Norway fund drops Adani Ports over ethical concerns

Adani Ports and Special Economic Zone Ltd (APSEZ) is among three companies blacklisted from Norway’s government pension fund portfolio over ethical concerns, the country’s central bank that manages the fund said.

“The Norges Bank executive board has decided to exclude the company APSEZ due to unacceptable risk that the company contributes to serious violations of individuals’ rights in situations of war or conflict,” the central bank said in a statement. 

The decision was taken as the company violated the conduct-based criterion in the guidelines for observation and exclusion from the Government Pension Fund Global. The decision is based on a recommendation from the Council on Ethics of 21 November 2023, it said.

The company has been under observation since March 2022, but that observation now ends given the exclusion decision, it added.

India’s largest integrated logistics player, APSEZ reported a consolidated net profit of ₹2,014.77 crore ($241 million) for the fourth quarter ended March 2024.

The other two companies blacklisted by Norges Bank are US-based L3Harris Technologies Inc and China’s Weichai Power Co Ltd.

Weichai Power has been excluded “due to unacceptable risk that the company contributes to sales of weapons to states in armed conflicts,” where the weapons are used in ways that constitute breaches of the international rules on the conduct of hostilities, Norges Bank said. 

The board has decided to exclude L3Harris due to the company’s development and production of components for nuclear weapons, it said. 

The recommendation to exclude these two companies came from the Council on Ethics in December 2023.

“The Executive Board has not conducted an independent assessment of all aspects of the recommendations but is satisfied that the exclusion criteria have been fulfilled. Before deciding to exclude a company, Norges Bank shall consider whether the use of other measures, including the exercise of ownership rights, may be better suited. The Executive Board concludes that it is not appropriate to use other measures in these cases,” Norges Bank said. 

With assets worth 1.5 trillion, the Government Pension Fund Global is one of the world’s largest funds. It has holdings in around 9,000 companies worldwide, owning almost 1.5% of all shares in the world’s listed companies. 

Norges Bank is responsible for managing the assets under the fund. The executive board has delegated the operational management of the fund to Norges Bank Investment Management. An independent Council on Ethics sends its recommendations to Norges Bank’s executive board, which then makes the final decision on exclusion, observation, or active ownership.