NBIM, which manages the Norwegian Pension Fund Global on behalf of the Norwegian government, has violated the OECD Guidelines for Multinational Enterprises, and it does not have a strategy for identifying and handling possible violations of human rights in the companies they invest.
This is the conclusion of the Norwegian National Contact Point for the OECD guidelines for Multinational Enterprises, an independed body that is tasked to assess possible violations of these international recognized guidelines for responsible business conduct.
The Norwegian Bank Investment Management (NBIM) has refused to cooperate with the Norwegian National Contact Point in its assessment of whether NBIM breaches human rights through its investment in the mining company POSCO, where NBIM owns 0,9 per cent. POSCO India plans to construct a 12 million ton per annum integrated steel plant with related infrastructure in the Jagatsinghpur District. The notifiers claim that this project will lead to the physical and economic displacement of more than 20,000 people, and that NBIM should have used its influence to prevent or mitigate the damage.
– The NBIM argued that the OECD guidelines do not apply to minority shareholders, and for that reason refused to give answers to our written questions.. The guidelines do apply, the questions is how they apply for an investor with numerous small shareholder positions, said Hans Petter Graver, chairman of the Norwegian Contact Point and professor of law. This view is supported by the United Nations High Commissioner for Human Rights.
– It is especially regrettable that the governmental manager of the Norwegian pension fund global, and one of the biggest investors in the world, does not respect the guidelines which Norway has signed, said Graver.
NCP recommends that NBIM, as a minimum, acts upon the following recommendations:
- Cooperate with the OECD NCP Norway by responding to the NCPs questions and accept the NCP offer to facilitate dialogue/mediation. Be transparent about how NBIM is a responsible investor in the POSCO case.
- Expand human rights due diligence to address the whole range of human rights relevant to its investments, and not only to child labour.
- Identify which human rights risks are prevalent in the various sectors or types of investments and develop a strategy to address these. NBIM is encouraged to work with other investors to increase leverage.
- Include in the strategy to work with other investors to encourage selected investees with particular risks to establish company based grievance mechanism.
- Publicize the strategy on human rights due diligence. Disclosure will make NBIM less vulnerable to criticism that NBIM addresses human rights risks randomly.
On 9 October 2012, the organisations Lok Shakti Abhiyan, KTNC Watch, Fair Green and Global Alliance and Forum for Environment and Development (ForUM) notified a Specific Instance with the National Contact Points of South Korea, Norway and the Netherlands respectively with regard to an alleged breach of the Guidelines by the South Korean Pohang Iron and Steel Enterprise (POSCO) and two of its investors; the Dutch pension Fund ABP and its pension administrator APG, and the Norwegian Government Pension Fund Global (the Fund). ABP has chosen to cooperate with the Dutch Contact Point.
Norges Bank Investment Management (NBIM) is one of the three operational wings of the Norwegian Central Bank (Norges Bank). It is the asset management unit of Norges Bank, managing the Norwegian Government Pension Fund Global (the Fund) on behalf of the Norwegian Ministry of Finance as well as most of Norges Bank’s foreign exchange reserves.
By the end of March 2013 the fund’s market value was 4,182 billion kroner (approximately 720 billion USD), distributed with 62.4 percent in equities, 36.7 percent in fixed income and 0.9 percent in real estate. Stock or equity investments are spread globally outside of Norway in a wide range of sectors.