28th Jun 2016 16:38
LONDON (Alliance News) - The central bank of Norway Tuesday said it has excluded Cairn Energy PLC from its investment portfolio because of "particularly serious violations of fundamental ethical norms".
Norges Bank said it has excluded Cairn alongside American firm Kosmos Energy Ltd from the portfolio of a national fund that is saving for the future generations of Norway once the oil runs out.
"Norges Bank has decided to exclude the companies Cairn Energy PLC and Kosmos Energy Ltd from the investment universe of the Government Pension Fund Global," said the bank. "The companies are excluded based on an assessment of the risk of particularly serious violations of fundamental ethical norms."
The exclusion follows on from a publication in early March that revealed San Leon Energy PLC had become the latest London-listed company to be excluded for also violating ethical norms.
The fund's portfolio is primarily made up of equity investments, followed by fixed-income investments and a small proportion of real estate and has grown in size significantly over the years, boasting a current market value equal to almost GBP623.00 billion.
The fund was one of the largest shareholders in Cairn with a stake of around 2.9% at the end of 2015.
Norges Bank said the executive board made the decision to exclude the two firms based on recommendations from the Council on Ethics, which is appointed by the Minister of Finance, Siv Jensen.
The Council said Cairn and Kosmos were contributing to "serious violations of fundamental ethical norms through their hydrocarbon exploration offshore Western Sahara on behalf of Moroccan authorities."
Cairn and Kosmos are partners in the Cap Boudour maritime contract area offshore Morocco, but the asset has been idle since early in 2015 when the CB-1 well failed to make a commercial discovery.
Kosmos is the operator with an 80% stake whilst Cairn holds a 20% stake.
"The executive board has not conducted an independent assessment of all aspects of the recommendation, but is satisfied that the exclusion criteria have been fulfilled," said the bank.
"Before deciding to exclude a company, Norges Bank shall consider whether the use of other measures, including the exercise of ownership rights, may be better suited. The executive board concludes that it is not appropriate to use other measures in these cases," the bank added.
Many London-listed companies have been excluded by Norges Bank, including some large players.
Cairn shares closed up 0.2% to 188.0 pence per share on Tuesday.
By Joshua Warner; [email protected]; @JoshAlliance
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