Norges Bank Investment Management (NBIM), responsible for the investments of the Government Pension Fund Global (GPFG), has decided to lift the exclusion of one company and instead place it under observation, whilst also excluding two other companies.

The executive board of NBIM announced that it has lifted the exclusion of RWE AG (RWE) and instead place the company under observation, following a recommendation from NBIM.

The German company was initially excluded in 2020 following an assessment against NBIM's product-based coal criterion, with estimates at the time suggesting that the company's coal extraction exceeded the threshold of 20 million tonnes per year, while coal power production exceeded the threshold of 10,000 MW capacity.

However, RWE has since committed to a plan to phase out all extraction and combustion of lignite in Germany by 2030, outlining a set schedule for this.

In line with this plan, the company is gradually closing down both power plants and mines towards 2030.

Several milestones have already been reached, with NBIM's executive board suggesting that coal power capacity is now below the absolute threshold specified in the coal criterion.

Whilst coal extraction will remain above the threshold for some time to come, the executive board noted that RWE is also building up significant production from renewable energy sources.

In addition to this, however, the executive board announced that it decided to exclude the company Petroleos Mexicanos due to an unacceptable risk that the company contributes to or is itself responsible for gross corruption.

The decision was based on a recommendation from the Council on Ethics from November 18, 2024.

The executive board also decided to exclude the company Paz Retail and Energy Ltd due to an unacceptable risk of the company contributing to serious violations of the rights of individuals in war or conflict situations.

The decision was based on a recommendation from the Council on Ethics from December 19, 2024.

Although the executive board has not independently assessed all the details of these recommendations, it confirmed that it had sufficiently substantiated that the criteria for exclusion in the latter two cases are met, and that the exercise of ownership is not an appropriate remedy in these cases.

However, the executive board has suggested that exercise of ownership may be an appropriate approach in other cases.

In particular, the executive board revealed that it has asked NBIM to follow up the companies Rio Tinto Plc, Rio Tinto Ltd and South32 through the exercise of ownership in terms of their work to reduce serious environmental damage over a period of five-10 years.

This comes after the Council on Ethics recommended excluding the companies based on their participation in the joint venture Mineração Rio do Norte (MRN) which operates a bauxite mine in the Amazon rainforest.

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