According to the Ministry of Finance – Norway, “The Ministry of Finance has decided to exclude 17 companies that produce tobacco from the Government Pension Fund Global (GPFG), based on a recommendation from the Fund’s Council on Ethics. The divestment of shares in these companies has now been completed.
“When the Graver Committee proposed the current ethical guidelines, there was debate on whether to exclude tobacco producers from the Fund. Under some doubt, it was decided that tobacco should not be excluded. After the Graver Committee submitted its recommendation, there have been international and national developments through the entry into force of the WHO Framework Convention on Tobacco Control and the tightening of the Norwegian Tobacco Act. We have taken these changes on board and believe – amongst others in light of the consultative input in connection with the evaluation of the ethical guidelines – that it is timely to exclude tobacco from the Fund. It is important that the ethical guidelines reflect at all times what can be considered to be commonly held values of the owners of the Fund,” says Minister of Finance Sigbjørn Johnsen.
In Report No. 20 to the Storting on the Management of the GPFG, the Ministry proposed excluding tobacco producers from the Fund. The move was supported by the Storting. The specific delimitation of the tobacco criterion was described in the National Budget for 2010. The recommendation was made in line with this. On the basis of the index providers’ industrial classification of companies in the GPFG’s equity and fixed-income portfolio (FTSE All Cap and Barclays Global Aggregate) and information on the companies’ own websites, the Council on Ethics has identified 17 companies engaged in activities affected by the criterion for exclusion of tobacco producers. Since the companies themselves state that they are primarily engaged in tobacco production, the Council on Ethics has not found it necessary to contact the companies to confirm this.
The excluded companies are: Alliance One International Inc., Altria Group Inc., British American Tobacco BHD, British American Tobacco Plc., Gudang Garam tbk pt., Imperial Tobacco Group Plc., ITC Ltd., Japan Tobacco Inc., KT&G Corp, Lorillard Inc., Philip Morris International Inc., Philip Morris Cr AS., Reynolds American Inc., Souza Cruz SA, Swedish Match AB, Universal Corp VA and Vector Group Ltd.
In drafting a new criterion on screening tobacco producers, the Ministry of Finance placed particular emphasis on finding a delimitation that fits well with the structure of the current ethical guidelines, including existing rules for negative screening of certain weapons manufacturers.
On this basis, a rule has been adopted that in principle will exclude all production of tobacco, regardless of the percentage of business represented by tobacco production. This means that it will be possible to exclude a few more companies than those listed under the industrial classification “tobacco” by the index providers. The new screening criterion for tobacco production is limited to tobacco products and does not include associated products such as filters and flavour additives.
The Council on Ethics has given notice that it may return with further recommendations to exclude companies that produce tobacco.”
read more: Ministry of Finance – Norway
In December 2016, Crown Prince Maha Vajiralongkorn became King of Thailand, succeeding his father King Bhumibol Adulyadej who passed away in October 2016. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]
by Michael Maduell
In my frequent and vast interactions with chief executives of small-to-large asset management firms, I’ve witnessed a number of traits that successful firms – meaning growing and retaining assets under management plus getting real respect in the industry – are able to properly execute. Besides generating amazing returns and matching the right solutions for the asset owner clients, CEOs need to be advancing their firms. Of course, quality client service should remain front of mind for fund management firms. In this short piece, I will focus on three traits that successful fund managers tend to possess.
1. Abundant Charisma from Founders
What is memorable and what will stick in one’s mind? A cadre of asset managers possess charismatic chief executives. BlackRock’s Larry Fink, DoubleLine’s Gundlach and Rajiv Jain of GQG Partners are some prime examples that come to mind. DoubleLine is a relatively new player compared to BlackRock and already amassed over US$ 100 billion in assets. Being a founder of the fund management company also helps, as CEO hires (often bringing a book-of-business contacts) may tend to look elsewhere unless generously compensated.
Having an effective cheerleader CEO is essential in nurturing and growing a sustainable franchise in a monochromatic industry of imitators. Too often, CEOs of some asset management firms are pure “salespeople” – too pushy or fake, or a highly-bright number-cruncher with low or nil emotional intelligence.
2. Not Drinking Too Much of One’s Own Kool-Aid
“We are a data-driven, technology, ESG-focused, smart-beta, solutions-led provider of services.” Hey, 2018 did I get that right?
Yes, your stuff does not stink. Like a broken clock, many CEOs rely on the flavor of the year or grappling a playbook, beating the idea over the heads of pensions and sovereign fund clients and prospects. In the long-run – meaning maintaining assets over a lengthy period of time – I find it’s better to be more objective when discussing potential strategies. I’m talking about a healthy dose of informative marketing. However, being overly-transparent or even talking yourself out of the strategy is not what I am directly advocating. It is important to be realistic about the strategy or thematic idea, as the attractiveness of these concepts shift over time.
3. Stirring up Controversy – Strategically
Shaking the tree and stirring the pot – this trait can surely backfire if not properly executed. Being the brightest crayon in the box can work. Even virtue signaling – latching onto a social current – can work in some instances, but CEOs that can deliver impactful counter-culture statements that shock the conscience tend to draw attention – and capital. This might not be the best example; however, upon the ascendancy of Abraaj Group, the firm’s founder, Arif Naqvi, often commented to not describe countries like China, India, etc. as emerging markets but as global growth markets – then creating a comparison to Wall Street and its risks. Abraaj was able to raise a ton of capital, before its downfall stemming from early 2018.
Boards need to diligently examine the CEOs they select. Does the firm want to grow or hold the line for the planned dividend? My belief is that if you are not growing, you are decaying, as the world moves faster and faster.
The views in this article are expressed by Michael Maduell.
Michael Maduell is President of SWFI.
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