Norway‘s $1.1 trillion wealth fund – the Government Pension Fund Global – can no longer invest in the security company G4S because of “unacceptable risk” involving human rights violations to which the company contributes, the central bank said on Thursday.
The fund held a 2.33 percent stake in G4S at the end of 2018, worth some $90m at the time, according to the fund’s own data on holdings in the multinational firm, which is based in the United Kingdom.
G4S shares on the London exchange fell on the news, down as much as four percent before moving about halfway back up to Wednesday’s closing price.
Norway’s sovereign wealth fund, the world’s largest, operates under ethical guidelines set by the parliament in Oslo for where not to invest in financial markets.
It has excluded 156 firms in total so far – including companies involved in producing tobacco, selling nuclear weapons, causing severe damage to the environment, or deriving more than 30 percent of revenues from coal.
In response to the announcement, G4S said it had been engaging with the fund’s Council on Ethics for the past three years on the issue.
“We carried out a robust investigation into the issues raised by the Council on Ethics into G4S’s employment practices in Qatar and the UAE,” a company spokeswoman said.
“We are making good progress on our action plan to reinforce our high standards in relation to employee recruitment and welfare provisions in the Middle East.”
The spokeswoman said the company had appointed a full-time migrant worker coordinator whose primary role is to conduct research into recruitment agencies.
The person would investigate practices and fees in each of the countries of origin for labourers – ensuring strict compliance with the company’s code and upholding its policies and standards for workers’ rights.
Many of G4S’s employees in the two Gulf countries are migrant workers who paid recruitment fees to join the company, the council said.
“When the workers arrive in the Gulf, they must spend a significant part of their salary to pay off this debt, and therefore have little chance of leaving. Many also received far lower wages than agreed, and in the Emirates, the workers got their passport[s] confiscated,” the Council of Ethics statement said.
“The Council’s investigations also revealed long working days, a lack of overtime payment and examples of harassment.”
G4S employs around 18,000 workers in the two countries, the ethics council said, quoting a letter it received from the company this year. G4S is the world’s largest private security company – with more than half a million employees in 90 countries, its website said.
Norway’s fund, created with the wealth from the country’s oil industry, owns shares in 9,158 companies, which is 1.4 percent of the world’s listed equity. So decisions to drop or reinstate companies from its investments carry considerable weight among investors.
The issue of human rights in the Gulf states has long been on the agenda of the fund’s ethics watchdog. It had looked previously at the practice of construction companies working in Qatar and the UAE.
In March, the chair of the Council on Ethics, Johan H Andresen, told the Reuters news agency that one of its blacklist recommendations was a company that breaches the human rights of workers in the Gulf states.
The fund gradually sells shares in any company it wishes to drop before a public announcement is made.