* Critics say POSCO's Indian plant in breach of human rights
* Say fund has not taken appropriate action as investor
* Oil fund: OECD guidelines do not apply to fund
OSLO, May 27 Norway's oil fund, the world's
largest sovereign wealth fund, has no strategy for dealing with
possible violations of human rights by the companies in which it
invests, an independent committee set up to safeguard OECD
ethical guidelines said.
The Norwegian committee pointed to the fund's investment in
South Korean steel maker POSCO, which plans to build
a $12 billion steel plant in India, saying the fund was not
doing enough to protect against human rights breaches.
Several non-governmental organisations say the plant in
Odisha state would displace more than 20,000 people, among them
indigenous people who receive special legal protection.
While the committee of experts, set up by the Norwegian
government, has no legal power, its criticism could potentially
damage the fund's reputation as a socially responsible investor.
The oil fund, whose investments totalled $740 billion on
Monday, is one of the world's most transparent wealth funds and
has excluded companies for what it has deemed to be unethical
behaviour, such as the production of nuclear weapons and tobacco
or the use of child labour.
The committee said on Monday that the fund had "failed to
take appropriate steps to prevent or mitigate negative human
rights and environmental impacts in connection with its
investment in POSCO".
The fund lacked "a strategy for identifying and handling
possible violations of human rights in the companies they
invest", it said.
Hans Petter Graver, head of the committee, said a company or
investment group that had this type of complaint directed at it
might face questions from future business partners.
The OECD - Organisation for Economic Cooperation and
Development - is a forum of 34 countries aimed at promoting
economic progress and trade. Member states are required to set
up an independent committee to police possible breaches of OECD
Norway's oil fund, which invests the country's revenues from
oil and gas for future generations, has a 0.9 percent stake in
POSCO and is the eleventh-biggest shareholder, according to
The fund is managed by Norges Bank Investment Management
(NBIM) on behalf of the Norwegian central bank, Norges Bank.
NBIM says that while it was following the complaint against
POSCO "with interest and concern", it did not think the OECD
guidelines should be applied to investors.
"In our view, the guidelines apply to the companies Norges
Bank invests in, their business operations and subcontractors,
but not to Norges Bank as a minority shareholder," NBIM said.
POSCO says on its website it has been highly sensitive to
the human rights of the local community in Odisha and has never
infringed upon any human rights. ()
The company has so far waited eight years to get the
necessary clearances in India to start work on the project.
Protests from rights activists, environmentalists and
ex-politicians could yet scupper its plans to build the plant,
even after a recent court decision on a mining licence moved the
project a step forward.