1 Introduction

1.1 Foreword by the Chair

The task of the Council on Ethics is to provide advice concerning the observation or exlusion of companies in which the Norwegian Government Pension Fund Global (GPFG) is invested. However, the Council is not free to do as it pleases. It is bound to work within the framework of the GPFG’s ethical guidelines, which are determined at the political level. Based on these guidelines, the Council has worked with over 250 companies in 2024. Of these, the Council recommended that 15 be excluded from investment by the GPFG.

Given that the GPFG is invested in almost 9,000 companies, identifying those whose products or conduct fall within the scope of the ethical guidelines is a mammoth undertaking. We have established multiple systems tasked with picking up on such cases. Yet this is just the starting point for the Council’s endeavours. In the subsequent investigation phase, we sometimes engage consultants to obtain information. In other cases, we base our assessments on publicly available information collected by the Council’s secretariat. Companies under review are also given the opportunity to provide information and share their views when we contact them. Occasionally, we also hold meetings with senior company executives. In general, more than one go around in the Council is needed before it reaches a decision. Ultimately, our recommendations are published for all to see. We endeavour to base them on solid facts and they are intended to stand the test of time. Although the multiple steps involved in the assessment process entail that each individual case takes time, we are confident that this is the best way for us to fulfil the mandate we have been given.

Loss of biodiversity has long been an important issue for the Council. The Kunming-Montreal Global Biodiversity Framework (GBF), which was signed in 2022 and aims to halt and reverse the loss of nature and ecosystems by 2030, has increased its significance for the Council. We increasingly identify and investigate companies engaged in activities that pose a threat to endangered species, ecosystems, biodiversity hotspots and large, contiguous areas of natural wilderness. Our starting point is that the GPFG’s investments should not contribute to the destruction of globally important biodiversity. In 2024, the Council recommended that three companies be excluded on the grounds of their impact on biodiversity.

In the past year, the Council also devoted a considerable portion of its resources to the review of companies that may have links to the Israeli occupation of the West Bank and the war in Gaza. The majority of these cases have now been concluded, although some remain under investigation. We explain the Council’s work in relation to such cases in more detail in a separate article in this annual report. The Council’s assessments have so far resulted in recommendations to exclude two companies.

The Council’s work has a long-term perspective and embraces a wide range of issues on every continent. Over the 20 years that the Council has existed, it has recommended that almost 200 GPFG-invested companies be placed under observation or be excluded from investment. However, it has been in contact with many more. Some of these have implemented measures to avoid exclusion. The Council’s objective is not to exclude as many companies as possible, but to help ensure the GPFG is not invested in companies that are responsible for or contribute to the serious violation of fundamental ethical norms covered by its ethical guidelines. If this can be achieved through improvements in companies’ practices, it is beneficial for those impacted by the companies, for the companies themselves and for the GPFG.

Svein Richard Brandtzæg – Chair of the Council on Ethics

1.2 Members of the Council on Ethics

The Council on Ethics

Svein Richard Brandtzæg (Chair)

Brandtzæg has a doctorate in engineering from the Norwegian University of Science and Technology (NTNU) and a diploma in business administration from BI Norwegian Business School. Over the course of 34 years, he occupied a variety of positions at Norsk Hydro ASA, both in Norway and abroad. For 10 years up until 2019, he was the company’s CEO. Brandtzæg has served on the boards of directors of numerous enterprises and industry associations. He is currently chair of Dormakaba AG (Switzerland) and a director of Mondi PLC (UK) and Rotork PLC (UK).

Siv Helen Rygh Torstensen (Vice Chair)

Rygh Torstensen is a lawyer, who is currently EVP Legal & Compliance at Equinor ASA. She has worked for Equinor in a variety of roles since 1998, mostly in the Legal & Compliance Department. She has previously served as the company’s Chief Compliance Officer. Torstensen also headed the CEO’s Office for three years until August 2019. Before joining Equinor, she worked as a lawyer with the law firm Cappelen & Krefting DA and in Stavanger City Council’s Legal Services Department.

Cecilie Hellestveit

Hellestveit is a lawyer, with a doctorate in humanitarian law. She also holds an MPhil in Middle Eastern Studies. Hellestveit works within academia on issues relating to international law and armed conflict. She has worked at various research institutions, including PRIO, SMR, NUPI, IKOS and ILPI. She has also been affiliated with the Atlantic Council in Washington DC and the Max Planck Institute in Germany. She is currently a researcher at the Norwegian Academy of International Law and is a special advisor at the Norwegian National Human Rights Institution. She is also affiliated with the Norwegian University of Science and Technology (NTNU). Hellestveit has authored a textbook on the international law of war as well as several books on contemporary armed conflicts.

Vigdis Vandvik

Vandvik has a PhD in plant ecology and is a professor at the Department of Biological Sciences at the University of Bergen, where she also heads the CeSAM Centre for Sustainable Area Management. Since 2017, she has been affiliated with the Bjerknes Centre for Climate Research. Vandvik has extensive experience at the intersection between research, public administration and environmental policy, and has participated in a number of national and international research projects, knowledge processes and committees. She has also participated in various advisory councils and commissions. Vandvik was previously a member of the Norwegian government’s Nature Risk Committee. She is the lead author of several reports published by the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES).

Egil Matsen

Matsen holds a PhD in Economics from the Norwegian School of Economics and Business Administration (NHH) and is CEO of Sparebankstiftelsen DNB. He has previously served as Deputy Governor of Norges Bank, with particular responsibility for the Norwegian Government Pension Fund Global (GPFG) and was a member of the Bank’s Executive Board. He has also been employed as CEO of Forte Fondsforvaltning, professor and head of the Department of Economics at the NTNU, and a member of KLP’s board of directors.

Secretariat

The Council on Ethics has a multi-disciplinary secretariat, whose members carry out assessments and prepare matters for the Council’s consideration. At the start of 2024, the secretariat had nine employees and is led by Eli Lund.

1.3 The work of the Council on Ethics

The Council on Ethics for the Norwegian Government Pension Fund Global (GPFG) is an independent body which makes recommendations to Norges Bank to either exclude companies from the GPFG or place them under observation. The Council’s assessments are based on ethical guidelines determined by the Norwegian Ministry of Finance. The guidelines contain both product-based exclusion criteria, targeting the production of tobacco, cannabis, coal and certain types of weapons, and conduct-based exclusion criteria, such as financial crime, the sale of weapons to certain states, human rights abuses, environmental damage and greenhouse gas emissions. The threshold for exclusion is intentionally high. The guidelines are forward-looking and apply to unacceptable conditions that are ongoing or may occur in the future. They are not meant to be a mechanism through which to punish companies for past actions. All the Council’s recommendations are published on its website as soon as Norges Bank has announced its decision.

Tabell 1.1 The Council on Ethics’ activities in the period 2022–2024

The table above summarises the extent of the Council’s endeavours with respect to companies in 2024, compared with in 2023 and 2022. Companies excluded by Norges Bank under the coal criterion, without the Council’s recommendation, are not included in the table.

Summary of the Council’s activities in 2024

Table 1.1 provides an overview of the Council’s activities in the past three years. The starting point for the Council’s endeavours is the companies in which the GPFG is invested. At the close of 2024, the GPFG was invested in just under 9,000 companies, the headquarters of which were located in more than 60 countries. Half of the companies in the GPFG are domiciled in Asia, although they account for only 18 per cent of the shareholdings’ value. By comparison, 21 per cent of the companies are domiciled in the USA, but account for 54 per cent of the share portfolio’s value.

Figur 1.1 Regional distribution of the GPFG’s 8,659 shareholdings at the close of December 2024

The Council on Ethics issues recommendations concerning the observation or exclusion of companies from the GPFG to Norges Bank, which makes a decision in each case. At the close of 2024, 105 companies were excluded from investment by the GPFG at the recommendation of the Council, while eight had been placed under observation. In addition, Norges Bank has, at its own initiative, excluded 66 companies pursuant to the coal criterion and placed 10 under observation. Since 2022, Norges Bank has also been able to assess companies under the climate criterion without a recommendation from the Council.

In 2024, the Council recommended that 15 companies be excluded and two be placed under observation. The Council also recommended that the exclusion of one company be revoked and the observation of three companies be terminated.

Since Norges Bank performs a thorough assessment of all the Council’s recommendations and also needs time to divest the GPFG’s shareholdings in the companies concerned, some of the decisions published in 2024 were based on recommendations issued by the Council in 2023. For the same reasons, not all the Council’s recommendations from 2024 have yet been published.

The Council always has many cases in progress. These normally include matters relating to the majority of exclusion criteria. It is not unusual for a company to be linked to several different cases. Some cases also involve more than one company. In 2024, the Council worked on a total of 284 active cases, relating to 268 different companies. Of these, 165 cases were opened during the year, while 53 were opened in 2023. The assessment of 146 cases was concluded. This includes companies for which a recommendation was issued to Norges Bank, companies where no grounds to exclude or place under observation were found, and companies in which the GPFG was no longer invested. Nine companies investigated by the Council exited the GPFG’s portfolio before the Council had concluded its assessment.

Figur 1.2 Status of the year’s 163 new cases

Figure 1.2 shows a breakdown of how the 163 cases that were opened in 2024 were dealt with. The majority of cases did not end in a recommendation for exclusion or observation but were closed at an earlier stage in the assessment process. A recommendation to exclude, observe or revoke a previous decision was issued in eight of the 163 new cases in 2024, while 91 were closed. The assessment of four new cases was terminated because the companies were no longer in the portfolio, 47 cases remain under investigation, while 13 cases are awaiting assessment to begin.

The risk of contributing to serious violations of the rights of individuals in situations of war or conflict was the subject of assessment in over 60 of the cases opened in 2024. These cases related primarily to companies operating in the West Bank. Several sector-wide reviews linked to financial crime account for almost 40 cases that were assessed and closed at an early stage in 2024. Moreover, some of the new cases related to industrial pollution and workers’ rights.

Figur 1.3 Regional breakdown of the companies assessed by the Council in 2024

Figur 1.4 Countries with the most companies under investigation

Figure 1.3 shows a regional breakdown of the companies the Council has assessed during the year. The percentage of companies from the different regions varies from year to year and reflects contemporary concerns and the general issues that the Council is focusing on at the time. Figure 1.4 shows the ten countries which had the most companies under assessment in 2024, with the actual number of companies concerned in 2022, 2023 and 2024. The review of companies linked to the West Bank and the war in Gaza is the main reason for the increase in the number of companies from France, Germany, Israel and the USA.

Of the 20 African companies which the Council assessed in 2024, 18 were selected due to the risk of money laundering. South Africa is a newcomer to the list of countries with the most companies under assessment. This is due to a sector-wide review of the banking sector and the risk associated with money laundering. In 2023, South Africa was placed on the Financial Action Task Force (FATF) and the EU’s list of countries with an elevated money laundering risk.

Over half of the cases relating to the approximately 70 Asian companies under assessment relate to human rights abuses. Some of these cases also have an environmental aspect. This applies to companies which dispose of ships for breakup in certain Asian countries. There are also purely environment-related cases, while other cases encompass several different criteria. In the last couple of years, the Council has investigated a smaller proportion of Asian companies than previously. For 2024, this is due in part to Asian companies not doing as much business in the West Bank as companies from other regions. In 2024, there was a decrease in the number of Chinese companies under assessment. Nevertheless, three of the recommendations issued in 2024 related to Chinese companies. Six of the companies about which the Council issued recommendations during the year were from Asia.

In 2024, the Council worked with almost 80 companies from 14 countries in Europe. Almost half of these cases related to the risk of financial crime and contribution to the violation of the rights of individuals in situations or war or conflict through their business activities in the West Bank. There were also a number of cases that related to various human rights abuses and serious environmental damage. The human rights cases concern labour rights violations, violations of the rights of indigenous peoples and forced labour. Seven of the companies about which the Council issued a recommendation in 2024 were European.

The dominant issue for the approximately 80 companies domiciled in the American continent was their contribution to the violation of the rights of individuals in situations of war or conflict through their business activities in the West Bank. The Council has also assessed several US companies under the criteria relating to the production and sale of weapons. Moreover, a significant number of cases related to corruption. Four of the companies about which the Council issued a recommendation in 2024 were from North America.

The Council assessed 23 companies from the Middle East in 2024, 19 of which were Israeli. The basis for assessing these companies was the risk that they were violating the rights of individuals in situations of war or conflict due to their business activities in the West Bank. Two of the companies about which the Council issued a recommendation in 2024 were from the Middle East.

Figur 1.5 Breakdown of the Council’s work by criterion

Work under the various criteria

Figure 1.5 shows a breakdown of cases by criterion in 2022, 2023 and 2024. The number of cases assessed in connection with financial crime continued to rise. This is partly due to the broadening of the guidelines’ corruption criterion to include all forms of financial crime in the wake of the Ethics Commission’s report. In addition to corruption in multiple business sectors, the Council’s main focus in 2024 has been banks that are accused of compliance failures with respect to legislation intended to prevent and deal with suspicions of money laundering. Initially, the Council assesses all the companies involved in such cases. It then selects those companies which have been involved in the most serious cases, where there have been repeated norm violations and where the risk of new norm violations seems to be highest. In connection with such investigations, an initial assessment is often made of a large number of companies, which are then relatively quickly whittled down to just a few. The three recommendations issued in 2024 pursuant to this criterion all relate to corruption.

The number of cases assessed under the war and conflict criterion is three times higher than in 2023. This is due to the review of companies with operations linked to the West Bank, which has resulted in recommendations to exclude two companies.

Despite a decrease in recent years, human rights cases remain an extremely large part of the Council’s work. Labour rights, including forced labour, is the dominant issue. Of the six recommendations issued under the human rights criterion in 2024, four relate to working conditions. Forced relocation and violation of the rights of indigenous peoples are also topics to which the Council pays considerable attention. Indigenous people are often extremely vulnerable in connection with the extraction of natural resources and the construction of infrastructure projects. Other cases relate to companies that have established plantations on land claimed by indigenous peoples.

Under the environmental criterion, loss of biodiversity and industrial pollution are the dominant issues. The three companies whose exclusion the Council recommended under the environmental criterion in 2024 all relate to loss of biodiversity.

Under the criterion concerning other serious violations of fundamental ethical norms, the Council has examined several cases relating to the risk of serious animal welfare violations. The Council has further assessed companies in connection with resource extraction in contested areas and contribution to an unlawful war of aggression. The recommendation issued in 2024 related to Russia’s war of aggression in Ukraine.

Under the product-related criteria, the Council has assessed several companies that produce launch platforms for nuclear weapons. Two of the recommendations issued in 2024 concerned such products. The Council has also assessed several companies which produce cannabis and tobacco, and has recommended that Norges Bank exclude two companies under the tobacco criterion and revoke the exclusion of another.

Contact with companies

Figures 1.6 and 1.7 show a breakdown of the companies with which the Council has been in contact in 2024, broken down by exclusion criterion and region. The Council has been in contact with 76 companies and met with 22 of them. The Council contacts companies at an early stage in its investigations. The companies therefore have the opportunity to provide information and state their views early in the process. At the same time, the Council makes clear to the company concerned which matters may form grounds for observation or exclusion. Whenever the Council recommends observation or exclusion under the conduct-related criteria, the company is given the opportunity to comment on a draft recommendation to exclude it or place it under observation.

Figur 1.6 Breakdown of contact with companies by criterion

Figur 1.7 Breakdown of contacts with companies by region of domicile

The Council places great emphasis on information provided by the companies themselves and takes the view that any failure to respond on the part of companies may help to heighten the ethical risk. Despite a few exceptions, most companies respond. Of the 60 or so companies that the Council reached out to in 2024, 23 did not reply. Some of these were contacted late in the year, so their response may yet be forthcoming. In 2024, the Council recommended the exclusion of six companies which failed to reply to its requests for information. One company had its exclusion revoked without it having replied to the Council’s communications.

In 2024, the Council contacted more companies domiciled in the Middle East and North America than the year before. This is largely attributable to the assessment of companies with business activities linked to the West Bank. The number of Asian companies with which the Council has been in contact continued to fall. This reflects the regional distribution of companies under assessment.

When the Council meets with companies, it is often late in the assessment process. Such meetings are frequently prompted by their receipt of a draft recommendation to exclude them or place them under observation. Figure 1.8 shows a breakdown of the 22 companies which the Council met with in 2024, by criterion. At six meetings, companies provided information that contributed to the Council not recommending their exclusion. Two of the companies which the Council met with in 2024 are under observation. The Council also met with four excluded companies which wanted to explain changes they had made after the Council’s previous assessment, with a view to their reinstatement in the list of potential GPGF investees.

Figur 1.8 Breakdown of companies that the Council met with in 2024, by criterion

Assessment of companies that have been excluded or placed under observation

Companies are not excluded for a specific period of time and their exclusion may be revoked if the grounds therefor no longer exist. Norges Bank decides whether to revoke a company’s exclusion on the basis of a recommendation from the Council on Ethics. The exclusion of one company was revoked in 2024.

During the observation period, the Council normally submits one or more observation reports to Norges Bank on each company placed under observation. Two such reports were issued in 2024.

Ultimately, the Council either issues a recommendation to terminate observation of a company or exclude it from investment. In 2024, the observation of four companies was terminated. Two of these are now excluded. One company had its two-year observation period extended at the Council’s recommendation.