* Norway's wealth fund is Total's fourth-biggest investor
* Total says it respects international norms on human rights
* Fund could blacklist firms for corruption, environmental
damage this year
* Council examining labour conditions in textile industry
By Gwladys Fouche
OSLO, March 12 Norway's sovereign wealth fund is
examining the operations of oil firm Total in Western
Sahara, a disputed region of North Africa with a history of
human rights abuses, to ascertain whether its activities there
The $850-billion fund, which invests Norway's revenues from
oil and gas for future generations, invests only in companies it
considers ethical, and has blacklisted 63 firms, including
makers of nuclear arms, anti-personnel landmines, cluster bombs
It is one of the world's largest investors, with holdings in
8,200 companies, including a 2.06 percent Total stake worth
about $3 billion, which makes it the French company's
"We are following the work of Total in Western Sahara
closely," said Ola Mestad, a law professor who has headed the
Norwegian fund's ethics council since 2010.
Total told Reuters its "operations offshore in Western
Sahara, as in other places where we operate, are in line with
the applicable international laws and standards mentioned in our
Code of Conduct, in particular those related to human rights".
Mestad said the main issue with Western Sahara, which
Morocco and Algeria-backed separatists both claim, was ensuring
that the interests of the local population, such as the Sahrawis
- many of whom are either exiled or in refugee camps - are
Total was awarded a licence to explore for oil and gas off
Western Sahara in 2011 by Morocco, which annexed the region in
1975 after colonial power Spain withdrew, and fought a war with
the separatists. In 1991, a U.N.-brokered ceasefire was reached
on the understanding that a referendum would be held on the
region's fate. That vote never took place.
Media reports and human rights organisations say the dispute
has resulted in frequent abuses, including the displacement of
tens of thousands of Sahrawi civilians.
The fund's council on ethics, which published its 2013
annual report on Wednesday, has recommended the fund drop its
investments in companies in the past because of their
involvement in Western Sahara.
In 2005 the fund sold its stake in oil company Kerr McGee,
since the council considered its offshore exploration work there
strengthened the claims of Morocco to sovereignty over the
territory, a claim not recognised by the United Nations. Kerr
McGee did not renew its contract the following year.
In 2011 the fund sold its shares in firms Potash Corporation
of Saskatchewan and FMC Corporation for buying phosphate from
In December Total signed a joint declaration with Morocco's
National Bureau of Petroleum and Mines in which the latter
emphasises its commitment to complying with the principles of
the Charter of the United Nations.
Total also signed a memorandum of understanding setting out
corporate social responsibility principles for the
reconnaissance period and any subsequent phases.
Speaking at his office at the University of Oslo, lined with
tomes on property, trade and E.U. law, Mestad said investors
should be more aware of human rights issues when investing in a
company, both for ethical reasons and because it can pose a risk
to their investments.
In 2014 he said the council on ethics would also be looking
at oil and gas firms operating in countries presenting a risk of
corruption and could sell out of textile companies that violate
He said multinationals would probably not be directly
responsible for the worst labour conditions, but their supply
chains could harbour abuses.
"That is where there could be a relation between really bad
conditions and a company in which we are invested in," he said.
He said the exclusion of firms by the fund could be expected
this year due to corruption, the destruction of forests to set
up plantations, and environmentally damaging fishing activity.
In 2013 the council looked at the oil and gas sector's
involvement in Equatorial Guinea and whether it contributed to
human rights violations.
In its report, the council said human rights were being
violated since the country's revenues were not being used to
improve the living conditions of the population.
"Given that this is thoroughly documented in various public
reports, this is something that the companies know about. On the
other hand, the companies cannot be said to have a significant
degree of control over the situation."
As a result, and given the fund's high threshold for
exclusions, the council did not recommend disinvestments.
The fund also looked at labour conditions in the consumer
electronics industry in China.
"In this sector, many of the larger companies seemed to be
more aware of their responsibilities. Companies that had
previously been strongly criticised appeared to have improved
their working conditions," the report said.
The ethics council is independent of the management of the
fund. It makes recommendations to Norway's finance ministry
about the investments, which then instructs management to act on