12 Published recommendations

Tabell 12.1 List of companies about which recommendations were published in 2022

The Council publishes recommendations on its website at the same time as Norges Bank announces its decision on the case. A summary of the recommendations published in 2022 is presented below.

Every year, the Council reviews the companies that have been excluded from investment by the GPFG to find out if the grounds for exclusion still exist. In 2022, the exclusion of two companies was revoked. One company had ceased petroleum exploration in Western Sahara and therefore no longer contributes to serious violation of fundamental ethical norms. The other company had divested its plantation business and was therefore no longer responsible for serious environmental damage in connection with the conversion of tropical forests to plantations.

During the year, a total of 13 companies were excluded under five different criteria. Two companies were excluded under the war and conflict criterion, on the basis of their business partnerships with the armed forces in Myanmar. Two companies were excluded because they contribute to serious environmental damage: one through pollution from a smelter works and the other due to the loss of biodiversity through the construction of a hydroelectric power scheme. Two companies were excluded for contributing to human rights abuses: one for the use of forced labour in Xinjiang, China, and the other for the sale of mass surveillance technology and associated services. Four companies that were not in the GPFG’s portfolio were excluded from the Fund’s investment universe on the basis of their production of cannabis for recreational purposes, while three companies outside the portfolio were excluded on the grounds of their production of tobacco.

It was announced that four companies had been placed under observation in 2022. One was placed under observation on the grounds of corruption, one for serious violation of the rights of individuals in situations or war or conflict, one in connection with human rights abuses and one for both serious environmental damage and human rights abuses. The observation case under the war and conflict criterion relates to a company that has business partnerships with the armed forces in Myanmar. The Council had recommended the exclusion of the company placed under observation in relation to the human rights criterion on the grounds of the poor living and working conditions suffered by employees at its own facilities. However, Norges Bank decided that the company’s progress should be observed instead. The company placed under observation under both the environment and human rights criteria has disposed of ships for break-up on beaches in Pakistan and Bangladesh.

12.1 Summaries of recommendations published in 2022

Adani Ports & Special Economic Zone Ltd

Issued 15 November 2021

The Council on Ethics recommends that Adani Ports & Special Economic Zone Ltd (APSEZ) be placed under observation due to an unacceptable risk that the company is contributing to serious infringement of the rights of individuals in situations of war and conflict. The recommendation concerns APSEZ’s business association with the armed forces in Myanmar.

In Myanmar, APSEZ does business through its subsidiary Adani Yangon International Terminal Company Limited. In 2019, this subsidiary signed a Build-Operate-Transfer/lease agreement with the military-owned conglomerate Myanmar Economic Corporation (MEC) to develop the Ahlon International Port Terminal in Yangon.

APSEZ is listed on the Bombay Stock Exchange and the National Stock Exchange in India. At the close of 2020, the Norwegian Government Pension Fund Global (GPFG) owned 0.73 per cent of the company’s shares, worth around NOK 840 million.

In February 2021, the armed forces in Myanmar staged a military coup. After the coup, armed conflicts in the country have intensified, and over 1,000 people have been killed. Assaults on the civilian population are ongoing, and there is a substantial risk that new, gross abuses will be perpetrated by the armed forces.

The Council takes the position that any company operating in an area of conflict has a duty to exercise particular care. The Council also relies on the UN’s Independent International FactFinding Mission on Myanmar, which found that any business relationship with MEC constitutes a high risk of contributing to human rights abuses and the violation of international humanitarian law. In the Council’s view, APSEZ’s collaboration with MEC may contribute to strengthening the armed forces’ economic and logistical capacity.

In October 2021, APSEZ announced that it was planning to exit its investment in Myanmar. In light of the situation in the country, there is significant uncertainty with respect to when such a withdrawal will be possible to implement. The Council therefore recommends that the company be placed under observation.

Aurora Cannabis Inc

Issued 30 March 2022

The Council on Ethics recommends to exclude Aurora Cannabis Inc from investment by the Norwegian Government Pension Fund Global (GPFG) due to production of cannabis for recreational use.

Bombardier Inc

Issued 22 October 2021

The Council on Ethics recommends that Bombardier Inc be placed under observation pursuant to the criterion relating to gross corruption or other serious financial crime in the Guidelines for Observation and Exclusion from the Norwegian Government Pension Fund Global (GPFG).

Bombardier is one of the world’s largest producers of private jet aircraft and has more than 16,000 employees in over a dozen countries. Bombardier also produced commercial aircraft up until February 2020, and used to be one of the world’s largest manufacturers of railway rolling stock and ancillary equipment. However, this part of the business was sold in January 2021. The company is listed on the Toronto Stock Exchange. At the close of 2020, the GPFG owned 1.03 per cent of the company’s shares, worth NOK 80.7 million.

The Council’s investigations have revealed that Bombardier or its subsidiaries can be linked to allegations or suspicions of corruption in six countries over a period spanning more than ten years. All the cases relate to bribes or suspicious transactions amounting to more than USD 100 million, via agents, intermediaries or partners, with the object of winning contracts for Bombardier’s subsidiaries.

The Guidelines for Observation and Exclusion from the Government Pension Fund Global (GPFG) look forward and the issue to be assessed is whether there is an unacceptable risk that the company is contributing to or is itself responsible for gross corruption. When assessing whether there is an unacceptable risk, the Council attaches importance to the systems the company has in place to prevent corruption, what the company has done to prevent the incidents in question, follow them up and communicate in relation to them, as well as the general corruption risk the company faces in connection with its operations.

The ‘tone from the top’ is crucial if a company is to be able to establish a culture in which ethical guidelines are complied with. The only example the Council has found of senior management communicating a zero tolerance for corruption is a statement by the then CEO in 2014. In light of the corruption investigations linked to the company and risk exposure in some very challenging markets, the Council considers that the company’s senior management could be expected to communicate more actively on this subject.

The Council notes that Bombardier has long had guidelines in place for the performance of third-party due diligence inquiries. Although the Council considers this to be positive in principle, it nevertheless questions the practical implementation of the guidelines. The company has disclosed that it has performed due diligence on partners and customers mentioned in this report, without uncovering any factors that constitute a risk of corruption.

At the same time, publicly available information indicates that these partners/customers have operated in part through shell companies and in part been politically exposed. The discrepancy between what the company has disclosed and the information the Council has obtained from other sources causes the Council to question how effectively the company is handling third-party risk.

The Council also notes that Bombardier has long had a whistleblower system in place and a dedicated team to follow up and investigate allegations of potential irregularities. Although this is important, the Council attaches greatest weight to the company’s ability to show how whistleblower reports are followed up in practice.

The Council notes that in 2015 and 2016, the company received three internal reports concerning the Azerbaijan project. As far as the Council is aware, Bombardier did not launch any inquiries into these matters until the Swedish police force started its investigation in the autumn of 2016. Nor has the company disclosed whether the case has had any consequences for those in the company who were involved. In the Council’s view, this too makes it questionable whether the company’s guidelines are being followed up in practice.

In the Council’s overall assessment, there is an unacceptable risk that Bombardier could also in future contribute to or itself be responsible for gross corruption. The Council’s decision to recommend that the company be put under observation and not be excluded from investment by the GPFG at this time rests on the fact that Bombardier, in 2021, divested its Transportation division, the business to which the majority of the corruption cases were linked. Compared with the remaining aviation business, the Transportation division was involved in far more public procurement projects, which brings with it a higher corruption risk. Even though Bombardier remains a global company, which could operate in many demanding markets with a high risk of corruption, the Council considers that it is uncertain what developments may occur forward in time, see section 6(5) of the GPFG’s ethical guidelines.

During the observation period, the Council will both obtain information about Bombardier’s anti-corruption efforts and monitor the emergence of new revelations linking the company to cases of alleged gross corruption or other serious financial crime.

Canopy Growth Corp

Issued 30 Mach 2022

The Council on Ethics recommends to exclude Canopy Growth Corp from investment by the Norwegian Government Pension Fund Global (GPFG) due to production of cannabis for recreational use.

Cognyte Software Ltd

Issued 17 June 2022

The Council on Ethics recommends that Cognyte Software Ltd (Cognyte) be excluded from investment by the Norwegian Government Pension Fund Global (GPFG) due to an unacceptable risk that the company is contributing to serious human rights abuses. The recommendation relates to human rights abuses that may be enabled by the company’s products and services.

Cognyte is an Israeli company that supplies surveillance software. Cognyte was previously part of Verint Systems (Verint), but was spun off as an independent company in 2021. Cognyte is listed on the Nasdaq exchange in the USA. At the close of 2021, the GPFG owned 0.87 per cent of the company’s shares, worth NOK 79 million.

Based on publicly available information, the Council considers that Cognyte’s products and services may have enabled serious norm violations. The company provides bespoke technological solutions, as well as training, service and maintenance. Several of the states that are said to be among its customers have been accused of extremely serious human rights violations, including abduction, torture and other forms of abuse targeting vulnerable groups, including sexual minorities. The accusations are wide-ranging and relate to many different countries.

An important factor for the Council is that the company must have known that some of its customers have been accused of extremely serious human rights violations. The Council also considers that surveillance of political opponents and minorities is a foreseeable risk for the company, given the products and services it offers.

With regard to the risk going forward, the Council attaches importance to the emergence, as recently as December 2021, of information that Cognyte’s solutions had been used for the surveillance of politicians and journalists. The Council considers that the information which Cognyte has shared with it does not adequately address the serious allegations made against the company. The Council has been particularly keen to understand what measures the company has implemented to avoid involvement in such norm violations in the future, but has received only superficial answers from the company. The Council therefore concludes that there is an unacceptable risk of Cognyte contributing to human rights violations.

Cronos Group Inc

Issued 3 May 2022

The Council on Ethics recommends to exclude Cronos Group Inc from investment by the Norwegian Government Pension Fund Global (GPFG) due to production of cannabis for recreational use.

Eastern Co SAE

Issued 30 March 2022

The Council on Ethics recommends to exclude Eastern CO SAE from investment by the Norwegian Government Pension Fund Global (GPFG) due to production of tobacco or tobacco-products.

Hanjaya Mandala Sampoerna Tbk PT

Issued 30 March 2022

The Council on Ethics recommends to exclude Hanjaya Mandala Sampoerna Tbk PT from investment by the Norwegian Government Pension Fund Global (GPFG) due to production of tobacco or tobacco-products.

Hansae Co Ltd and Hansae Yes 24 Holdings Co Ltd

Issued 25 November 2021

In June 2017, the two South Korean companies Hansae Co. Ltd (Hansae) and Hansae Yes24 Holdings Co Ltd were placed under observation due to the risk of systematic labour rights abuses at Hansae’s garment factories. Hansae produces textiles and garments in Vietnam, Myanmar and Haiti, among others.

During the observation period, Hansae has implemented numerous measures to improve working conditions at its factories. The company has also made changes to its management and compliance systems, and the sum of these measures may help to create lasting improvements.

The Council on Ethics considers that the risk of systematic labour rights abuses at the company’s operations is no longer unacceptable, and recommends that observation of Hansae Yes24 Holdings Co Ltd and Hansae Co Ltd be terminated.

Hyundai Glovis Co Ltd

Issued 17 December 2021

The Council on Ethics recommends that Hyundai Glovis Co Ltd be placed under observation. Hyundai Glovis is a South Korean company providing logistics and transport services, primarily in the area of motor vehicle transport. The company owns and operates a fleet of bulk carriers and car transport vessels. At the close of 2020, the GPFG owned 0.75 per cent of the company’s shares, worth approx. NOK 410 million.

The basis for the Council’s assessment is that Hyundai Glovis has disposed of decommissioned vessels by sending them to be broken up for scrap on beaches in Pakistan and Bangladesh, a practice known as ‘beaching’, where working conditions are extremely poor. The process also causes severe environmental damage. The Council considers that by disposing of ships for scrapping in this way, the company can be said to contribute to serious human rights violations and severe environmental damage.

When assessing the risk that the company will contribute to such norm violations in the future, the Council has attached importance to the company’s statement that it will consider better ways to break up decommissioned vessels from now on. The company has further stated that it has no plans to dispose of any more ships for breakup until 2024. In the Council’s view, this should give the company sufficient time to find better alternatives for the breakup of its decommissioned vessels. On this basis, the Council recommends that the company be placed under observation. The issue to be observed is whether the company introduces an acceptable practice for the disposal of decommissioned vessels. If, in future, the company disposes of decommissioned vessels for breakup in ways that result in serious environmental damage or gross human rights abuses, the Council may recommend that the company be excluded from investment by the GPFG.

IJM Corp Bhd

Issued 24 February 2022

The Council on Ethics recommends that the exclusion of the company IJM Corp Bhd from the Government Pension Fund Global (GPFG) be revoked.

In 2014, the Council on Ethics recommended to exclude IJM Corp Bhd from the GPFG due to the risk of the company being responsible for severe environmental damage through its conversion of tropical forest into oil palm plantations. At the time, the company was developing plantations in lowland rainforest in East Kalimantan, Indonesia. The Council emphasised that the company seemed not to have implemented measures to reduce the loss of biodiversity.

In 2021, IJM Corp divested its stake in its plantations business and is no longer involved in the development and operation of plantations. The Council on Ethics therefore considers that the grounds for exclusion no longer exist.

Leonardo SpA

Issued 23 August 2022

In May 2017, Leonardo SpA (Leonardo) was placed under observation due to the risk that the company was contributing to or was itself responsible for gross corruption. Norges Bank made this decision on the basis of a recommendation to exclude the company issued by the Council on Ethics in December 2016. The Council’s recommendation rested on allegations of corruption linking the company to the bribery of public officials, via intermediaries, in India, South Korea, Algeria and Panama in the period 2009 to 2014. The Council considered that the company had not adequately substantiated that it had implemented targeted internal anti-corruption procedures. For the Council, the decisive factor was Leonardo’s use of agents and how the company managed this risk.

Throughout the observation period, the Council has had the impression that Leonardo’s efforts to prevent, detect and deal with corruption have steadily improved. The Council’s assessment now is that the company seems to have put in place an anti-corruption system that, in most areas, aligns with internationally recognised recommendations.

Since the autumn of 2020, the Council has been aware that two former Leonardo employees have been implicated in a new corruption case in Italy. No information has so far emerged to indicate that the company is encompassed by the ongoing investigation. The Council does not consider it expedient to continue observing the company pending new information that casts a different light on the case in question in Italy.

The Council no longer considers the risk of gross corruption in the company’s business operations to be unacceptable and recommends that observation of Leonardo be discontinued.

Li Ning Co Ltd

Issued 30 September 2021

The Council on Ethics recommends that Li Ning Co Ltd (Li-Ning) be excluded from investment by the Norwegian Government Pension Fund Global (GPFG) due to an unacceptable risk that the company is contributing to serious human rights abuses in China’s Xinjiang Uyghur Autonomous Region.

Li-Ning is a Chinese company that manufactures and sells sports clothing and equipment. The company is listed on the Hong Kong Stock Exchange. At the close of 2020, the GPFG owned 1.2 per cent of the company’s shares, worth NOK 1.76 billion.

Several reports and news articles have described the ongoing human rights abuses in Xinjiang, both relating to internment camps and forced labour. It is therefore well documented that producing in or purchasing certain products from this region, including textiles and cotton, are associated with a particular risk of becoming involved in forced labour.

Information published on Chinese websites indicate that Li-Ning signed a cooperation agreement with Xinjiang Jinfujie Clothing Co Ltd (Jinfujie) in 2017. According to these sources, the agreement was intended to make Jinfujie Li-Ning’s “production base”. Publicly available information indicates that Jinfujie manufactures inside an internment camp in Xinjiang, and that the company has several production facilities in the region which are said to have taken on many workers via government-sponsored programmes targeting ethnic minorities. Li-Ning is also linked to human rights abuses in Xinjiang through other suppliers.

In light of the information available, as well as the general risk relating to textiles production in Xinjiang, the Council considers that there is a risk of forced labour linked to Li-Ning’s operations. The Council does not have information indicating that Li-Ning has investigated or addressed this risk with respect to Jinfujie or other suppliers, and the company has not answered the Council’s requests for information. The Council therefore concludes that the risk of the company contributing to serious human rights abuses is unacceptably high.

NHPC Ltd

Issued 24 February 2022

The Council on Ethics recommends that NHPC Ltd (NHPC) be excluded from investment by the Norwegian Government Pension Fund Global (GPFG) due to an unacceptable risk that NHPC is responsible for or contributes to severe environmental damage.

NHPC (previously the National Hydroelectric Power Corporation Limited) is an Indian company that is majority-owned by the Indian government. NHPC is listed on stock exchanges in Mumbai (BSE and NSE) in India. As of 31 December 2020, the GPFG owned 0.19 per cent of NHPC’s shares, worth a total of NOK 50 million. NHPC develops, owns and operates a range of hydropower projects, including the Lower Subansiri Hydropower Project (the Project) currently under construction. When completed, the Project will be the largest hydropower scheme in India, with an installed capacity of 2,000 MW.

The Project has been controversial for more than 20 years. The agreement with the construction contractor was signed in 2003 but due to conflicts and challenges related to licensing and land acquisition, construction works did not start until 2005. At that stage, the scheme was scheduled enter operation in 2010. Various issues have resulted in further delays with multiple stops in construction. At present, the Project is expected to become operational in 2022–2023.

The Project’s size, location and proposed operational regime have resulted in protests and allegations of harm to local people’s livelihoods and important biodiversity. The reservoir will inundate 33.5 km2 that mainly consist of forest areas in a region known as the Eastern Himalaya Biodiversity Hotspot, one of 36 global biodiversity hotspots. Areas that will be lost are partly located in international Key Biodiversity Areas, where species new to science have recently been found in the forests to the west of the project area. There are endemic and threatened species in the project area, which will be adversely affected by the Project.

The Project is planned for hydro-peaking operations. This means that the power plant will be run at full or near full capacity during parts of the day when demand for power is high (typically in the morning and/or in the evening), and with very low capacity at other times of the day. The hydro-peaking operations appear planned with variation from 240 m3/s (very low capacity) to 2,579 m3/s (full capacity). This will result in very high river flow variations downstream of the dam, which will have destructive environmental impacts, including for the endangered Ganges River Dolphin. The large fluctuations in river flow also represents a safety hazard to the many people living along a 126 km section of the river.

NHPC has neither replied to the Council on Ethics’ questions nor commented on a draft recommendation for the company’s exclusion.

The Council considers that NHPC is responsible for the project impacts because the company controls planning and construction and will, as the owner, be responsible for operating the completed power plant. The Council considers that the risk of severe environmental damage is unacceptable, due to inundation of a large forest area containing internationally important biodiversity. The hydro-peaking operations will result in long-term and wide-ranging environmental damage downstream of the power plant, including harm to threatened species. It also poses a substantial risk to local people living along the river. The Council also emphasises the fact that the environmental studies that informed project decision-making appear to be inadequate, and that NHPC has not provided information about meaningful measures to avoid, minimise and mitigate adverse impacts.

Nien Hsing Textile Co Ltd

Issued 17 December 2021

In July 2018, the Taiwanese company Nien Hsing Textile Co Ltd (Nien Hsing) was placed under observation due to the risk of systematic abuse of labour rights at the company’s textiles factories. Nien Hsing produces yarn, fabric and apparel in Taiwan, Vietnam, Lesotho and Mexico.

The Council’s 2018 recommendation was based largely on investigations into working conditions at the factories in Lesotho, where female employees were subjected to widespread sexual harassment. During the observation period, Nien Hsing has implemented substantial changes to address gender-based violence and harassment. The Anti-Gender Based Violence and Harassment Program, which was established through agreements with brand-named customers, trade unions, women’s rights organisations and Nien Hsing, has been crucial for driving these changes. The Council’s investigation from 2021 shows that the company’s corporate culture has changed, harassment has been reduced and employees find that complaints mechanisms work. Management’s attitudes have also changed, and the company is now working more systematically to prevent labour rights abuses at its factories.

The Council deems the risk of systematic labour rights abuses at the company’s operations to no longer be unacceptable and recommends that observation of Nien Hsing be terminated.

PTT Oil & Retail Business PCL and PTT PCL

Issued 6 May 2022

The Council on Ethics recommends that the Thai company PTT PCL (PTT) and its subsidiary PTT Oil and Retail Business PCL (PTTOR) be excluded from investment by the Norwegian Government Pension Fund Global (GPFG) due to an unacceptable risk that the companies are contributing to serious violation of the rights of individuals in situations of war and conflict. The recommendation relates to the companies’ activities in Myanmar.

At the close of 2021, the GPFG owned 0.35 per cent of the shares in PTT, worth NOK 998.8 million, and 0.11 per cent of the shares in PTTOR, worth NOK 96.4 million. The companies are listed on the Stock Exchange of Thailand.

PTT is a fully integrated oil and petrochemical company which, through its subsidiary PTT Exploration and Production PCL is partnering with the state-owned oil company Myanma Oil and Gas Enterprise (MOGE) in three offshore gas fields in Myanmar. PTTOR engages in the distribution of petroleum products and retail sales, and is a partner in a joint venture which, in 2019, entered into a Build Operate and Transfer (BOT) agreement with the military-owned conglomerate Myanmar Economic Corporation (MEC) for the construction and operation of an oil terminal and a liquid natural gas (LNG) filling facility. Both MOGE and MEC are controlled by the Myanmar armed forces and are subject to sanctions by the EU and several other countries, including Norway.

In February 2021, the armed forces in Myanmar staged a coup d’état, after which armed conflicts in the country have intensified. At least 1,600 people have been killed and more than 12,500 have been interned. The UN High Commissioner for Human Rights has stated that the armed forces’ actions could qualify as crimes against humanity and war crimes. Assaults on the civil population are ongoing and there is a substantial risk of new, extremely serious abuses by the military.

When assessing the companies’ contribution to such abuses, the Council takes the position that companies must demonstrate particular care and due diligence when operating in situations of war or conflict. As in previous recommendations, the Council attaches importance to whether the companies’ business operations in Myanmar help to strengthen the armed forces’ financial capacity and to the fact that business partnerships with military-owned entities represents a particularly high risk of contributing to the armed forces’ abuses. The Council finds it material that the UN High Commissioner for Human Rights advises against financial cooperation with military entities, that sanctions have been imposed on MOGE and MEC precisely because revenues from these companies increase the armed forces’ ability to commit serious norm violations, and that PTT and PTTOR cannot point to any initiatives that reduce this risk.

In accordance with the Council’s previous practice, PTTOR’s business partnership with MEC, which receives revenues through the BOT agreement, would not by itself lead to its exclusion from the GPFG. However, since the military coup in 2021, the oil and gas industry constitutes the largest source of revenue for the armed forces. In the Council’s view, therefore, PTT’s engagement in this area constitutes the most important element in the company’s contribution to the serious abuses for which the armed forces are responsible.

San Leon Energy PLC

Issued 21 October 2021

San Leon Energy Plc (San Leon) was excluded from the Government Pension Fund Global (GPFG) in 2016 as a result of the company’s petroleum prospecting in Western Sahara. As the prospecting that led to the exclusion has now ceased, the Council on Ethics recommends that the exclusion of the company be revoked.

Scandinavian Tobacco Group A/S

Issued 24 February 2022

The Council on Ethics recommends that Scandinavian Tobacco Group A/S be excluded from the investment universe of the Government Pension Fund Global (GPFG) due to this company’s production of tobacco products.

Supermax Corp Bhd

Issued 24 February 2022

The Council on Ethics recommends that Supermax Corp Bhd (Supermax) be excluded from the Norwegian Government Pension Fund Global (GPFG) due to an unacceptable risk that the company is contributing to human rights abuses. The recommendation concerns the living and working conditions experienced by migrant workers at the company’s production facilities in Malaysia.

Supermax is a Malaysian manufacturer of rubber gloves, with three subsidiaries that collectively operate 12 factories in Malaysia. Supermax and its subsidiaries employ approx. 3,800 people, around 60 per cent of whom are migrant workers. At the close of 2020, the GPFG owned 1.35 per cent of the company’s shares, worth approx. NOK 455 million. Supermax is listed on the Bursa Malaysia stock exchange.

Due to the Covid-19 pandemic, it has not been possible for the Council to carry out its own investigations in Malaysia, and the company has declined to participate in an online due diligence assessment. The recommendation is therefore based on the information that is publicly available. Since 2019, several news reports have been published about very poor living and working conditions experienced by the company’s employees. Allegations include the payment of high recruitment fees, very long working hours, an elaborate system of publishments and fines, and restrictions on workers’ freedom of movement.

These practices seem to have been ongoing for several years and to have affected many workers. Even though the Council has not taken a position on whether the allegations in this case constitute forced labour, the Council notes that the treatment of the workers correspond to several of the ILO’s indicators of forced labour. In any event, such treatment could contravene the right to decent, safe and healthy working conditions.

In light of the seriousness of the allegations against Supermax, the Council considers that the company’s response has largely been inadequate. The company has denied that any human rights infringements have taken place, claims that living and working conditions are good, and asserts that the workers’ testimonies are incorrect or exaggerated. Despite this, the company has given notice that it will implement a number of measures to improve living and working conditions and ensure that its workers do not pay recruitment fees.

The Council takes a positive view of the measures the company has announced. However, it has not been possible to assess the measures and their implementation because the company has not replied to the Council’s latest enquiries. It is also unclear whether the measures will reduce the risk of human rights abuse in the longer term. In the Council’s experience, this risk is best managed by the company working systematically to uncover and manage risk, and communicating clearly that any human rights abuse is unacceptable. The Council needs solid documentation that this is the case, and the company has not, so far, shared such information. On this basis, the Council has concluded that the risk of future human rights abuses is unacceptably high.

Tilray Brands Inc

Issued 3 May 2022

The Council on Ethics recommends to exclude Tilray Brands Inc from investment by the Norwegian Government Pension Fund Global (GPFG) due to production of cannabis for recreational use.

Young Poong Corp

Issued 1 March 2022

The Council on Ethics recommends that Young Poong Corp (Young Poong) be excluded from investment by the Norwegian Government Pension Fund Global (GPFG) due to an unacceptable risk that Young Poong is responsible for or contributes to severe environmental damage.

Young Poong is listed on the stock exchange in South Korea. As of 31 December 2020, the GPFG owned 0.24 per cent of the company’s shares, worth a total of NOK 18.8 million.

Young Poong owns and operates the Seokpo smelter in South Korea, which went into operation in 1970. Following multiple expansions, the smelter is currently one of the largest producers of zinc in the world. Annual production at the smelter is approximately 400,000 tonnes of zinc bars, 728,000 tonnes of sulphuric acid, 1,830 tonnes of copper sulphate, 3,000 tonnes of electrolytic copper cathode, 100 tonnes of indium, and 46,000 tonnes of silver by-product.

The Seokpo smelter has been accused of causing serious pollution as well as harm to both the environment and human health for many years. Such allegations have been made by local people, workers at the smelter, civil society organisations, researchers and the public authorities. Studies show that the smelter can be linked to serious persistent and ongoing pollution. This includes the emission of heavy metals (e.g. cadmium, zinc, lead and arsenic) and sulphur dioxide (SO2) to the air. Regular discharges of polluted wastewater during operations, combined with accidental releases, also result in heavy metals (e.g. cadmium, zinc, lead and copper), fluorine and selenium polluting the Nakdong River that runs next to the smelter. This river is also a source of drinking water. Recent studies show that the pollution continues.

Substantial pollution has resulted in high levels of metals, including arsenic, cadmium, zinc, lead, copper and mercury, in soils in surrounding areas. Workers at the smelter are exposed to health risks due to dust with metals and gasses that have resulted in health problems and illness.

For years, government authorities have ordered the company to implement remedial measures and temporary shutdowns until improvements have been made. Authorities have also issued fines, some of which the company has contested in the courts. The authorities continue to issue new remediation orders to Young Poong. A company executive and an employee at a firm providing environmental monitoring services have received prison sentences for comprehensive manipulation of emission monitoring data. In this instance, values for air pollution that were substantially above national limits and international standards had been changed to show values far below these limits.

Young Poong has neither replied to the Council on Ethics’ questions nor commented on a draft recommendation to exclude it from the GPFG.

The Council considers that Young Poong is responsible for or contributes to long-term and substantial pollution as well as harm to human health and the environment. Levels of air, water and soil pollution are far above national limits and international standards. Despite having had a long period to implement corrective measures, the company does not appear to have taken steps that substantially reduce ongoing or historically accumulated pollution in surrounding areas. Given the company’s repeated and continuing violations of requirements and standards, and failure to implement measures that substantially reduce pollution, the Council finds that there is an unacceptable risk of future pollution and severe environmental damage.