Norway's Largest Pension Fund Ditches Saudi Aramco and 11 Other Gulf Firms Over Climate and Human Rights Concerns

In a significant move, Norway's largest pension fund, KLP, managing a substantial $70 billion, announced on Thursday its decision to divest from Saudi Aramco and 11 other Gulf companies. The exclusion, amounting to $15 million, was motivated by concerns related to climate action and human rights.

The telecom and real estate sectors in Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates witnessed the removal of 11 companies due to "unacceptably high human rights violations’ risks." KLP specifically blacklisted Saudi Aramco, citing its ties to the Saudi state and non-compliance with expectations regarding climate and energy transition plans.

Kiran Aziz, Head of Responsible Investment at KLP, stated, "The overall rationale for these exclusions is that Gulf states remain characterized by authoritarian systems of government that restrict freedom of expression and political rights, including of critics and human rights activists."

Aziz highlighted that telecom companies were excluded due to concerns over systematic surveillance and censorship linked to the development of advanced technology, including AI. In the real estate sector, insufficient reforms and ongoing discrimination against African and Asian migrant workers contributed to the exclusions.

Saudi Aramco, with 90% ownership by Saudi Arabia, faced exclusion primarily because of its lack of an energy transition plan. KLP emphasized that the company's climate policy and lobbying efforts opposed the phasing out of oil and gas as a climate mitigation measure.

This move follows KLP's divestment from Russian companies in 2022 after Russia's invasion of Ukraine. In 2021, the fund had also excluded companies associated with Israeli settlements in the occupied West Bank, including telecom equipment giant Motorola.