Norges Bank has decided to exclude Bharat Heavy Electricals Ltd, place the companies PetroChina Co Ltd and Leonardo SpA under observation, and follow up Eni SpA and Saipem SpA through active ownership.
The Executive Board in Norges Bank has decided to exclude Bharat Heavy Electricals Ltd from the Government Pension Fund Global. The company is excluded based on an assessment of the risk of severe environmental damage. The Executive Board’s decision on exclusion was made on the basis of a recommendation from the Council on Ethics. The Executive Board has not conducted an independent assessment of all aspects of the recommendation, but is satisfied that the exclusion criteria have been fulfilled (see section 3(c) of the Guidelines for observation and exclusion from the Government Pension Fund Global).
The Executive Board has decided to place the companies PetroChina Co Ltd and Leonardo SpA under observation based on an unacceptable risk that the companies contribute to, or are responsible for, severe corruption according to the Guidelines section 3(e). The Guidelines' section 6(4) says that «Observation may be decided when there is doubt as to whether the conditions for exclusion are met or as to future developments, or where observation is deemed appropriate for other reasons». The Council on Ethics has recommended that PetroChina Co Ltd and Leonardo SpA should be excluded from the fund’s investment universe, but highlights that the companies have taken measures against corruption. The Executive Board believes that these measures provide sufficient grounds to observe the development in the future.
The Executive Board has decided to raise the issue of the risk of severe corruption with Eni SpA and Saipem SpA as part of Norges Bank Investment Management’s active ownership efforts. The Council on Ethics has recommended that the companies should be placed under observation. The Guidelines' section 6(3) says that «Before making a decision on observation and exclusion in accordance with section 6(1), the Bank shall consider whether other measures, including the exercise of ownership rights, may be more suited to reduce the risk of continued norm violations, or whether such alternative measures may be more appropriate for other reasons». The Executive Board concludes that it is appropriate to use other measures, and that they probably will be better suited to reduce the risk of continued norm violations in these cases.
List of all excluded companies
Runar Malkenes
Director of Communications, Norges Bank
Phone: +47 952 14 283