The skyline of Oslo and a Norwegian flag flying on a ferry from Akershus to Oslo.
Kommunal Landspensjonskasse, Oslo, divested from 11 firms in the Middle East due to human rights concerns, and from Saudi Aramco for energy transition worries and the firm's "close ties to a dominant state owner."
KLP's divestments equated to about 250 million Norwegian kronor ($23 million) if the pension fund's index strategies were to track the MSCI Emerging Markets Index precisely, a spokesperson said.
Oil and gas company Saudi Aramco — which is 90% owned by Saudi Arabia — was divested from due to "dominant state ownership and weak plans for transition," a document published by the pension fund said.
"Based on an overall assessment of the company's close ties to an authoritarian state and an active position in opposition to KLP's expectations regarding oil and gas companies' climate change and energy transition plans, it has been decided to exclude Saudi Aramco from KLP's investments," the document concluded.
In making its decision, KLP noted that in a ranking of the 25 largest oil and gas companies' climate-related goals and transition plans by the Carbon Tracker organization, Saudi Aramco came last.
The other 11 companies, based in Saudi Arabia, the United Arab Emirates, Kuwait and Qatar, were all telecommunications and real estate firms.
KLP's document said that, based on analysis and reviews of data and information obtained from sources including conversations with public officials, human rights organizations and international indexes that rank Gulf States based on civil and political rights and working conditions, "KLP has identified two sectors in the Gulf States where we consider that there is a generally unacceptable risk that KLP may contribute to human rights abuses. These sectors are telecommunications and building, construction and property."
The proceeds of the divested stocks will be reinvested in other emerging markets, mainly in Hong Kong, India, Malaysia and Taiwan, the spokesperson said.
The document said that, as a broad, index-based investor, "KLP strives to as far as possible reflect relevant market segments through representative indexes. Investments in countries and companies that entail risk of human rights abuses may be justified where we believe we can achieve improvements through the exercise of active ownership and dialogue."
The pension fund "has found engaging in dialogue with companies based in the Gulf States to be fruitful. Going forward, KLP will continue to prioritise the exercise of shareholder influence relating to issues that are particularly challenging in the Gulf States, including migrant workers' rights, equality and diversity at management level," the document said.
KLP's mutual funds now hold stocks in the UAE, Kuwait, Qatar and Saudi Arabia equal to about 1 billion kronor, the spokesperson added.
Last month, Nordic institutional investors including KLP with combined assets of $1 trillion penned a letter to U.S electric car manufacturer Tesla, urging the firm to cooperate with unions in light of an ongoing labor dispute in Sweden.
