March 6, 2018 / 9:11 AM / 4 months ago

Norway's $1 trillion wealth fund earned less money due to ethical profile

OSLO (Reuters) - Norway’s $1-trillion sovereign wealth fund, the world’s largest, has earned less money because of divestments it has made over the past twelve years due to ethical and environmental considerations, it said on Tuesday.

The fund funnels the proceeds of Norway’s oil and gas production. It invests in around 9,100 companies worldwide and holds on average 1.4 percent of global listed shares.

It is forbidden by law from investing in firms that produce nuclear weapons or landmines, or are involved in serious and systematic human rights violations, among other criteria.

The fund returned 1.6 percentage points less between 2006 and 2017 as a result of exclusions of companies on ethical grounds, according to a report on return and risk it published.

Some 73 companies are excluded on ethical grounds, based on the recommendation of the fund’s ethical watchdog, the Council on Ethics. Another 69 firms are excluded directly by the fund based on their dependence on thermal coal.

The biggest loss of 2.4 percentage points was caused by not being invested in products such as tobacco or nuclear weapons.

But there was an upside on some types of investments.

By being divested from firms the fund deemed were involved in severe environmental damage, corruption or gross human rights violations, it earned 0.9 percentage point more than if it had stayed invested in those firms, the report said.

Writing by Gwladys Fouche, editing by Terje Solsvik

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