“First Facts”: Update on ethical investments

11/1 2013

First House, is a consulting firm with expertise in strategic analysis, and implementation. The company has offices in Oslo and Stavanger in Norway and in Brussels with Fipra. First House is specialized in financial communication; advice regarding political, policy and regulatory issues, corporate communication, media and crisis management. – Our unique experience from finance, politics and CSR ensures that clients will have a strong advisory team on policy and ethical issues relevant for parties that need to understand or prepare for a dialogue with the Norwegian Pension Fund, says Per Høiby, managing partner in First House.
The assets in the Government Pension Fund stem from oil and gas revenues and it belongs to the future generations of Norwegians. The assets are therefore safeguarded to secure the future of the Norwegian welfare state. Ensuring good returns over time is important.However: not at any price.

International companies who have or want the Government Pension Fund as investor need to know about and understand the ethical guidelines of the Fund, says Morten Wetland, senior advisor at First House. Before Wetland came to First House, he was Norway’s UN ambassador in New York. He has a unique combination of experience from politics, business, and diplomacy. He has held the position of State Secretary at the Prime Minister’s Office in both Jens Stoltenberg’s and Gro Harlem Brundtland’s cabinets. Together with Torbjørn Giæver Eriksen, who has held political office in the Ministry of Finance and who served as the press secretary of Prime Minister Jens Stoltenberg for 6 years, he is the focal point for pension fund issues.Eriksen is Master of Public Policy from Princeton University. Norway is one of the first countries to develop a coherent policy on Corporate Social Responsibility (CSR) in the global economy. A very important part of this policy is to base the investments of the Norwegian Government Pension Fund on an ethical foundation.

The four values
The ethical basis for the Norwegian CSR-policy derives from the inviolability of human dignity. The Government views four areas as central when it comes to corporate social responsibility in international operations. Companies should:

• Respect human rights in all their operations.
• Respect the rights of employees and create decent working conditions.
• Protect the environment and the climate.
• Engage in fighting corruption and increasing transparency about a company’s operations and their impact on people and the environment.

In Norway, all companies are expected to respect these values in their business activities, both in Norway and abroad. The same key areas provide a basis for the Government Pension Fund’s ethical guidelines. It is the Norwegian government’s view that state-owned enterprises must lead the way on CSR-action.

The topic is covered in more details in the whitepaper “Corporate social responsibility in a global economy” (2009). Here you can find more information on the Norwegian CSR-policy.

Revision, screening and exclusion of companies
– The size of the Government Pension Fund entails a significant and influential voice in the global market, says Morten Wetland. In 2004 The Government took an official stand to what this voice should communicate by issuing the ethical guidelines for the fund and appointing an Advisory Council on Ethics.

The background for this is the belief that as an investor, the state also shares the responsibility on how the companies, in which the fund invests, conduct, what they produce and their impact on the local community. The Government will seek to actively exercise ownership rights, put companies under observation and exclude companies from the Fund’s portfolio. The Council on Ethics makes recommendations concerning screening and exclusion.
– The guidelines in force were revised in 2010. They are specific on how the fund is to be managed, says Wetland. See the guidelines here.

More than 50 companies on the blacklist
The Ministry of Finance may exclude companies from the Fund’s investment portfolio if there is an unacceptable risk that the company contributes to, or is responsible for:

• serious or systematic human rights violations, such as murder, torture, deprivation of liberty, forced labour, the worst forms of child labour and other child exploitation;
• serious violations of the rights of individuals in situations of war or conflict;
• severe environmental damage;
• gross corruption;
• other particularly serious violations of fundamental ethical norms.

The threshold for applying this exclusion-mechanism is high. According to the criteria grossly unethical activity must be involved. Currently, 51 companies operating on the international market are excluded from the Pension Fund. See a list over the currently excluded companies here.

Source: Norway’s official websites abroad, The Norwegian Pension Fund – making ethical investments.

For more information or advisory support with regards to issues related to your relationship with the fund:

Morten Wetland, senior advisor, mobile +47 970 34 904 and e-mail mw@firsthouse.no
Torbjørn Giæver Eriksen, senior advisor and partner, mobile +47 995 41 911 and e-mail: tge@firsthouse.no
Tor Mikkel Wara, senior advisor and partner, mobile +47 917 02 191 and e-mail tmw@firsthouse.no
Bjørn Richard Johansen, senior advisor and partner, mobile +47-47 800 100 and e-mail brj@firsthouse.no

First House in brief:
First House, with offices in Oslo and Stavanger in Norway and in Brussels with Fipra, is a consulting firm with senior expertise and focus on analysis, strategy and implementation for clients within the private and public sectors. The company offers its services based on four foundations: financial communication; political communication; corporate communication (including media and crisis management); and, First House Media. First House Media offers consulting on strategic and operational levels within the media industry. First House was established in January 2010 and has 28 employees plus 7 associate senior partners. Income in 2011 was NOK 48 million and the profit before tax was NOK 9.5 million. First House is a part of Fipra and thus has access to an outstanding international network of advisers in more than 50 countries, including all Nordic countries and all member states of the EU. Almost all advisers in Fipra have experience from politics including ministers, state secretaries, ambassadors, parliamentary or ministerial bureaucracy, or from prominent positions in industry, consumer organizations, volunteer, humanitarian and environmental organizations (NGOs). In May 2012, First House received the Sabre Award for the New Consultancy of the Year for Europe, the Middle East and Africa (EMEA) by the renowned analyst Holmes Report (www.holmesreport.com). First House is a member of the trade organizations Norwegian Information Advisers, KOMM, Norwegian Investor Relations Association, the oil, energy and offshore supply network organized in subseavalley.com and Abelia (www.nho.no). For more information: www.firsthouse.no

More about First House
There is a difference between being in the war and reading about it. First House is unique amongst the Norwegian consulting companies because many of us have been in the storm, and learned from it. Among our consultants are people with experience as ministers, state secretaries and parliamentary representatives. We have people with experience from top positions in major media houses; we have former communications directors; and people who have been central in the stock exchange introduction in Norway in recent decades. Therefore, our customers receive more than theoretical models when First House helps them to make wise strategic choices.
Whether it’s financial communications, analyses of political situations and processes, reputation management or crisis management, our team is an honest and challenging sparring partner which draws on our own experiences to understand the client’s situation. It means that we deliver good results for our clients. In First House, we try not to force all employees into the same shape. On the contrary, we believe that precise analysis is created when different personalities with different skills and backgrounds, without prestige, challenge each other with their own thoughts and judgments. Through the profound insights that our employees have acquired, we constitute a powerful centre at the intersection between politics, business and society in general.
It’s not just our clients that benefit. It is also good for society. We help clients understand the processes so that they can make informed decisions. We help more people to understand the important linkages between politics, business and organizational life. We believe that deeper insight gives wiser decisions, and we are proud of our contribution in making this happen in more and more areas of society.

Contact us
Inkognitogaten 1, N-0258 Oslo
Tel: +47 210 46 200
Crisis: (24/7): +47 994 21 994