Norges Bank has decided to exclude the Israeli petroleum company, Delek Group Ltd, from Norway’s Government Pension Fund Global (GPFG), due to the company’s petroleum prospecting of offshore West Sahara.

The Executive Board of the bank, which is responsible for the investments of the GPFG, said Delek Group Ltd had been excluded “due to unacceptable risk of the company contributing to or being responsible for serious breaches of ethical norms” as per its guidelines.

The decision is based on a recommendation from the Council on Ethics of 30 May 2023, due to the company’s petroleum prospecting of offshore West Sahara.

In addition, Norges Bank has initiated observation of two companies, ended the special exercise of ownership in one company and extended the special exercise of ownership in two companies. KDDI Corp and Sumitomo Corp have been placed under observation for three years due to the unacceptable risk that the companies are contributing to serious violations of the rights of individuals in situations of war or conflict.

The recommendation relates to the companies’ telecommunications business in Myanmar.

The decision is based on two recommendations from the Council on Ethics of 29 June 2023, which recommended the exclusion of the companies. However, companies may be placed under observation if it is uncertain whether grounds for exclusion exist or what developments may occur forward in time, or when expedient for other reasons.

“Based on the recommendations, the Executive Board has emphasised steps the companies have taken, including conducting human rights due diligence, assessing the human rights situation in the country and dialogue with human rights experts. The observation period gives the Council on Ethics the opportunity to observe the companies’ further efforts to manage human rights risk and the development of the companies’ business in Myanmar.

“The Executive Board has not conducted an independent assessment of all aspects of the above recommendations but is satisfied that criteria for the exclusion and observation have been fulfilled. Before deciding to exclude or place a company under observation, Norges Bank shall consider whether the use of other measures, including the exercise of ownership rights, may be better suited. The Executive Board concludes that it is not appropriate to use other measures in these cases,” Norges Bank stated.

Furthermore, the Executive Board has decided to end the special exercise of ownership in PetroChina Co Ltd, which began in February 2020 due to the unacceptable risk that the company contributes to, or is responsible for, gross corruption. The Executive Board of Norges Bank decided that the matter should instead be taken up with the company through active ownership for three years. The ownership period has now come to an end, and the Executive Board finds that the risk of future norm violations appears to be sufficiently reduced.

“The special exercise of ownership will therefore end, and going forward, Norges Bank Investment Management will continue to engage with the company as part of its regular ownership activities. See more information about the special ownership engagement below,” the bank stated.

Finally, the Executive Board has also decided to extend the special exercise of ownership in Shell PLC and Eni SpA by two years. The Council on Ethics recommended in March 2013 to place the companies under observation due to unacceptable risk that the companies contribute to or are responsible for severe environmental damage.

The recommendations were based on the companies’ activities in the Niger Delta. During the past 10 years, Norges Bank Investment Management has met the companies regularly, including through in-person meetings, video conferences and written correspondence.

“The Executive Board has now assessed the case and progress towards the ownership objectives. Overall, the Executive Board finds that there is still a forward-looking risk of norm violation. At the same time, the exercise of ownership has been constructive and the Board notes that the companies have publicly expressed an ambition to divest the relevant assets in the Niger Delta,” the bank stated.

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