By Kjetil Malkenes Hovland
OSLO--Babcock & Wilcox Co. (BWC) and Jacobs Engineering
Group Inc. (JEC) have been excluded from the portfolio of Norway's
$698 billion sovereign wealth fund, or oil fund, because the
companies were involved in the production of nuclear weapons, the
Ministry of Finance said Friday.
The ministry found that Babcock & Wilcox operates facilities
producing fissile material for nuclear warheads, while Jacobs
Engineering Group is part of a company developing, producing and
maintaining nuclear weapons.
The fund's ethical guidelines state that the fund should not
invest in companies producing weapons that are in conflict with
humanitarian principles. The Norwegian parliament has decided that
his includes nuclear weapons.
At the end of 2011, Norway's oil fund owned 188 million
Norwegian kroner ($33.71 million) worth of shares in Babcock &
Wilcox and NOK208 million worth of shares in Jacobs
Engineering.
But the ministry has reversed the exclusion of BAE Systems PLC
(BA.LN) and Finmeccanica S.p.A. (FNC.MI) after they had ended their
production of nuclear weapons. The exclusion of FMC Corp. (FMC) had
also been reversed, the ministry said, since the company was no
longer buying phosphate from Western Sahara.
The decisions were made after recommendations from the Advisory
Council of Ethics, which was established in 2004 to advise the
government on ethical investments.
Separately, the ministry said it has ended the four-year
observation of Siemens AG (SI) on the suspicion of corruption
because the company had "shown a will and ability to turn around
the company's culture."
The changes in the fund's portfolio had already been made,
according to the Ministry of Finance, which has the final word on
the fund's investment strategy. The fund is managed by the
country's central bank on behalf of the Ministry of Finance.
By the end of the third quarter, the Government Pension Fund
Global had about 60% of its investments in equities, distributed
between 7,354 companies.
Write to Kjetil Malkenes Hovland at
kjetilmalkenes.hovland@dowjones.com