Case Two Submission: Norway Sells Walmart

Case Two Submission: Norway sells Walmart

In this globalised world, the rapid expansion of multinational corporations and the inordinate economic power showed that there might be the most efficient mechanism for the creation and distribution of wealth on a worldwide scale. However, if the ethics conducted by these companies are not well managed, the existence of unethical behaviours in the international business context has led to extensive discussions. Also, we will discuss how the sovereign wealth fund could be affected when the investment into these unethically performed firms was not regarded as appropriate from the case of “Norway sells Walmart”.

Since Norway was famous of its oil production industry, so as to leave benefits to the generations of Norwegians, the government taxed heavily onto oil companies and direct participated in the oil field. Thus, the introduction of Fund was to ensure the fair distribution of wealth as social welfare to Norwegians and also to reduce the cyclical fluctuations in economy due to the variations in oil revenues by investing in foreign financial assets. As required by the norms of the Fund, the wealth could not be invested into companies who violated human rights and labour rights. According to the ministry of finance, Walmart had broken norms, including employing minors against international rules, allowing hazardous working conditions at many of its suppliers and blocking workers’ efforts to form unions. Also, it mentioned that Walmart pressurizing workers to work overtime without compensation, discriminate against women in pay and blocking all attempts to unionize. As the Norwegian government would like to avoid investments with a substantial risk of complicity in grossly unethical actions while it did not want the returns to come from the blood money of suppliers, etc.

As there are two inherent goals of socially responsible investing which includes social impact and financial gain. The NSWF was provided to bring benefits to the Norwegians which could be regarded as the financial gain to distribute welfare for the public. Also, SRIs are only allowed for investors to seek out companies engaged in social justice, environmental sustainability and alternative energy/clean technology efforts. As NSWF finally divested from Walmart and Freeport-McMoRan due to the unethically social behaviour and images produced to the public, we could say that NSWF was acting as the market regulator while at the same time, following strict rules to generate motivation of investment with the hugest social consciousness.

Some of the best well-known applications of socially responsible investment were morally or religiously motivated as those associated with products such as weapons, liquor and tobacco were regarded as “sinful” while it could produce addiction and harm to the health of human being, as well as not promoting sustainability. In addition, most SRI funds did not allow or restrict investment into tobacco companies while most investors would negatively screen these companies. Originally from the theories of negative screening and exclusion in the GPFP ethical guidelines, in the case of violation of human rights, environmental damages, gross corruption and other serious violations of fundamental ethical norms, these relevant companies would be excluded. In terms of tobacco companies, it seemed that they were acceptable to be included in the GPFP as they did not really break any rules. Thus, before 2010, the GPFP committee did not exclude tobacco companies from the Fund but in 2010, the Norwegian Ministry of Finance decided to exclude 17 companies that produce tobacco from the government pension fund global based on a recommendation from the fund’s council on ethics. It was important that the ethical guidelines reflected at all times wat can be considered to be commonly held values of the owners of the fund as the force of the WHO Framework Convention on Tobacco Control and the tightening of the Norwegian Tobacco Act ensured that the basic rules should not be breached in GPFP ethic guidelines. The evidences showed that there were 20 tobacco producers were excluded from the list of investment since 2009.