministry Web site: http://www.regjeringen.no
-By Elizabeth Cowley, Dow Jones Newswires; elizabeth.cowley@dowjones.com; +47 22 20 10 58
The council on ethics for the NOK2-trillion fund, in which Norway invests its surplus oil money, has decided to pull investment in South Korea's Hanwha Corp. (Korea:000880) (000880.SE), the U.K.'s Serco (LSE:SRP) group (SRP.LN) and U.S. company GenCorp Inc. (NYSE:GY) (GY) because they produce cluster munitions and nuclear weapons respectively, Finance Minister Kristin Halvorsen said.
(In "=DJ Norway Pension Fund Pulls Out Of Munitions Producers" published at 1313 GMT, the value of the pension fund was incorrectly given as $2-trillion.)
(END) Dow Jones Newswires 01-11-08 0828 Copyright (c) 2008 Dow Jones & Company, Inc.
