Tuesday, February 22, 2011

Part XXII: Developing a Coherent Transnational Jurisprudence of Ethical Investing: The Norwegian Sovereign Wealth Fund Ethics Council Model

This Blog Essay site devotes every February to a series of integrated but short essays on a single theme.  The Ruminations Series in 2009 produced a series of aphoristic (ἀφορισμός) essays, meant to provoke thought rather than explain it. The hope was that, built up on each other, the series would provide a matrix of thoughts that together might lead the reader in new directions. Ruminations continue to be produced form time to time.  For 2010, this site introduced a new series--Business and Human Rights.  The series took as its starting point the issues and questions raised by John Ruggie, the United Nations Special Representative of the Secretary-General (SRSG) on business and human rights, in a global online forum
For 2011, this site introduces a new series of integrated essays--Developing a Coherent Transnational Jurisprudence of Ethical Investing: The Norwegian Sovereign Wealth Fund Ethics Council Model.  The object of this series to to consider the work of the Ethics Council of the Norwegian Sovereign Wealth Fund.  The thesis of this series is this:  The Norwegian Sovereign Wealth Fund (NSWF ) investment program is grounded in the application of a set of Ethical Guidelines adopted by the Storting (the Norwegian Legislature) and enforced through an Ethics Council charged with determining whether a company should be excluded from investment by the NSWF.  The work of the Ethics Council has produced the beginnings of a coherent jurisprudence of ethics for corporate investment.  That jurisprudence may contribute significantly both to the development of transnational social norm standards and  affect the way domestic corporate law is understood. This is Part XXII of the series.

Part XXII: Ethics and a Jurisprudence of Responsible Investment:  The Statistics--Part III
Some of the most interesting issues of the Ethics Council's work relates to its exclusion actions.  I have included additional data below. 

Exclusions by year and by country:

The prominence of the United States is apparent.  What is more apparent is the small number of determinations made.  Much of the exclusion determination bulges were aggregations of a single determination (e.g., the tobacco company exclusions).  The number of exclusions are substantially insignificant.  But the rate of investigation is growing and the scope of investigations appears to be expanding as well.

The insignificance can be placed in context:
                                                                                    2008         2009
Companies excluded during the year                      5                 19
Recommendations published                                    6                   6
Companies reinstated during the year                    0                    3
Companies in SPU at the end of the year             7800           8300
Cases flagged in monthly consultants’ reports       360            450
Cases where initial assessments were carried out  130            170
Companies under further assessments                    30               55
From Ethics Council, Annual Report 2009 (pdf, 1.0 MB), pg. 6.  
"The Council often starts looking into cases after allegations are made of potential violations of the Ethical Guidelines. However, it also undertakes studies of regions or sectors not based on news items about individual companies, but on the basis of information about recurrent problems in an industry or area. In 2010, the Council will continue its assessments of companies with operations in the conflict areas in the Democratic Republic of Congo, partly in light of UN reports claiming that companies are fuelling conflicts. The Council is also going to investigate more closely the Fund’s investments in coal mines in light of the many accidents in this industry, and is as well as looking into oil pollution in the Niger Delta in light of the many oil spills in the region over a prolonged period and the impact this may have on the environment and human health." Id.  
Additional data amplifies these insights.

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