Tobacco producers excluded from the Government Pension Fund Global

The Ministry of Finance has excluded the American company Schweitzer-Mauduit International Inc. and the Chinese company Huabao International Holdings Limited from the investment universe of the Norwegian Government Pension Fund Global (GPFG) on account of their tobacco production. The decision is based on a recommendation from the Council on Ethics for the Fund.

The Council on Ethics gave this reccomendation to the Ministry of Finance on 24th January 2013. Schweitzer-Mauduit International Inc. and Huabao International Holdings are involved in the production of reconstituted tobacco leaf (RTL).[1]

According to the guidelines for observation and exclusion of companies from the Pension Fund Global, Section 2 (1) b), "The assets in the Fund shall not be invested in companies which themselves or through entities they control: [...] produce tobacco". As the Council on Ethics points out in its recommendation, the Ministry of Finance gave a further definition of this in the National Budget for 2010, section 5.4.4, stating that producers of products that contain tobacco shall be excluded from the GPFG. The Council underlines that RTL primarily is made from the tobacco plant and therefore must be regarded as a tobacco product. The two companies concerned state in their annual reports and investor presentations that they produce RTL. The Council on Ethics has based its recommendation on this information.

The Ministry of Finance has decided to exclude Schweitzer-Mauduit International Inc. and Huabao International Holdings Limited based on the recommendation from the Council on Ethics. In accordance with the guidelines, the decision to exclude is made public once the shares are sold.

Read more:

• The recommendation from the Council on Ethics
• Council on Ethics for the Government Pension Fund Global
• A list of all the companies that have been excluded from the Fund's investment universe

[1] RTL is made from remnants, dust and other by-products of the processing of tobacco leaves and from parts of the tobacco plant that cannot otherwise be used (stems, etc.). These are processed through various techniques into a product that is used in the manufacture of cigarettes. RTL can constitute up to 10–15 per cent of the tobacco content of cigarettes.