Published by Uma Rajagopal
Posted on December 3, 2024
4 min readLast updated: January 28, 2026
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By Gwladys Fouche
OSLO (Reuters) -The Norwegian sovereign wealth fund’s ethics watchdog will next year investigate shoemakers, crypto firms and gambling operators in which the fund has holdings for potential ethical breaches, which could lead the influential investor to sell its shares.
The world’s largest sovereign wealth fund, which owns 1.5% of listed shares across 8,700 companies globally, operates under ethical guidelines which are set by Norway’s parliament.
The $1.8 trillion fund’s Council on Ethics investigates companies in which it has money invested to ensure these are respected. If they are not, the ethics watchdog recommends the fund divests from them or puts them on a public watch list.
A document drafted by the council and sent to the finance ministry on Oct. 10, which was seen by Reuters, said that next year it “will investigate work conditions at a significant number of shoe producers”, without naming any.
Working conditions at shoe factories in Asia have been under the spotlight for decades, with issues ranging from long hours and low pay to the right to form unions.
The document outlining the plan for 2025, which has not been previously reported, says: “companies have a direct responsibility for working conditions within their own operations and gross, systematic breaches of workers’ rights can lead to exclusions from the fund”.
The watchdog said in an emailed statement that its programme “indicates that these are issues the Council will look into”, adding: “It is not possible for the Council to predict the outcome of the investigations”.
CRITERIA
Norway’s fund currently excludes 189 companies on ethical grounds, including Airbus and Boeing for making nuclear weapons and Glencore and RWE for producing coal or coal-based energy.
Other criteria which dictate its investment decision-making include violation of human rights, severe environmental damage, gross corruption or producing tobacco and cannabis.
The fund invests in some of the biggest shoe manufacturers, including Nike, with a 0.9% stake worth $1 billion, Adidas, with a 3.6% stake worth $1.5 billion and Puma, with a 1.5% stake worth $100 million.
Others include Deckers, in which the fund has a 1.2% stake worth $300 million, Asics, where its holding of 2.7% is worth $310 million, Birkenstock, in which it has 1.7% worth $170 million and Crocs, with 1.2% worth $100 million.
Adidas said last week it had taken “a variety of measures to ensure fair and safe working conditions for workers in its supply chain” over the past 25 years, including conducting 1,200 factory audits last year.
Puma said it had invested “a vast amount of time and resources … to ensure a very high standard regarding ESG topics” for the past 20 years, including requiring all suppliers to sign up to a legally binding code of conduct and actively investigating breaches reported.
Nike, Deckers, Asics, Birkenstock and Crocs did not immediately respond to Reuters requests for comment.
CRYPTO, GAMBLING
The document outlines work the ethics watchdog has already started, as well as new areas for investigation next year.
“The Council on Ethics in 2025 will take a closer look at companies involved in cryptocurrencies and gambling/casino, where there is a significant risk of money laundering,” it said.
Norway’s fund is invested in cryptocurrency exchange Coinbase, with a 0.83% stake worth $453 million as well as gambling firms Flutter Entertainment, in which it has a 2.13% stake worth $691 million and MGM Resorts, where its 0.87% stake is worth $121 million.
Coinbase, Flutter Entertainment and MGM Resorts did not immediately reply to requests for comment.
Elsewhere, the watchdog will continue to investigate “several companies” that could be breaching human rights in the occupied West Bank, as previously reported by Reuters.
The Council on Ethics makes recommendations to the board of the central bank, which operates the fund. The bank often follows the watchdog’s advice to exclude firms, but not always.
It can also put a company on notice to change its behaviour or ask the fund’s management to engage directly. Those designated for divestment are not named until the fund has sold.
The length of time to divest can range from weeks to months, depending on the size of the company. The fund divests from a company progressively so as not to alert markets.
(Reporting by Gwladys Fouche in Oslo; Editing by Terje Solsvik and Alexander Smith)
Ethical investing refers to investment strategies that consider both financial return and social/environmental good. Investors seek to align their portfolios with their values.
A sovereign wealth fund is a state-owned investment fund that invests in various assets to generate returns for the country's economy.
Cryptocurrencies are digital or virtual currencies that use cryptography for security. They operate on decentralized networks based on blockchain technology.
Corporate governance involves the systems, principles, and processes by which companies are directed and controlled, focusing on the interests of stakeholders.
Investment portfolios are collections of financial assets such as stocks, bonds, and other securities held by an individual or institution.
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