Word: labor
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...ecological responsibility, the fund insists, is key to safeguarding its own financial returns. Take children's rights. If children are denied schooling and forced to earn a living prematurely, they grow up to be less productive workers with fewer skills. While a current employer may benefit from their cheap labor, future employers will lose out. For Norway's fund, it's a concern - both ethically and economically - that "the action of one company may influence the profitability of another," says Yngve Slyngstad, CEO of Norges Bank Investment Management, the part of Norway's central bank that runs the fund...
...Slyngstad's team of 188, which includes 11 people focused solely on corporate governance issues, consciously leverages the fund's rights as a major shareholder. Last year, the fund contacted several companies in its portfolio with operations in India's agricultural sector, urging better controls on child labor. Similarly, talks are ongoing with firms in Brazil's mining and steel industries. The fund has also sent to the boards of about 30 firms a document it published with the help of UNICEF and Save the Children, setting out its expectations regarding children's rights...
...instance, it sold off stakes in Britain's BAE and Boeing for their part in the manufacture of nuclear weapons. The remaining firms put the fund at risk of contributing to serious breaches of human rights, or severe environmental damage. Citing "systematic" violations of human and labor rights in its business and its supplier chain, the Ministry excluded Wal-Mart from the fund in May 2006. (The retailer said the claims were based on inaccurate and outdated information.) Such exclusions are "in one sense, an admission of defeat of the corporate governance effort," says Slyngstad. "When you're no longer...
...ways that you would not be comfortable with?" asks Slyngstad. "Yes, of course." But his team, which is spread between Oslo, London, Shanghai and New York City, tries to use its heft strategically - for example, to pressure firms in a sector like Brazilian mining, in which exploitation of child labor persists. Nor will the environmentally unfriendly origins of the fund's cash prevent it from pressing for better ecological standards. Last year, for instance, the fund voted in favor of a shareholder push for U.S. oil major ExxonMobil to adopt emission-reduction goals. Hardly the actions of a rapacious villain...
...Western multinationals have been trying for years, with mixed success, to stamp out such scenes. In the 1990s, a series of scandals showed the damage that could be wrought if a brand was linked to shoddy labor practices overseas. For example, in 1996, it was alleged that a Wal-Mart clothes label endorsed by American TV personality Kathie Lee Gifford had been produced using child labor in Honduran sweatshops. Gifford sobbed on air, saying she hadn't been aware of conditions at the factory. For corporations and consumers alike, it brought home the realization that globalized production comes...