Vedanta Resources PLC VED

DJ Norway's Oil Fund Executive: Ethical Investment Won't Hamper Its Long-Term Return

 
   By Alex MacDonald 
   Of DOW JONES NEWSWIRES 
 

ST. GALLEN, Switzerland (Dow Jones)--Norway's oil fund has stopped investing in 56 companies that don't comply with its ethical standards, a move which isn't expected to alter its ability to deliver on an annual real return of 4% over the long term, the fund's deputy CEO told Dow Jones Newswires in an interview Thursday.

"In the long run, it shouldn't affect the...expectation for a 4% real return" from the fund, said Tornd Grande, the deputy CEO of Norges Bank Investment Management, the firm that manages Norway's massive $620 billion oil fund. "We think that sustainability and financial returns go together," he added.

He said that the company uses the FTSE all share index as a benchmark for ethical standards to determine which companies to exclude from its investment portfolio. It also reviews its portfolio against its own ethical standards and sometimes works with companies to see if it is possible to improve their ethical standards.

Grande said that the fund has been pursuing ethical investment for several years and this year increased the number of companies excluded from its portfolio to 56. Some of those companies include tobacco companies and nuclear weapon companies such as European Aeronautic Defence & Space Co. EADS N.V. (EAD.FR), according to the ministry of finance. Other companies that the fund can't invest in include Canada's Potash Corp of Saskatchewan Inc (POT, POT.T), mining titan Rio Tinto PLC (RIO) and Vedanta Resources PLC (VED.LN).

Grande, however, said that companies that are excluded from the portfolio aren't necessarily excluded forever; they could return once they meet the fund's ethical standards.

-By Alex MacDonald, Dow Jones Newswires; +44 (0)7776 200 924; alex.macdonald@dowjones.com

(END) Dow Jones Newswires

May 03, 2012 13:39 ET (17:39 GMT)

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