Kommunal Landspensjonskasse (KLP), the largest pension fund in Norway, is divesting all its interests in Saudi Arabai's oil giant Aramco and also plans to blacklist over a dozen other companies in the Gulf.
Citing Aramco's negative impact on the environment, KLP stated that the move to divest comes after the pension concluded the firms pose and "unacceptable risk" to the environment, as well as human rights.
Kiran Aziz, head of responsible investment at KLP, which has assets under management of about $95 billion by the end of 2023, stressed that Aramco will be excluded from the pension's investment portfolio as the oil and gas producer’s net zero and energy transition plans "fail to meet expectations."
She pointed out that even though engagement efforts had been "fruitful", it proved difficult to influence Aramco's shareholders as it is largely state-owned. KLP's current stake is currently a $15 million investment.
KLP, which primarily manages pensions for public sector works, including practically every Norwegian council, is increasingly taking a firm stance when it comes to executing its responsible investments strategy.
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Previously, it dropped Adani Green Energy over concerns that the company aided in financing emission-increasing activities. It also pulled out of a number of US-based companies that oversaw refugee centres that were linked to human rights violations.
"Adani's corporate structure created an unacceptably high risk that 'clean' investment could be siphoned off towards coal mining, in breach of the fund’s commitments," Aziz explained.
In addition to Aramco, Aziz also said KLP will pull out over a dozen companies in Qatar, the United Arab Emirates and Kuwait, primarily over human rights concerns.
It involves mostly real estate and telecommunication firms, where KLP argued migrant workers from mostly India, Pakistan and Africa have faced discrimination and racism.
“Gulf states remain characterized by authoritarian systems of government that restrict freedom of expression and political rights, including of critics and human rights activists,” Aziz clarified.
She singled out telecom firms for the development of artificial intelligence as as this increases the risk of surveillance and censorship in the region.
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