A (possibly) decent ethical investment decision

Rio Tinto, one of Britain\’s most blue-chip corporate names, has been thrown out of a sovereign wealth fund\’s investment portfolio for potentially subjecting it to "grossly unethical conduct" through its involvement in the world\’s biggest gold mine.

Norway\’s finance minister, Kirsten Halvorsen, said yesterday that it was selling off the £500m stake held in Rio Tinto by its Government Pension Fund-Global, commonly known as the "oil fund".

They\’re flogging off the stake because of an involvement in a mine in Indonesia.

OK, fair enough, their money etc.

It\’s just that I don\’t really buy into the super-cycle theory of commodity prices. If I were dabbling in the market (which I\’m not) I\’d be getting out of mining stocks myself anyway. Things which can\’t go on for ever, like ever rising commodity prices, don\’t go on for ever.

So we might actually be seeing an ethical investment decision which makes good sense for entirely non-ethical reasons.

4 thoughts on “A (possibly) decent ethical investment decision”

  1. Well it’s probably not a great plan to put your oil fund money into commodity stocks – why not leave it in the ground? I suppose it diversifies within commodities, but it increases risks.

  2. They’re flogging off the stake because of an involvement in a mine in Indonesia.

    I wonder how the ethics of the Shtokman project, of which StatoilHydro (i.e. the Norwegian government) is a major partner, will play out.

  3. There is also the political risk issue. Sky high commodity prices have led to an increase in expropriation of the assets or the profits of many oil and other companies. (See windfall tax).

    My only question is why tell the market first?

  4. It didn’t really – the ethics board proposed the sale in February or something like that and the sale was announced today. But in any case how would you sell £500m of shares in secret?

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