Norway Proposes to Exclude Tobacco From Wealth Fund

No more investments in tobacco companies for the Norwegian sovereign wealth fund.

April 3 (Bloomberg) — Norway proposed excluding tobacco producers as part of an overhaul of ethical guidelines for its $310 billion sovereign wealth fund.

“There’s no healthy way to use tobacco,” Finance Minister Kristin Halvorsen said today at a press conference in Oslo, without naming specific companies. “There has notably been a lot of attention directed at how tobacco companies target developing countries.”

The government also proposed a review of its external fund managers and increased investments in the environment. The world’s third-largest sovereign wealth fund lost a record 633 billion kroner ($96 billion) last year, wiping out gains since the fund started investing Norway’s oil revenue 12 years ago.

Ethical rules were set up in 2004 to ensure the fund doesn’t invest in companies involved in human rights abuses, environmental damage, or the production of some weapons. The ministry is responsible for deciding whether to exclude any of the 8,000 companies the fund invests in, based on recommendations from the ethics council.

The fund has excluded 30 companies, including Wal-Mart Stores Inc., the world’s largest retailer. A decision to ban a company is made public after shares are sold. The biggest equity investor in Europe holds about 0.8 percent of global equity markets, according to its annual report released March 11.

At the end of 2008, the fund owned shares in tobacco companies including Imperial Tobacco Group Plc, British American Tobacco Plc, Europe’s largest cigarette maker, as well as in Swedish Match AB and in Philip Morris International Inc.

“We’ll go through all the companies in the portfolio and slowly liquidate our positions,” Halvorsen said.

To contact the reporter on this story: Marianne Stigset in Oslo at mstigset@bloomberg.net; To contact the reporter on this story: Meera Bhatia in Oslo at mbhatia2@bloomberg.net.

Source: Bloomberg.com