Norway pension fund blacklists Aramco, other Gulf companies

“Gulf states remain characterized by authoritarian systems of government that restrict freedom of expression and political rights, including of critics and human rights activists,” said Kiran Aziz, KLP’s head of responsible investment, in a statement.

The stocks which were blacklisted were mixed on Thursday, with some trading higher along with emerging-market peers, while others slipped. Aramco edged lower, tracking an overnight drop in oil. Foreign investors generally have a smaller exposure to Gulf markets — which comprise just over 7% of the MSCI Emerging Markets Index — due to smaller free floats and more recent inclusions to the benchmark.

KLP manages pensions for the public sector, including Norwegian municipalities, and describes itself as a responsible investor that’s willing to divest from companies for environmental, social and governance reasons. In recent years, it has targeted Adani Green Energy Ltd. on concerns the company might have inadvertently helped finance polluting activities via its stake; US-based firms overseeing refugee centers linked to human right violations; and companies tied to Israeli settlements in the West Bank.

KLP’s Aziz said Aramco was excluded primarily because the oil and gas producer’s energy transition plan failed to meet expectations. The pension fund said it has found engaging with companies in the Gulf States to be fruitful, but added that it’s difficult for shareholders to influence Aramco as it’s mostly state-owned.

KLP said the $15 million divestment amount would have been roughly $27 million if its investments more closely matched the index weightings of the stocks.