The Norwegian investor KLP announced 3 June that they have blacklisted the oil company Total from its portfolio due to the company's oil activities offshore Western Sahara. The Norwegian Government's Pension Fund might land on the same conclusion.
Photo: Total has in 2012-2013 executed comprehensive search activities in Western Sahara together with a Chinese government owned oil company. This photo shows one of the supply boats that participated in the operation. Click on the photo for higher resolution. Free use.
“KLP is of the opinion that Total's activities on the continental shelf offshore Western Sahara can be linked to a violation of fundamental ethical norms”, says Jeanette Bergan, head of responsible investments in KLP Kapitalforvatning, to Norwegian national broadcaster NRK 3 June.
The pension fund, which provides pensions for local government employees in Norway, sold their shares amounting to more than 50 million Euros as a result of the decision. The Norwegian Support Committee for Western Sahara welcomes KLP's well-founded decision.
“It is difficult to find a more cynical operation than this. Total works together with Moroccan authorities in order to rob the natural resources of the territory whilst the area is still being occupied”, says Erik Hagen, director of the Norwegian Support Committee for Western Sahara.
Hagen says that the exclusion confirms the organizations impression of KLP as a socially responsible investor and tells that other investors, including the Norwegian Government Pension Fund, will probably follow.
“The decision is clearly in line with other exclusions we have seen from KLP and other investors internationally. Western Sahara is a taboo area for responsible companies and investors. The information about Total's engagement in Western Sahara is only seven months old and we are looking forward to seeing other investors drawing the same conclusion. We are especially eager to hear what the Norwegian Ministry of Finance will do”, says Hagen.
Norwegian daily Aftenposten has already written about the Norwegian Government Pension Funds huge investments in Total. With over Nok 14 billion invested, the Norwegian Government Pension Fund is one of Total's biggest shareholders. At the same time, the fund has until now shown a through and good practice in throwing out companies engaged in Western Sahara.
In 2005, the Norwegian Government Pension Funds and several other investors sold their shares in the American oil company Kerr-McGee. This was the first company that the Norwegian Government Pension Fund excluded after having been subject to following ethical guidelines. However, Kerr-McGee was not the only one operating in Western Sahara at that time. Total was operating in Western Sahara on Kerr-McGee's neighboring block in the period 2002 2004. Only a few months before the question of Kerr-McGee was considered by the Ministry of Finance in 2004, Total claimed that there were no commercially viable oil potential on the block, and they hence pulled out. If Total had not left Western Sahara in that point of time, the company would already have been thrown out of the Norwegian Government Pension Fund together with Kerr-McGee on the 6th June 2005.
And also, if the Ministry of Finance uses as long time on the question of Total as they did with Kerr-McGee, Total will be black listed on this forthcoming Thursday, 6th June.
The Norwegian Pension Fund track-record of excluding Kerr-McGee and phosphate companies in Western Sahara makes it difficult to see that they might come to a different conclusion then excluding Total. The Norwegian Support Committee for Western Sahara cannot find a single difference between the license of Kerr-McGee (that lead to them being thrown out of the fund in 2005) and Total. Check out the parallels:
Former Council leader: "Total exclusion case possibly stronger"
The former leader of the Council on Ethics states to KLP that there is possibly a stronger case for excluding Total than excluding Kerr-McGee. The reason is that Morocco signed the UNCLOS in 2007.
This is how the Kerr-McGee case was handled
29 November 2004 a letter was sent to the Ministry of Finances, stating that the company Kerr-McGee operated in Western Sahara, thus violating the newly established ethical guidelines for the fund. 4 January 2005, Kerr-McGee sent a letter to the Norwegian Ministry of Finances Per-Kristian Foss that they had heard about the complaint, and asked the Norwegian government to reject it. Read the letter from Kerr-McGee to the Norwegian government.
The Ethical Council carried out its assessments during the spring of 2005. The company was approached, and 5 April 2005 Kerr-McGee a letter to Norwegian Bank Investment Management (NBIM) where they say that the Norwegian assessment was wrong.
Three small weeks later, 29 April 2005, the Ministry of Finances an order to NBIM to exclude the company. Read the letter from the Ministry to NBIM. NBIM got 4 weeks to sell the shares.
One week after NBIM's expired, 6 June 2005, the Ministry of Finances announced that the company was excluded from the fund. They explained that the operations constituted a "'a particularly serious violation of fundamental ethical norms' e.g. because it may strengthen Morocco's sovereignty claims and thus contribute to undermining the UN peace process".
Does NBIM work on the Total case?
The Support Committee has asked NBIM to raise the issue with Total. NBIM sent on 18 December 2012 a letter to the Support Committee where they write that they will not comment clearly on that topic. It is not known if NBIM has raised the Western Sahara case with the company.
If the Ministry of Finances is to maintain their practice from the past, they will exclude Total.
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