Norges Bank excludes Cairn Energy, Kosmos over Western Sahara links

Norges Bank Investment Management has excluded two companies from the giant Government Pension Fund Global – UK-listed Cairn Energy and Kosmos Energy, the US-based oil firm, following a recommendation from the Council of Ethics advisory panel.

In its recommendation to the fund, the Council recommended the exclusion of Kosmos and Cairn due to “an unacceptable risk of the companies contributing to serious violations of fundamental ethical norms through their hydrocarbon exploration offshore Western Sahara”.

Western Sahara is part controlled by Moroccan authorities, but is defined by the UN as a ‘non self-governing territory’, without a recognized administering power.

The Council explains it has had extensive dialogue with Cairn and Kosmos, and met with Moroccan authorities and representatives of Western Sahara’s local people.

Norges said: “The Executive Board has not conducted an independent assessment of all aspects of the recommendation, but is satisfied that the exclusion criteria have been fulfilled.”

In the discussions, Cairn and Kosmos had argued that they had consulted with local people who were fine with their activities. They also said they did not produce oil, but were only mapping petroleum resources in the area.But the council believes no distinction can be made between exploration and exploitation activities. “Morocco’s objective with carrying out exploration activity is undoubtedly to exploit petroleum deposits,” says the Council. “The companies are contributing to this future objective, irrespective of whether the companies themselves only carry out exploration activities or if they will also take part in any future production in the area.”

The Council was also not satisfied that the companies had spoken sufficiently to local people, noting they had not had a dialogue with Polisario, which the UN recognizes as the representative of the people in the area.

It also says the exploration activity contributes to maintaining an unresolved situation in the area.

Last week, fellow Norwegian investor KLP, announcing a raft of exclusions, said it had reinstated its position in Total SA, the oil major that was previously excluded for its involvement in exploration projects in the Western Sahara region.
On June 24, Norges confirmed that it had filed a complaint against Volkswagen over the ‘dieselgate’ emissions scandal in the Braunschweig District Court in Germany. The complaint is a part of a joint legal action on behalf of multiple institutional investors represented by the law firm Quinn Emanuel Urquhart & Sullivan. Link