Norway’s largest pension fund, KLP, has announced it is divesting its holdings in 11 Gulf state companies due to unacceptably high human rights violations risks and Saudi oil giant Aramco for failing to meet the fund’s climate expectations. The companies in question are active in the telecommunications and real estate sectors. According to Kiran Aziz, head of responsible investment at KLP, the exclusion is based on the fact that Gulf states have authoritarian systems of government that restrict freedom of expression and political rights. Additionally, Aramco was excluded for its lack of an energy transition plan. KLP’s divestment from these companies amounts to $15 million and follows a thorough due diligence assessment.
This is not the first time KLP has taken such action. In 2022, the pension fund divested from Russian companies following the war with Ukraine, and in 2021, it divested from companies linked to Israeli settlements in the occupied West Bank, including telecom equipment giant Motorola.
KLP’s decision to divest from these Gulf state companies and Aramco highlights the growing importance of human rights and climate change concerns in investment decisions. By actively avoiding companies with ties to oppressive regimes and those failing to align with climate expectations, KLP is sending a clear message about its commitment to responsible investing.
It is worth noting that Saudi Aramco, which is 90 percent owned by Saudi Arabia, is particularly significant due to its immense size and influence in the oil industry. Its exclusion from KLP’s investment portfolio raises questions about the company’s future and its ability to adapt to the global energy transition.
The divestment from these companies not only serves as a way for KLP to address its concerns about human rights violations and climate change, but it also puts pressure on these companies to improve their practices. By losing the support of a significant investor like KLP, these companies may be compelled to reassess their operations and make changes to align with international standards.
Ultimately, KLP’s decision reflects the increasing push for investors to consider non-financial factors, such as human rights and climate change, in their investment strategies. As more investors prioritize these issues, companies will face greater scrutiny and will be expected to demonstrate their commitment to ethical practices and sustainability.
