12 Published recommendations

Tabell 12.1 List of companies about which recommendations were published in 2023

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 2023 is presented below.

Each year, the Council reviews the companies that have been excluded to identify whether the grounds for exclusion still exist. In 2023, the exclusion of two companies was revoked. One company had ceased engaging in the production of nuclear weapons, while the other had not disposed of ships for breakup since it was excluded in 2018.

During the year, a total of six companies were excluded under four different criteria. Two companies were excluded under the war and conflict criterion, due to their financial ties with the armed forces in Myanmar. Two companies were excluded due to the sale of weapons to Myanmar. One company was excluded because it contributes to environmental damage through the loss of biodiversity resulting from the construction of hydropower generating facilities. One company was excluded because it contributes to the serious violation of other fundamental ethical norms through prospecting for oil off the coast of Western Sahara at the behest of the Moroccan authorities.

Of the five decisions to place companies under observation that were published in 2023, one related to gross corruption, two to serious violation of the rights of individuals in situations of war or conflict, one to human rights abuses and one to serious violation of other fundamental ethical norms. The Council had originally recommended the exclusion of the two companies placed under observation in relation to the war and conflict criterion, due to the risk that they were contributing to serious norm violations in Myanmar through their partnership with a telecoms company which was conducting surveillance activities at the orders of the regime.

In 2023, the observation of two companies was terminated. One was under observation due to its financial relations with the armed forces in Myanmar. Observation was terminated because the company had ended this partnership and divested its operations in Myanmar. The second company was under observation because it had previously disposed of ships for breakup at yards operating to an unacceptable standard. The company has now introduced a new policy for responsible shipbreaking, and the grounds for further observation therefore no longer exist.

12.1 Summaries of recommendations published in 2023

AviChina Industry & Technology Co Ltd

Issued 23 August 2022

The Council on Ethics recommends that AviChina Industry & Technology Co Ltd (AviChina) be excluded from investment by the Norwegian Government Pension Fund Global (GPFG) due to an unacceptable risk that the company sells weapons to a state that uses weapons in ways that constitute serious and systematic violations of international humanitarian law (IHL). The background for this recommendation is the sale of light combat aircraft to the armed forces in Myanmar.

AviChina is a Chinese company that engages in the development and sale of aircraft and aviation products. At the close of 2021, the GPFG owned 0.37 per cent of the company’s shares, worth NOK 137 million. The company is listed on the Hong Kong Stock Exchange (HKEX).

In December 2021, several light combat aircraft of the type K-8 were delivered to the armed forces in Myanmar. The aircraft are thought to have been produced by companies which AviChina controls. It has been reported that such aircraft have previously been used in combat in Myanmar.

In February 2021, the armed forces in Myanmar staged a coup d’état. Both before and after the coup, the armed forces have perpetrated extremely serious abuses against the civilian population, relating in part to ongoing armed conflicts in the country. Several UN bodies have reported that the armed forces have deliberately attacked civilian targets. In some cases, this has involved the use of combat aircraft. The attacks have been numerous and constitute, in the Council on Ethics’ assessment, serious and systematic violations of IHL. This information has long been in the public domain, and the Council takes the position that anyone selling weapons to Myanmar since 2018 should have understood that they could be used in violation of IHL.

In its assessment of the risk of contributing to new abuses forward in time, the Council has attached importance to the fact that the company supplied aircraft to Myanmar despite the military coup and the information concerning the armed forces’ abuses. The delivery in December 2021 is said to be part of a larger contract, which indicates that further deliveries may take place. Although the Council has contacted the company on several occasions, it has not replied to the Council’s queries.

Bharat Electronics Ltd

Issued 23 August 2022

The Council on Ethics recommends that Bharat Electronics Ltd (BEL) be excluded from investment by the Norwegian Government Pension Fund Global (GPFG) due to an unacceptable risk that the company sells weapons to a state that uses the weapons in ways that constitute serious and systematic violations of international law. The background for this recommendation is the sale of military equipment to the armed forces in Myanmar.

BEL is an Indian producer of aviation and defence electronics. At the close of 2021, the GPFG owned 0.32 per cent of the company’s shares, worth NOK 195 million. The company is listed on the National Stock Exchange of India (NSE).

In July 2021, BEL delivered a remote-controlled weapons station (RCWS) to Myanmar. This weapons station has been developed to remotely control a machine gun from inside an armoured vehicle. It is reported that such vehicles are used in attacks on civilians in Myanmar.

In February 2021, the armed forces in Myanmar staged a coup d’état. Both before and after the coup, the armed forces have committed extremely serious abuses against Myanmar’s civilian population, relating in part to ongoing armed conflicts in the country. Several UN bodies have reported that the Myanmar armed forces, also known as the Tatmadaw, have deliberately attacked civilian targets. The attacks have been numerous and, in the Council’s view, constitute serious and systematic violations of international law. This information has long been in the public domain, and the Council takes the position that anyone selling weapons to Myanmar since 2018 should have understood that they could be used in violation of international law.

When assessing the risk of the company’s potential contribution to new abuses forward in time, the Council has attached importance to the fact that it delivered military equipment to Myanmar despite the military coup and the information concerning the Tatmadaw’s abuses. The company has also previously sold military equipment to the armed forces in Myanmar, and has a sales office in the country. Even though the specific delivery is limited in scope, the Council has given weight to the fact that there seems to be a more extensive relationship between BEL and the armed forces in Myanmar. Although the Council has contacted the company on several occasions, BEL has not responded to its queries.

Delek Group Ltd

Issued 30 May 2023

The Council on Ethics recommends that Delek Group Ltd be excluded from the Government Pension Fund Global because the company is responsible for a serious violation of fundamental ethical norms. The background is the company’s petroleum prospecting offshore Western Sahara.

At the end of 2022, the GPFG held shares in the company to the value of NOK 600 million, corresponding to three per cent ownership. Delek Group is an Israeli company, listed on the Tel Aviv stock exchange. Delek Group’s wholly owned subsidiary NewMed Energy is involved in exploration, extraction and production of natural gas and condensate.

The company has entered into an agreement with Moroccan authorities for petroleum exploration offshore Western Sahara. Morocco does not have legal, sovereign rights over this area’s natural resources.

The Council has considered that Delek Group’s exploration activities offshore Western Sahara must be considered a serious violation of fundamental ethical norms as per the Fund’s ethical guidelines, as the activity is not conducted in accordance with the wishes and interests of the people of Western Sahara, and because it contributes to maintain an unresolved situation for the area. With regard to the risk of future violations, the Council points out that the exploration agreement has a term of up to eight years.

GAIL India Ltd

Issued 29 November 2022

The Council on Ethics recommends that GAIL (India) Ltd (GAIL) be excluded from investment by the Norwegian Government Pension Fund Global (GPFG) due to an unacceptable risk that the company is contributing to serious violations of the rights of individuals in situations of war or conflict. The recommendation relates to the company’s business activities in Myanmar.

At the close of 2021, the GPFG owned 1.15 per cent of the company’s shares, worth USD 89.1 million. GAIL is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange of India.

GAIL is an integrated natural gas company engaged in the exploration, production, distribution and sales of natural gas. GAIL is a partner in a joint venture with the state-owned oil company Myanma Oil and Gas Enterprise (MOGE) in the Shwe project, a gas field off the coast of Myanmar. GAIL has a minority share in the project. MOGE is controlled by Myanmar’s armed forces (Tatmadaw) and is 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. Since then, armed conflicts within the country have intensified. The United Nations High Commissioner for Human Rights has asserted that the Tatmadaw’s actions could qualify as crimes against humanity and war crimes. The abuse of the civilian population is ongoing and there is a considerable risk of further extremely serious abuses being perpetrated by the military in Myanmar.

As in previous recommendations, the Council has attached importance to whether the company’s business operations in Myanmar help to strengthen the Tatmadaw’s financial capacity. The Council also takes the position that any business partnership with entities controlled by the armed forces constitutes a particularly high risk of contributing to abuses perpetrated by the Tatmadaw. A material factor for the Council is that the UN High Commissioner for Human Rights advises against any economic cooperation with military-owned entities, that sanctions were imposed on MOGE precisely because revenues from such companies boost the Tatmadaw’s ability to commit serious norm violations, and that GAIL cannot point to any measures that reduce this risk. Since the military coup in 2021, revenues from the oil and gas industry have been the Tatmadaw’s largest source of income.

The Council on Ethics presumes that the company is unlikely to have sufficient influence to enable it to prevent new abuses, as long as the Tatmadaw holds power in the country. In the Council’s opinion, the company will therefore have no other options but to withdraw from its partnership with MOGE, if it is to avoid contributing to norm violations. GAIL has given no indication of its intention to do so. On the contrary, the company indicates that it will seek additional business opportunities in Myanmar. This leads the Council to presume that the company will remain in the country and that it will continue to generate substantial revenues for the junta. The Council therefore concludes that the risk of contributing to the violations of the rights of individuals in situations of war or conflict is unacceptable and recommends that the company be excluded from investment by the GPFG.

Hyundai Glovis Co Ltd

Issued 12 May 2023

The Council on Ethics recommends that observation of Hyundai Glovis Co Ltd be terminated. Hyundai Glovis was placed under observation in 2022 at the recommendation of the Council on Ethics. The company has now introduced a new policy for the responsible ship recycling. The Council therefore considers that there are no longer grounds for continued observation.

KDDI Corp

Issued 29 June 2023

The Council on Ethics recommends that KDDI Corp (KDDI) be excluded from investment by the Government Pension Fund Global (GPFG) due to an unacceptable risk that the company is contributing to serious violation of the rights of individuals in situations of war or conflict. KDDI is an integrated provider of telecommunication. This recommendation relates to the company’s telecommunications business in Myanmar.

At the close of 2022, the GPFG owned 1.13 per cent of KDDI’s shares, worth USD 788.7 million. KDDI is listed on the Tokyo Stock Exchange.

On 1 February 2021, the armed forces in Myanmar staged a military coup. Since the coup, the armed conflicts taking place within the country have intensified. 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 civilian population are ongoing and well-documented, and there is a substantial risk that the military will commit new, extremely serious abuses.

In Myanmar, KDDI is a partner in a joint venture that has signed a joint operation agreement with Myanmar Posts and Telecommunications (MPT). MPT is one of four telecommunications operators in Myanmar. Through the joint venture, KDDI has provided technology and engineering capacity to MPT. Since the coup, MPT has been under military control.

It has been reported that MPT and other telecoms operators in Myanmar have been ordered to install and activate spyware and surveillance software that enable the regime to monitor customers’ phone and internet use in real time. In this way, the regime can listen into conversations, read text messages, monitor internet and email traffic, and track the location of users. The level of surveillance has intensified since the coup.

It is not known how data from MPT is used by the police and armed forces. However, it is known that such monitoring has enabled serious norm violations. This includes the arrest of those opposed to the regime on the basis of information obtained through surveillance. MPT’s surrender of personal data constitutes a considerable risk to the civilian population and infringes the individual’s right to liberty, safety and freedom from torture, as well as the right to a private life and freedom of expression. When assessing KDDI’s contribution to norm violations, the Council attaches importance to the fact that the company is engaged in a business association with a partner that enables serious and systematic violations of human rights and humanitarian law. Although KDDI plays no direct role in the surveillance, the Council presumes that the company is aware that MPT has installed and activated tools for the political monitoring of human rights activists, political opponents and other individuals.

In its dialogue with the Council, KDDI has asserted that it has performed due diligence assessments, that it continuously assesses the human rights situation in the country and that it has attempted to use its influence to address the risk of human rights violations relating to the surveillance. Although this is positive, the company’s efforts have borne little apparent fruit. KDDI has elected to remain in Myanmar out of concern for its own employees and to help maintain the telecoms infrastructure and communications capacity. The Council acknowledges that the choice between remaining in the country and pulling out represents a potential dilemma for the company and that it has limited freedom of action in its partnership with MPT. Nevertheless, the Council considers that this cannot be accorded decisive weight when there is a considerable risk that MPT will continue to surrender customer data that will enable serious abuses to be perpetrated on the civilian population. While the military holds power in the land, it is unlikely that KDDI will wield sufficient influence to prevent this. The Council concludes, therefore, that as long as KDDI’s partnership with MPT persists, the risk of the company contributing to the violation of the rights of individuals in situations of war or conflict will remain at an unacceptable level.

Kirin Holdings Co Ltd

Issued 2 February 2023

In March 2021, Kirin Holdings Co Ltd (Kirin) was placed under observation pursuant to the criterion concerning serious violations of the rights of individuals in situations of war and conflict, due to the company’s business partnership with the military conglomerate Myanmar Economic Holdings Public Company (MEHPCL) in Myanmar.

At the close of 2022, the GPFG owned 1.22 per cent of Kirin’s shares, worth NOK 1.68 billion.

Kirin is a Japanese holding company with several subsidiaries operating primarily in the beverage and pharmaceutical production sectors. The company was a partner in two joint ventures with MEHPCL. The armed forces in Myanmar have committed acts of extreme brutality against the country’s civilian population, including the Rohingya community, a religious minority in Myanmar. The Council on Ethics considered that a business partnership with MEHPCL represented a high risk of contributing to serious abuses by the country’s armed forces. Before the Council issued its recommendation, Kirin disclosed that it was considering making changes to its business operations in Myanmar. The Council recommended that the company be placed under observation due to developments forward in time.

Kirin has now terminated its partnership with MEHPCL and no longer operates in Myanmar. The Council therefore considers that the grounds for observing the company have ceased to exist and recommends that observation be terminated.

Korea Gas Corp

Issued 29 November 2022

The Council on Ethics recommends that Korea Gas Corporation (KOGAS) be excluded from investment by the Norwegian Government Pension Fund Global (GPFG) due to an unacceptable risk that the company is contributing to serious violation of the rights of individuals in situations of war or conflict. The recommendation relates to the company’s business activities in Myanmar.

At the close of 2021, the GPFG owned 0.19 per cent of the company’s shares, worth USD 5.9 million. KOGAS is listed on the Korea Stock Exchange (KRX).

KOGAS engages principally in the importation of natural gas for the domestic market and the construction and maintenance of gas terminals and gas pipelines in South Korea and elsewhere. It also owns shares in offshore gas fields. In Myanmar, KOGAS is a partner in a joint venture with the state-owned oil company Myanma Oil and Gas Enterprise (MOGE) in the Shwe project, a gas field off the coast of Myanmar. KOGAS has a minority share in the project. MOGE is controlled by Myanmar’s armed forces (Tatmadaw) and is 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. Since then, armed conflicts within the country have intensified. The United Nations High Commissioner for Human Rights has asserted that the Tatmadaw’s actions could qualify as crimes against humanity and war crimes. The abuse of the civilian population is ongoing and there is a considerable risk of further extremely serious abuses being perpetrated by the military in Myanmar.

As in previous recommendations, the Council has attached importance to whether the company’s business operations in Myanmar help to strengthen the Tatmadaw’s financial capacity. The Council also takes the position that any business partnership with entities controlled by the armed forces constitutes a particularly high risk of contributing to abuses perpetrated by the Tatmadaw. A material factor for the Council is that the UN High Commissioner for Human Rights advises against any economic cooperation with military-owned entities, that sanctions were imposed on MOGE precisely because revenues from such companies boost the Tatmadaw’s ability to commit serious norm violation, and that KOGAS cannot point to any measures that reduce this risk. Since the military coup in 2021, revenues from the oil and gas industry have been the Tatmadaw’s largest source of income.

The Council presumes that the company is unlikely to have sufficient influence to enable it to prevent new abuses, as long as the Tatmadaw holds power in the country. In the Council’s opinion, the company will therefore have no other options but to withdraw from its partnership with MOGE, if it is to avoid contributing to norm violations. KOGAS has given no indication of its intention to do so. This leads the Council to presume that the company will remain in the country and that it will continue to generate substantial revenues for the armed forces. The Council therefore concludes that the risk of contributing to the violation of the rights of individuals in situations of war or conflict is unacceptably high and recommends that the company be excluded from investment by the GPFG.

ORLEN SA

Issued 24 October 2022

The Council on Ethics recommends that Polski Koncert Naftowy Orlen SA (Orlen) be placed under observation pursuant to the ethical guidelines’ human rights criterion. The background for this is Orlen’s acquisition of the newspaper publisher Polska Press and its implications for freedom of the press in Poland.

Orlen is an integrated energy company listed on the Warsaw Stock Exchange. The company’s largest shareholder is the Polish state. At the close of 2021, the GPFG owned 1.18 per cent of the company’s shares, worth NOK 822 million.

The acquisition of Polska Press gives Orlen control over the majority of the country’s regional newspapers, in addition to a large number of local media companies and online portals. Numerous key actors have pointed out that the state’s ownership of Orlen potentially exposes Polska Press to the exercise of political influence and that the acquisition therefore has an adverse impact on freedom of expression. This criticism has been levelled in the context of diminishing press freedom in the country.

With regard to the company’s contribution to norm violations, Orlen has carried out the acquisition and, as owner, contributed to the replacement of editors and removal of criticism from the public discourse. Confronted with the negative consequences of the acquisition, the company has stated that it was a purely commercial decision that fits well with its strategic goals. The company has emphasised that it respects national legislation covering the media market and that it will not interfere in the editorial content of Polska Press’s publications.

In the Council’s view, there is no contradiction between the acquisition being undertaken for commercial reasons and it having an adverse impact on freedom of the press at the same time.

The risk of political interference is particularly serious in connection with elections, and the Council notes that several actors have expressed serious concern about the independence of Polska Press’s publications in connection with the elections in 2023. To what extent this risk will materialise is nevertheless uncertain. Due to this uncertainty about future developments, the Council recommends that the company be placed under observation.

Petrofac Ltd

Issued 3 April 2023

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

Petrofac Ltd is a British oil service company, with 8,200 employees distributed across 32 departments worldwide. It is listed on the London Stock Exchange. The company engages primarily in the design and construction of infrastructure for oil and gas production, as well as the operation and maintenance of such facilities. At the close of 2022, the GPFG owned 1.19 per cent of the company’s shares, worth approx. NOK 52 million.

The Council’s investigations have shown that Petrofac, or its subsidiaries, may be linked to allegations or suspicions of corruption in six countries over a period of 15 years. All the cases relate to allegations of bribery or suspicious transactions via agents or through subcontractors in order to win contracts for Petrofac’s subsidiaries. A former Petrofac executive has pleaded guilty to a total of 14 counts of bribery, involving a combined total of over USD 80 million, which was paid in order to win contracts worth in excess of USD 8 billion for the company. Of the total amount paid in bribes, the company has pleaded guilty in relation to USD 44 million.

The Guidelines for Observation and Exclusion of Companies from the GPFG are forward-looking, 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 exists an unacceptable risk, the Council attaches importance firstly to the extent to which the company has implemented effective measures to prevent, detect and respond to corruption. The corruption risk in the business sector and countries in which the company operates are also factors in the assessment. Otherwise, the Council attaches importance to whether the company has helped to shed light on the case, and takes the position that it is up to the company to substantiate that it is working effectively to prevent corruption if the risk to the GPFG is to be deemed acceptable.

The Council notes that in her sentencing remarks following the company’s conviction in Southwark Crown Court in the UK, the judge acknowledged that since the corrupt acts took place, Petrofac has significantly strengthened its compliance organisation and due diligence processes, and that it has terminated all contracts with agents where this is not required under national law. Petrofac has shared little information about how it handles markets where the use of agents was previously crucial to winning contracts. Petrofac still operates in a business sector and in several countries in which the risk of corruption is high. Several of the countries to which allegations or suspicions of corruption are linked remain Petrofac’s most important markets. The Council has received information about the company’s general procedures for the identification and management of corruption risk, but not about what Petrofac considers to be the most important corruption risks, how these are prioritised and what specific measures the company has implemented to deal with the identified corruption risks.

With respect to sanctions for violation of the company’s guidelines, the Council notes Petrofac’s assurance that it has “cleaned the house” after the corrupt acts came to light. Nevertheless, it is impossible for the Council to make any qualified assessment of whether the company has implemented any proportionate, dissuasive and visible responses on this basis.

The court found that Petrofac has made serious attempts to change the culture within the company, and points out that large parts of the board and management have been replaced since the corrupt acts took place. Nevertheless, the Council notes that anti-corruption does not seem to be a core competence of any of the board members appointed to the Ethics and Compliance Committee after the serious allegations of corruption became known. The Council also attaches importance to the fact that two of today’s board members served on the board when the corrupt acts took place and have held key positions at the company for many years. As board chair and CEO, respectively, these two have – until now – had ultimate responsibility for establishing a good “tone from the top” and a strong compliance culture within the company. The Council therefore finds reason to question whether these have been the appropriate individuals to communicate the message of culture change to the organisation in the change process it has undergone. Another expression of companies’ “tone from the top” and compliance culture is whether they themselves report wrongdoing and cooperate with the relevant investigations. The Council perceives there to be a contradiction between Petrofac’s claims of dialogue with the UK’s Serious Fraud Office (SFO) and the findings of the court when it handed down its verdict against the company.

The Council therefore considers that uncertainty still attaches to some elements of Petrofac’s compliance programme, its corporate governance and the change in culture the company now claims to have implemented. Petrofac’s new compliance organisation was put in place not long ago, making it difficult to fully assess the impact of the company’s anti-corruption measures. Because the Council considers that developments forward in time remain doubtful, it takes the view that the company should be placed under observation pursuant to section 6(5) of the Guidelines.

During the observation period, the Council will monitor developments in the ongoing corruption cases and observe Petrofac’s anti-corruption efforts, in part through dialogue with the company. If additional cases of gross corruption or other forms of serious financial crime are uncovered, or if the company cannot demonstrate that it is doing enough to prevent, detect and deal with corruption and other financial crime within its business operations, the condition for recommending the company’s exclusion from the GPFG could be met.

Power Construction Corp of China Ltd

Issued 14 February 2023

The Council on Ethics recommends that Power Construction Corp of China Ltd (PowerChina) be excluded from investment by the Norwegian Government Pension Fund Global (GPFG) due to an unacceptable risk that the company is contributing to, or is itself responsible for, serious environmental damage.

PowerChina is a Chinese multinational company that engages in the construction of hydropower schemes and operation of power stations, among other things. At the close of 2022, the GPFG owned 0.03 per cent of the company’s shares, worth NOK 40.3 million. The company’s shares are listed on the Shanghai Stock Exchange.

This case relates to the potential loss of important biodiversity. The Council’s assessment rests on the UN Convention on Biological Diversity (CBD) and the Kunming-Montreal Global Biodiversity Framework, from 2022, which sets targets for reducing the loss of ecosystems and species, and establishes an expectation that companies shall contribute towards this end.

PowerChina’s wholly owned subsidiary Sinohydro Corp Ltd (Sinohydro), is responsible for the construction and operation of the Batang Toru hydropower project in Indonesia, which lies on the Batang Toru river in South Tapanuli, NorthSumatra. The project includes the construction of an almost 80-metre high dam, which will create a reservoir covering nearly 1 km2, as well as tunnels, coffer dams access roads, soil deposit sites, workers’ housing areas, etc. The work should have been completed in 2022, but is several years behind schedule – partly due to the pandemic and partly to a funding shortfall.

The project is located in a Key Biodiversity Area, which is also home to the critically endangered Tapanuli orangutan. The Tapanuli orangutan is the most endangered of all the great apes, and habitat loss is the most important threat to the survival of this species. The Council attaches considerable importance to the fact that there are fewer than 800 of these animals left in the Batang Toru forest, that this forest is the species’ only remaining habitat worldwide, and that this habitat is estimated to cover less than 5 per cent of the Tapanuli orangutan’s original range.

The hydropower project lies in the area with the highest concentration of orangutans, in a landscape partly covered by dense lowland rainforest in which a number of other critically endangered species, as well as species new to science (in 2015), also live. This area will be permanently destroyed as a result of the project.

In addition, it is likely that the project’s infrastructure will further fragment the Tapanuli orangutan’s habitat and block connectivity between different parts of its range, thereby reducing the genetic exchange between population groups. The project’s impact on all the endangered species that depend on this area will probably be significant, and the project increases the likelihood of several critically endangered species, including the Tapanuli orangutan, becoming extinct.

The Council also notes that 17 employees and local community members have died in connection with the project over a period of two years, and that the company does not seem to have addressed this. In the Council’s opinion, the deaths are a clear indication that the company’s safety measures are insufficient and that its safety culture is inadequate.

PowerChina has not replied to the Council’s queries.

The company has also been awarded contracts in other areas where the environmental risk is extremely high. Although the Council has not assessed in detail any other projects that the company has taken on, they indicate that the company’s operations are not curtailed by environmental considerations.

The Council concludes that the construction of the hydropower project in Batang Toru will have a destructive impact on the environment, thereby further reducing the Tapanuli orangutan’s habitat, and will pose a serious threat to the survival of this orangutan species as well as other critically endangered species.

Semen Indonesia Persero Tbk PT

Issued 19 December 2022

The Council on Ethics recommends that PT Semen Indonesia (Persero) Tbk (SIG) be placed under observation for a period of three years pursuant to the ethical guidelines’ criterion concerning “other particularly serious violations of fundamental ethical norms”. The Council’s recommendation rests on the risk of damage to prehistoric and especially important cultural heritage sites in the Maros-Pangkep karst landscape in South Sulawesi, Indonesia. The importance of protecting humanity’s cultural heritage is expressed in several international conventions and guidelines.

SIG is Indonesia’s largest producer of cement. Through its subsidiary, PT Semen Tonasa, the company operates a limestone quarry, a clay pit and four cement factories in the Maros-Pangkep area.

Some of the oldest rock art in the world is to be found in the Maros-Pangkep region’s karst landscape. One of the caves, which was discovered by scientists in 2017, contains the world’s oldest figurative cave art, a hunting scene found to be at least 43,900 years old. The significance of the rock art in Maros-Pangkep lies not merely in its antiquity, but also in its importance for our understanding of the symbolic thinking of early modern humans.

With the assistance of experts, the Council has investigated the risk of Semen Tonasa’s activities damaging the rock art. The investigation identified a total of 40 locations containing rock art and archaeological sites inside or adjacent to the areas in which Semen Tonasa holds mining concessions.

The rock art is in the process of deterioration. Climate change, driven by human activity, seems to be an important factor. There is no clear evidence that the company’s activity is harming the rock art, but the company’s activity increases the risk. Semen Tonasa has no systematic monitoring of rock art sites which provides a basis for assessing the activities’ impact on the rock art. The lack of a clear risk picture is due to weak underlying data and inadequate monitoring of the sites. The Council considers that a lack of oversight over the impact of the company’s operations constitutes a significant risk, given the outstanding cultural heritage which the rock art represents. Without adequate steps to identify risks and implement necessary measures, the Council considers the risk that the company’s operations may damage examples of irreplaceable cultural heritage to be unacceptable.

SIG and Semen Tonasa have disclosed that they have implemented numerous measures to protect the cultural heritage. This includes reducing the sites’ exposure to dust and vibration, and intensifying their monitoring. The company further states that it is committed to protect all cultural heritage sites and that it will draw up a plan for the management of cultural heritage in its concessions in partnership with experts in the field. It therefore appears as though the company now wants to take a more systematic approach to the management of the cultural heritage.

The Council on Ethics considers that the company must take particular responsibility for ensuring that Semen Tonasa’s activities do not contribute to the destruction of the rock art, given the outstanding global significance of the cultural heritage it represents. This responsibility also extends to the protection of cultural heritage as yet undiscovered. As the company does not appear to have implemented previously recommended measures concerning the protection of cultural heritage sites in its concession areas and the measures are still in the planning stage, the Council recommends that SIG be placed under observation in order to monitor the implementation of these measures.

Serco Group PLC

Issued 21 September 2023

The British company Serco Group Plc (Serco) has been excluded from the Norwegian Government Pension Fund Global (GPFG) since 2007 due to its involvement in the production of nuclear weapons. Since the grounds for the company’s exclusion no longer exist, the Council on Ethics recommends that it be revoked.

Sumitomo Corp

Issued 29 June 2023

The Council on Ethics recommends that Sumitomo Corp (Sumitomo) be excluded from investment by the Government Pension Fund Global (GPFG) due to an unacceptable risk that the company is contributing to serious violation of the rights of individuals in situations of war or conflict. Sumitomo is a Japanese conglomerate with manufacturing and trading activities within six business areas, one of which is media and digital services. This recommendation relates to the company’s telecommunications business in Myanmar.

At the close of 2022, the GPFG owned 1.38 per cent of Sumitomo’s shares, worth USD 288.4 million. Sumitomo is listed on the Tokyo Stock Exchange.

On 1 February 2021, the armed forces in Myanmar staged a military coup. Since the coup, the armed conflicts taking place within the country have intensified. 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 civilian population are ongoing and well-documented, and there is a substantial risk that the military will commit new, extremely serious abuses.

In Myanmar, Sumitomo is a partner in a joint venture that has signed a joint operation agreement with Myanmar Posts and Telecommunications (MPT). MPT is one of four telecommunications operators in Myanmar. Through the joint venture, Sumitomo has provided expertise and advice in the field of sales and marketing, as well as the expansion of the telecommunications network. Since the coup, MPT has been under military control.

It has been reported that MPT and other telecoms operators in Myanmar have been ordered to install and activate spyware and surveillance software that enable the regime to monitor customers’ phone and internet use in real time. In this way, the regime can listen into conversations, read text messages, monitor internet and email traffic, and track the location of users. The level of surveillance has intensified since the coup.

It is not known how data from MPT is used by the police and armed forces. However, it is known that such monitoring has enabled serious norm violations. This includes the arrest of those opposed to the regime on the basis of information obtained through surveillance. MPT’s surrender of personal data constitutes a considerable risk to the civilian population and infringes the individual’s right to liberty, safety and freedom from torture, as well as the right to a private life and freedom of expression. When assessing Sumitomo’s contribution to norm violations, the Council attaches importance to the fact that the company is engaged in a business association with a partner that enables serious and systematic violations of human rights and humanitarian law. Although Sumitomo plays no direct role in the surveillance, the Council presumes that the company is aware that MPT has installed and activated tools for the political monitoring of human rights activists, political opponents and other individuals.

In its dialogue with the Council, Sumitomo has asserted that it has performed due diligence assessments, that it continuously assesses the human rights situation in the country and that it has attempted to use its influence to address the risk of human rights violations relating to the surveillance. Although this is positive, the company’s efforts have borne little apparent fruit. Sumitomo has elected to remain in Myanmar out of concern for its own employees and to help maintain the telecoms infrastructure and communications capacity. The Council acknowledges that the choice between remaining in the country and pulling out represents a potential dilemma for the company and that it has limited freedom of action in its partnership with MPT. Nevertheless, the Council considers that this cannot be accorded decisive weight when there is a considerable risk that MPT will continue to surrender customer data that will enable serious abuses to be perpetrated on the civilian population. While the military holds power in the land, it is unlikely that Sumitomo will wield sufficient influence to prevent this. The Council concludes, therefore, that as long as Sumitomo’s partnership with MPT persists, the risk of the company contributing to the violation of the rights of individuals in situations of war or conflict will remain at an unacceptable level.

Thoresen Thai Agencies PCL

Issued 12 May 2023

The Council on Ethics recommends that the exclusion of Thoresen Thai Agencies PCL (Thoresen Thai) from investment by the Norwegian Government Pension Fund Global (GPFG) be revoked.

As per the Council’s recommendation, Thoresen Thai has been excluded from investment by the GPFG since 2018. The Council recommended exclusion because the company had disposed of decommissioned vessels for break up on beaches in Pakistan and Bangladesh, where environmental and working conditions were considered to be extremely poor.

The company has not disposed of further ships to be broken up for scrap since 2018. The Council therefore considers that grounds for exclusion no longer exist.