

The Norwegian Ministry of Finance has excluded Chinese conglomerate Shanghai Industrial Holdings Ltd. from the investment portfolio of the NOK3trn (€385bn)) Government Pension Fund Global because a subsidiary produces tobacco.
At issue is Shanghai-based but Hong Kong-listed SIHL’s wholly-owned Nanyang Brothers Tobacco Co. Ltd, the largest tobacco manufacturer in Hong Kong.
The fund had a stake of NOK102.6m (€m) in SIHL, which is ultimately majority owned by the Shanghai government, as at the end of 2009.
The divestment follows a review of the fund’s holdings to see if any of its investee companies were involved in tobacco production, and takes the number of tobacco producers excluded to 18. The fund has excluded tobacco producers since 2009.
The Ethics Council, the body which advises the Ministry, was informed by letter from SIHL in September 2010 that Nanyang was involved in tobacco. “The Council has therefore recommended that Shanghai Industrial Holdings Ltd. should beexcluded from the Fund’s investment portfolio.”
SIHL on its website says it and its subsidiaries comply with relevant environmental protection laws and regulations and have passed certain environmental reviews.
Meanwhile, the Ministry has decided to re-include US military technology company L-3 Communications, which had been excluded over its involvement in cluster munitions manufacture. The Ethics Council has received confirmation from the company that it no longer produces such components.
“The Council therefore considers that the grounds for excluding L-3 Communications Holdings Inc. no longer apply.”
Earlier this month it emerged that Bengt Enge, Chief Investment Officer of Norges Bank Investment Management, the arm of the central bank which runs the fund’s assets, had stepped down unexpectedly.
The Fund is set to release its annual report on March 18. Announcement