Norway’s largest pension fund manager, KLP, has made a significant move by divesting from a range of Gulf companies, expressing concerns about potential human rights violations and climate risks. Managing a substantial $70 billion, KLP excluded twelve companies listed in Saudi Arabia, Qatar, the United Arab Emirates, and Kuwait from its investment portfolio. The primary reasons cited for these divestments are the perceived risks of contributing to human rights abuses and, separately, the negative environmental impact associated with Saudi Aramco.
KLP’s decision to blacklist companies in the Gulf region stems from what it deems as an “unacceptable” risk of involvement in human rights violations. The fund has particularly scrutinized the real estate sector, where allegations of discrimination and human rights violations against migrant workers from Africa and Asia have been reported. Additionally, KLP has raised concerns about the telecommunications sector, citing the development of artificial intelligence as a factor reinforcing the risks of surveillance and censorship in the region.
Kiran Aziz, Head of Responsible Investment at KLP, emphasized that Gulf states still exhibit authoritarian systems of government, limiting freedom of expression and political rights for critics and human rights activists. KLP, which manages pensions for the public sector, including Norwegian municipalities, positions itself as a responsible investor willing to divest from companies based on environmental, social, and governance considerations.
Saudi Aramco, one of the world’s largest oil and gas producers, faced exclusion primarily due to concerns about its energy transition plan failing to meet expectations. KLP acknowledged its successful engagement with companies in the Gulf States but highlighted the challenge of influencing Aramco due to its predominantly state-owned nature.
The total divestment amounts to $15 million, with KLP noting that it would have been approximately $27 million if its investments had more closely mirrored the index weightings of the affected stocks. This move aligns with KLP’s track record of addressing environmental and human rights concerns, having previously divested from companies like Adani Green Energy Ltd., U.S.-based firms associated with human rights violations in refugee centers, and entities linked to Israeli settlements in the West Bank.
