Norway Case

Case Summary

--Norway Sells Wal-Mart

Norway, a democratic and ethically oriented nation, is a large exporter of oil in the world. Most of the country’s oil profits went to the Norwegian government. Norway established the Norwegian Pension Fund(formerly the Petroleum Fund) in 1990 mainly to ensure a fair distribution of wealth across generations of Norwegians and reduce cyclical fluctuations in the Norwegian economy due to variations in oil revenue by investing in financial assets abroad. 60% of the fund to be invested in fixed income and 40%in equities.

Norwegian Pension Fund had recently sold its approximately US$416 million in Wal-Mart shares at the recommendation of the Fund’s Council on Ethics.

Fund’s Council on Ethics is created in 2004 by Norwegian government to recommend to the Ministry of Finance which companies it should exclude from Fund investments. The council had found Wal-Mart had serious and systematic abuses of human and labor right. Based on investigation of Wal-Mart, Council reported Wal-Mart had broken norms, including employing minors, allowing hazardous working conditions, blocking workers’ efforts to form unions, pressuring workers to work overtime without compensation, discriminating against women in pay and blocking all attempts to unionize in some countries. All of them were violations of the Fund’s ethical guidelines. With no respond from Wal-Mart, the Council sent its findings to recommend the Fund to exclude Wal-Mart shares. And Ministry of Finance, which carried out an independent assessment of whether the Fund should sell its Wal-Mart securities, has followed the recommendations from the Council on Ethics.