Norway’s €1.9bn Nestlé stake under scrutiny

The Norwegian Government Pension Fund’s NOK17bn (€1.9bn) stake in Nestlé has come under scrutiny from labour unions.
In a joint letter, the unions have asked the Finance Ministry to assess an alleged “systemic pattern of human rights abuses” by the Swiss food group. The company is the fund’s second largest equity holding.
A spokesman for the ministry confirmed the letter had been received but added he couldn’t comment at this time. He said: “Letters to the Ministry asking to evaluate specific pension fund investments in relation to the ethical guidelines will routinely be forwarded to the Council on Ethics for the fund.” Nestlé did not respond to a request for comment.
The unions argue Nestlé’s wages policy in countries such as Indonesia and India violates the International Labour Organisation’s conventions and the pension fund’s ethical guidelines. They called on the government to put pressure on Nestlé to “respect fundamental ILO Conventions and the ethical guidelines of the Pension Fund.
“If it is impossible to engage in a constructive dialogue, the Finance Ministry should consider withdrawing its investment in Nestlé.”
Meanwhile, it is interesting to compare and contrast two ‘divestment’ stories that popped up recently involving major institutional investors and Israeli settlements on the West Bank.One prompted an international diplomatic incident, the other nothing more than a few ripples in the blogosphere.
First up was the Norwegian Finance Ministry’s order, revealed this month, to the Government Pension Fund to divest its holding of defence technology firm Elbit Systems over human right abuses. Elbit provides surveillance equipment for the separation fence in the West Bank.
The move provoked outrage with reports stating the Israeli foreign ministry had summoned the Norwegian ambassador. Then about a week later US educational fund TIAA–CREF announced it had exited another Israeli firm, real estate developer Africa-Israel Investments, which is also involved in settlements on the West Bank.
It said: “As of June 30, 2009, TIAA–CREF no longer owned shares in Africa-Israel Investments Ltd.” The shares were sold “after they fell out of the MSCI Emerging Markets Index”.
It had been under pressure to divest the real estate firm, notably from the US Campaign for the Academic & Cultural Boycott of Israel.
But TIAA–CREF said the sale, which took place in June was a “routine part of the indexing investing process”. So it wasn’t a divestment on ethical grounds at all, although that didn’t stop it being portrayed that way in some quarters.