NORWAY SMOKES OUT TOBACCO PRODUCERS FROM PENSION FUND

UNCLAS OSLO 000034 STATE FOR EUR/NB, EEB/ESC SENSITIVE SIPDIS TAGS: EINV ENRG EPET ECON NO SUBJECT: NORWAY SMOKES OUT TOBACCO PRODUCERS FROM PENSION FUND PORTFOLIO ¶1. (SBU) Summary. Seventeen tobacco producers, including seven U.S. companies, have been excluded from the Norwegian Government Pension Fund's (GPF) portfolio, on ethical grounds. End Summary. ¶2. (U) On January 19, The Ministry of Finance announced that 17 tobacco producers had been excluded from the Norwegian Government Pension Fund's portfolio, and that the sale of the relevant shares had been completed. Among the 17 companies excluded were the following seven U.S. producers: Alliance One International Inc., Altria Group Inc., Lorillard Inc., Phillip Morris International Inc., Reynolds American Inc., Universal Corp VA and Vector Group Ltd. The Tobacco Criterion - A First Comb-Through -------------- ¶3. (SBU) GPF investments are regulated by a set of ethical guidelines, introduced in 2004, that bar investment in companies involved in particularly unethical behavior, including weapons production, human rights violations, and environmental degradation. Last year, the Ministry of Finance proposed to have tobacco added as a screening criterion, and the motion was supported and passed by Parliament. The portfolio of approximately 8,000 companies has since been filtered, and shares in 17 tobacco giants have been divested. However, the GPF's Council on Ethics has signaled that more may follow, as the exclusion criterion covers all companies involved in tobacco production, not considering the percentage of business represented by tobacco production. The production of associated products like filters or flavoring is not covered. Status - U.S. Companies -------------- ¶4. (SBU) In total, 51 companies have been excluded from the GPF portfolio since 2004; three have since been re-included. At present, the U.S. tops the list with 21 excluded companies, accounting for 2/5 of the list. Of these, 11 have been excluded for nuclear weapons and cluster bomb production, 2 for human rights violations, 1 for environmental degradation, and 7 for tobacco production. ¶5. (SBU) COMMENT: The tobacco divestment was expected, as a natural follow-up to last year's inclusion of tobacco production as an additional screening criterion. Unlike some previous divestment decisions, the tobacco decisions appear to be uncontroversial, consistent and transparent. END COMMENT WHITE