Norway’s oil fund divests Chinese clothing brand over Uighur labour

Norway's sovereign wealth fund, the largest in the world, will sell off its stake in China's Li Ning over suspicions of forced labour use in the Xinjiang region, the fund's manager said.

People walk past a Li-Ning store in Beijing on October 2019
People walk past a Li-Ning store in Beijing on October 2019. File photo: WANG Zhao / AFP

Li Ning, a manufacturer and trader of sportswear and equipment, was singled out “due to unacceptable risk that the company contributes to serious human rights violations,” Norges Bank, the Norwegian central bank, said in a statement late on Monday.

The decision followed a recommendation from its Council on Ethics, which in an advisory opinion pointed to reports linking Li Ning to “a supplier said to manufacture inside an internment camp”.

China is accused of having interned more than a million Uighurs, a Muslim minority living in Xinjiang, in political re-education camps and exploiting them for forced labour.

At the end of 2021, the Norwegian fund, which was then worth 12,340 billionNorwegian kroner (1,264 billion euros), held 0.59 percent of Li Ning shares, valued at nearly 1.5 billion kroner, which it has now sold.

In contrast, it has removed South Korean textile group Hansae Yes24 and Taiwanese Nien Hsing Textile from its watch list — the step before companies are excluded – because it believed there was no longer reason to suspect systematic labour rights violations in their factories.

Meanwhile, it placed Canadian aircraft manufacturer Bombardier “under observation” over allegations of corruption in six countries over a period of more than ten years (2004-2016).

When it finalised the sale of its transport division to France’s Alstom in early 2021, Bombardier had issued a 250 million euro bank guarantee to the French company to cover expenses related to these cases, the ethics board noted.

Also placed under observation was India’s Adani Ports, because of its business dealings with the junta in Myanmar, and South Korea’s Hyundai Glovis, because of its activities involving the beaching of boats in Pakistan and Bangladesh where they are broken up for scrap.

Finally, the fund also removed San Leon Energy from its blacklist, as the Irish oil company had ended its incriminating activities in Western Sahara.

As one of the world’s largest investors, the Norwegian wealth fund — known as the oil fund — is governed by ethical rules that prohibit it from investing in companies involved in serious human rights violations, those that manufacture “particularly inhumane” or nuclear weapons, as well as coal and tobacco products.

READ ALSO: Norway’s oil fund says its Russia assets are down 90 percent

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Norwegian government open to continued oil exploration

Norway's Oil and Energy Minister Terje Aasland says that, in the long term, in light of the current energy and security situation in Europe, there are increased opportunities related to oil exploration in the Barents Sea.

Norwegian government open to continued oil exploration

The Norwegian government has an agreement with the Socialist Left Party (SV) that the 26th licensing round for oil exploration will not be launched this year.

Still, Minister Aasland told the newspaper Dagens Næringsliv (DN) that he is open to issuing a call for new blocks next year.

“The Norwegian continental shelf is much more attractive now. The Norwegian continental shelf plays a much larger, more important role for European energy security (now) than ever before,” Aasland noted.

The war in Ukraine

Norway became the largest gas exporter to Europe after Russia cut off its gas supply.

“I believe that the opportunity in the Barents Sea in a long-term perspective has been strengthened through the situation that we are experiencing.

“The need for gas has not diminished with the situation that has unfolded with the war in Ukraine…

“I feel that the European Union (EU) wants Norway to develop its oil and gas activities further, (so that it can) be a stable and long-term supplier of gas,” Aasland added.