Responsible Investor

Bringing human rights into pension finance. Interview with Gro Nystuen, Norway Govt Pension Fund

The chair of the Council of Ethics talks about exclusions, international norms and why Norway’s fund giant has become an ethical pensions leader.

Do you consider the work of the Council on Ethics as a step towards civilizing capitalism?

Gro Nystuen Capitalism is a function of the way the world is organized and structured financially and politically and so we are not thinking that we are civilizing capitalism. If we are really lucky, we might civilize a couple of companies or maybe more than a couple. And perhaps we may eventually have a positive influence that is more far-reaching than the impact we may have on those companies that we have dealt with concretely. But this is difficult to assess.

How can we regulate corporate conduct on an international level?

Gro Nystuen As a point of departure: international laws do not regulate company behaviour, national law does. There are some solid international agreements and some elements of international law that do specifically apply to corporate behaviour. An example is the UN anti-corruption treaty. To a certain extent human rights treaties have the same effect. For example child labour is prohibited in most countries. But to get a company to respect specific human rights, you have to go via national legislation. The states, in which the company operates, must have legislative prohibitions of child labour that allow the police and other public authorities to act against and hopefully eradicate child labour.
Enforcement of such legislative prohibitions often remains a problem. India, for example, has very good general legislation on child labour, but implementing it is difficult in many areas. We have to be specific about who is responsible and who has obligations and

about the source of these responsibilities and systems. Companies do not have obligations under international law.

The Council’s first recommendations were issued only three years ago. Since then the reputation of the Norwegian Pension Fund as an international leader in ethical investment has been acknowledged rapidly all over the world. How do you explain your leadership?

Gro Nystuen I think our international reputation for ethical investment turns on the robust system that we have developed. The Council consists of five persons who are all experts in the different areas covered by our guidelines. This expertise means that we know what we are talking about. It is not a “prominent-persons-have-been-politicians” kind of council, as it could easily have been. We have our own office space and a secretariat of six full time employed people. So we really have the time and the resources to think things through properly. The biggest difference between us and anybody else is the amount of resources we use and the level of distrust we have when we screen companies. We do not just rely on service providers who claim they can make sure that our portfolio is ethical. We think that nobody actually can do this better than ourselves. So although we use initial information from screening companies, we always check the quality of the information ourselves. Another reason why we are leaders in the field relates to the fact that we are a public institution and therefore have a very transparent system. All the sources and all the references we use are public. That means everybody else can use our knowledge. If other ethical investors want to exclude producers of nuclear weapon systems, they are invited to

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