* Fund's ethics council investigating mining sector
* Focus is on whether slave-like working conditions
* Council also eyeing cattle-ranching, illegal fishing
By Gwladys Fouche
OSLO, May 29 Norway's $740-billion sovereign
wealth fund, the world's largest, is examining labour conditions
in the mining industry and may sell out of firms that violate
workers' rights, the head of the fund's ethics council said.
The fund could also divest from companies involved in cattle
ranching, if working conditions on farms are exploitative, and
from firms implicated in illegal or unregulated fishing.
"Working conditions, slave-like working conditions, ... is a
very important priority," said Ola Mestad. "We have been trying
to identify different sectors: (one of them) could be mining."
The fund invests Norway's revenues from oil and gas
production for future generations. It is one of the world's
largest investors with holdings in some 7,500 companies.
It has excluded firms for what it deems to be unethical
behaviour based on the advice of its ethics council, an
independent body reporting to the finance ministry, which has
ultimate responsibility for the fund. The ministry tends to
follow the council's recommendations.
The fund also bans investments in some industries - nuclear
arms, anti-personnel landmines, cluster bombs and tobacco.
The fund last excluded tobacco producers Schweitzer-Mauduit
and Huabao International Holdings earlier this
month, citing their involvement in the production of
reconstituted tobacco leaf.
The fund has holdings in hundreds of mining firms and has
invested heavily in the biggest ones.
The council will also be investigating potential labour
abuse in cattle ranching - the raising of livestock on large
farms, usually in South America.
Mestad said it was very difficult to investigate labour
abuse in those two industries.
"Although there is widespread labour abuse in the world, it
is not usually related directly to the multinational companies
in which we are invested: it will be in the supply chain," said
the law professor at the University of Oslo.
"So the question of when to attribute (responsibility) to
the multinational companies is extremely complicated," Mestad
said in the interview late last week.
This week, a committee set up to safeguard the Organisation
for Economic Cooperation and Development's guidelines for
multinational companies said the fund lacks "a strategy for
identifying and handling possible violations of human rights in
the companies they invest".
It pointed to the fund's investment in South Korean steel
maker POSCO, which plans a $12 billion steel plant
in India that critics say will displace thousands of people.
POSCO says it has never infringed any human rights.
The fund is managed for Norway's central bank by Norges Bank
Investment Management (NBIM), which said it did not think the
OECD guidelines should apply to it as a minority shareholder.
According to a 2010 report by the International Labour
Organisation, mining is responsible for about eight percent of
fatal accidents at work, even though it accounts for just one
percent of the global workforce.
No reliable data exist on injuries, said the ILO, but they
are significant, as is the number of workers affected by such
disabling occupational diseases as pneumoconiosis, hearing loss
and the effects of vibration.
CATTLE AND FISH
When it comes to cattle ranching and illegal fishing, the
fund has invested in close to 80 firms involved in the
production of food, according to Reuters data. It is unclear how
many of these may be involved via their suppliers in the
activities investigated by the fund.
Unregulated fishing is fishing by vessels without
nationality or flying the flag of a country that is not party to
the regulations governing a fishing area. Mestad said it was
difficult to investigate the practice.
"It is extremely complicated because of the ownership
structure," he said. "Ownership of ships changes all the time,
partly to conceal what is going on, partly to get fishing
Mestad said the fishing firms the fund was invested in were
typically small companies from South East Asia, Russia and South
America that were either involved in the catching, processing or
wholesale distribution of fish.
(Editing by Anthony Barker)