Academic

• Managing Director Ylva Lindberg
• Professor Dag Olav Hessen
• MBA Bente Rathe
• Associate Professor Dr. juris Gro Nystuen (Chair of the Council) 
• Professor dr. juris Ola Mestad

The Ethics Council is vested with four principle functions described in Sections 4(2)-(5) of the Ethics Guidelines as follows:

Norway acused of ?hypocrisy? over ethical investment, World.edu (Aug. 24, 2010). (The Norwegian government has sold its investment in one Malaysian logging and palm oil company but remains a big shareholder in another accused of destroying rainforest and orang-utan habitats). 

The Ministry of Finance can put a company under observation on the basis of recommendations of exclusion or observation from the Council on Ethics. In these cases, assessments will be made regularly to determine whether the company should remain on the watch-list. If the risk of norm violations is reduced over time, the company can be taken off the watch-list. If the required improvements are not observed, companies on the watch-list may be recommended for exclusion from the Fund. (Council on Ethics for the
Government Pension Fund Global, Annual Report 2009,  at 13).

A principal operational function of the Ethics Council is the harvesting of information.  It is given broad, though unspecified authority,  to  "obtain the information it deems necessary and ensure that the case has been properly investigated before giving advice on exclusion from the investment universe." (Ethics Guidelines, Sec. 5(2)).  The obligation to harvest information extends not only through the process of determining  exclusion from the investment universe but continues thereafter.  "The Council shall routinely assess whether the basis for exclusion still exists and may, in light of new information, recommend that the Ministry of Finance reverse a ruling on exclusion." (Ethics Guidelines, Sec. 5(5)). 

The Ethics Guidelines set out a rudimentary system of procedural protection applicable to the process of determining the appropriateness of Fund exclusion.  The process system evokes  a determination of qualitative minimum protections  of the rights of those affected by Ethics Council determinations balanced by the needs of the Ministry of Finance for efficiency in the operation of the system,  (Cf.  Mathews v. Eldridge, 424 U.S. 319 (1976); Case 17/74 Transocean Marine Paint v. Commission [1974] ECR 1063).   First,

A company that is being considered for exclusion shall be given the opportunity to present information and viewpoints to the Council on Ethics at an early stage of the process. In this context, the Council shall clarify to the company which circumstances may form the basis for exclusion. If the Council decides to recommend exclusion, its draft recommendation shall be presented to the company for comment. (Ethics Guidelines, Sec. 5(3)).

The Council will, among other factors, assess:

• whether the violations fall within the scope of the Fund?s Ethical Guidelines;
• whether it is possible to establish a clear connection between the company?s practices and the violations;
• whether the violations may be regarded as isolated incidents or whether they constitute an indication of present and future practices;
• whether the violations are serious or systematic;
• whether the violations will lead to long-term or permanent damage to humans or the environment;
• whether there is sufficient documentation to substantiate allegations of violations; and
• whether the company has implemented measures to prevent or remedy the violations. (From Ministry of Finance, Ethics Council, Frequently Asked Questions, No. 5)

 These grounds shall include a presentation of the case, the Council?s assessment of the specific basis for exclusion and any comments on the case from the company. The description of the actual circumstances of the case shall, insofar as possible, be based on material that can be verified, and the sources shall be stated in the recommendation unless special circumstances indicate otherwise. (Id.).

The Council on Ethics bases its work on a series of different sources. The main rule is that the information taken into account must be verifiable.

In order to gather information the Council on Ethics often maintains contact with special interest groups, local and national authorities, international organizations, local and international experts and the company itself. Important information may include documentation such as research and scientific reports, legal sources, environmental impact assessments, reports from non-governmental organizations, the company?s own documents, etc. The Council on Ethics does not have a mandate to subpoena anyone or order the release of documents. In certain cases the Council on Ethics hires external specialists to carry out field studies or other studies if considered necessary to sufficiently document the violations. (From Ministry of Finance, Ethics Council, Frequently Asked Questions, No. 16)

The internal routines for managing proceedings to reverse exclusion, described as "cases" in the English translation of the Ethical Guidelines are to be publicly available and the affected companies informed.  (Ethical Guidelines, Sec. 5(6)). And the Ministry of Finance is required to publish Ethics Council recommendations "after the securities have been sold, or after the Ministry has made a final decision not to follow the Council on Ethics? recommendation."  (Id., Sec. 5(7)).

Sovereign Wealth Funds Emerging as Major Force,Research Recap,  Jan. 2, 2008.

One problem is that publishing a list of companies that we are looking at causes itself reputational hazard for a company. It shows that they are under our scrutiny. And if we then publicized the details of all the companies we have looked at and decided not to exclude them from our investment programme, it would mean that we gave them a seal of quality, which we do not want to do. Some companies can be really bad, we know that but we just can?t get the documentation. And we do not want to give those companies a quality seal. And some companies, on the other hand, are falsely accused of things, for a number of reasons. (From Sibylle van der Walt, Bringing human rights into pension finance. Interview with Gro Nystuen, Norway Govt Pension Fund, Responsible Investor.com, April 21, 2009).

Upon the determination by the Ministry of Finance that a company is to be excluded from the investment universe of the NSWF, the Norges Bank is formally notified and has two calendar months from the time of notification to divest its holdings .  (Ethics Guidelines, sec. 7(1)).  Norges Bank may notify the excluded company, but only at the Finance Ministry's request (Ethics Guidelines, sec. 7(2).  In any case, companies and others receive notice of Finance Ministry actions by reviewing a periodically updated list of excluded companies (or companies put under observation) which the Finance Ministry is required to publish.  (Ethics Guidelines, Sec. 8).

What emerges from this review is a  body that is organized much like a constitutional court.  Its members understand their role as essentially political. Some but all of its members are lawyers.  They are chosen for their representative value (and to that extent can be understood as the embodiment of essentialist abstraction in the service of the state)  and their personal achievements and status.  But the forms used to  exercise authority are quasi-judicial, rather than administrative or legislative in character.  The Ethics Council produces information--principally of use to the Ministry of Finance and Norges Bank.  But more importantly, the principal authoritative product of the Ethics Council are its determinations of the compliance of companies with the product or conduct based exclusion rules specified in the Ethics Guidelines.  Those determinations are not mewrely specific instances of the application of the Ethics Guidelines.  To the extent that they suggest and develop a set of approaches to such determinations, standards for applying those Ethical Guidelines or rules for determining conformity thereto, the Ethics Council begins to develop a jurisprudence whose value as a governance tiool becomes significant. It is to a consideration of the work of the Ethics Council, it character, nature, meaning and effect, that these essays turn to next.

Appendix A:  Ethics Council Members

Gro Nystuen holds a doctorate in law and has specialized in international law. She is a Senior Partner at the International Law and Policy Institute (ILPI). Nystuen?s expertise includes international law, international humanitarian law/the law of war, as well as human rights including international rules regarding workers? rights, among other things. Nystuen has 12 years? experience in the foreign service, including the legal department and Norway?s delegation to the United Nations in Geneva. She has also served as legal advisor to Thorvald Stoltenberg and Carl Bildt under the peace process for the former Yugoslavia. Nystuen led the Council on International Law for the Petroleum Fund until its dissolution in November 2004 and was a member of the Graver Committee in charge of suggesting ethical guidelines for the Petroleum Fund. She has led the Council on Ethics since its creation in 2004. Nystuen is an associate professor at the University of Oslo and at the Norwegian Defence University College (NDUC).

Gro Nystuen 

   

Ylva Lindberg is managing director of SIGLA. She has more than ten years business experience, including as a consultant with McKinsey & Company, marketing manager in Orkla and equity analyst at KLP Asset Management. Her expertise is in strategy, corporate responsibility and marketing from Scandinavia and Russia. Ylva holds a degree in Philosophy, Politics and Economics from Oxford University and holds four board positions in Norway.
   
  Ylva Lindberg 

Professor Andreas Føllesdal (Co-Director), Professor of political philosophy, Director of Research, Norwegian Centre for Human Rights, Faculty of Law, University of Oslo, was in residence the whole academic year. A political philosopher, his own research mainly addressed issues of the normative legitimacy of human rights conventions and the various treaty organs. He edits, co-edits and contributes to two of the books and the two special issues of journals that stem from the project: on Legitimacy, the European Convention on Human Rights; on the Constitution of Nepal and reflection on the Legitimacy of international judicial review in Nytt Norsk Tidsskrift.