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Norway’s oil fund divests China brand over Uighurs

FOLLOWING THE RULES: Norway’s sovereign wealth fund is governed by ethical rules that prohibit it from investing in firms involved in human rights violations


Mar 10, 2022

Customers try on shoes at a Li Ning Co flagship store in Shanghai on Feb. 12.

Photo: Bloomberg

Norway’s sovereign wealth fund, the largest in the world, has sold off its stake in China’s Li Ning Co (李寧) over suspicions of forced labor use in the Xinjiang region, the fund’s manager said.

Li Ning, a manufacturer and trader of sportswear and equipment, was singled out “due to unacceptable risk that the company contributes to serious human rights violations,” the Norwegian central bank said in a statement on Monday.

The decision followed a recommendation from Norges Bank’s Council on Ethics, which in an advisory opinion pointed to reports linking Li Ning to “a supplier said to manufacture inside an internment camp.”

China is accused of having interned more than 1 million Uighurs, a Muslim minority living in Xinjiang, in political re-education camps and exploiting them for forced labor.

At the end of last year, the Norwegian fund, which was then worth 12.34 billion Norwegian kroner (US$1.38 billion at the current exchange rate), held 0.59 percent of Li Ning shares, valued at nearly 1.5 billion kroner, which it has now sold.

By contrast, it has removed South Korean textile group Hansae Yes24 Holdings Co and Taiwanese Nien Hsing Textile Co (年興紡織) from its watch list — the step before companies are excluded — because it believed there was no longer reason to suspect systematic labor rights violations at their factories.

Meanwhile, the fund placed Canadian aircraft manufacturer Bombardier Ltd “under observation” over allegations of corruption in six countries over a period of more than 10 years (2004 to 2016).

When it finalized the sale of its transport division to France’s Alstom SA early last year, Bombardier had issued a 250 million euro bank guarantee to the French company to cover expenses related to these cases, the ethics board said.

Also placed under observation was India’s Adani Ports and SEZ Ltd, because of its business dealings with the military government of Myanmar, and South Korea’s Hyundai Glovis Co, because of its activities involving the beaching of boats in Pakistan and Bangladesh, where they are broken up for scrap.

Finally, the fund also removed San Leon Energy PLC from its blacklist, as the Irish oil company had ended its incriminating activities in Western Sahara.

As one of the world’s largest investors, the Norwegian wealth fund — known as the “oil fund” — is governed by ethical regulations that prohibit it from investing in companies involved in serious human rights violations, those that manufacture “particularly inhumane” products or nuclear weapons, as well as coal and tobacco products.

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