Norway Defends Wealth Fund’s Guidelines as Child Labor Debated
(Bloomberg) -- Norway’s finance minister, Jan Tore Sanner, defended the investing guidelines of his country’s wealth fund after lawmakers demanded to know why its portfolio includes companies that are exposed to child labor.
The world’s biggest sovereign investment vehicle has acknowledged that it holds a number of stocks that, through their supply chains, rely on the work of minors to generate a profit. The fund, which oversees $1.4 trillion in assets, has said it expects companies to “work against” the practice, but also pointed to “complex underlying causes” that make the issue difficult to address.
Sanner, in a response sent to Norway’s parliament dated June 24, said he believes the current guidelines for the fund are “balanced.”
“The framework has been gradually updated, based on learning, experience and the development of norms,” he wrote. “By excluding a company, we lose the ability to influence through dialogue and voting. Ownership can be a powerful force.”
The debate touches on a key question in sustainable investing, namely when to divest and when to stick with a company in the hope of bringing about change from the inside. The fund has recently stepped up its environmental, social and governance ambitions and says it wants to be a global leader in responsible investing.
“The presence of a large, global and responsible owner such as the wealth fund with clear expectations toward companies’ responsibility can have a positive effect on a company’s conduct,” Sanner said.
Freddy Andre Ovstegard, a member of the Socialist Left in Norway’s parliament whose question prompted Sanner’s response, said, “Child labor is a breach of human rights and I expect the wealth fund to have a clear strategy to reduce the use of child labor,” in an emailed comment last week.
©2021 Bloomberg L.P.