Norway's wealth fund reviews stakes in Hansae Yes24, subsidiary (updated)

Hansae Co

29/06/2017 11:11

* Fund criticises working conditions at Hansae Co 
    * Companies say taking steps to improve conditions 
    * Fund barred from investing in firms breaking ethics code 
 
 (Adds comments from companies and the fund, bullets, 
background) 
    OSLO, June 29 (Reuters) - Norway's $965 billion sovereign 
wealth fund has put under observation South Korea's Hansae Yes24 
Holdings  016450.KS  and its garment manufacturing unit Hansae 
 105630.KS  over possible human rights violations, the central 
bank said on Thursday. 
    Under the fund's operating guidelines, it could sell 
holdings in firms that do not meet its ethnical code. 
    At the end of 2016, the fund had a 1.29 percent stake worth 
$11 million in Hansae Co Ltd, which manufactures garments in 
Vietnam and several other countries. It also owned a 1.52 
percent stake worth $5.2 million in its parent Hansae Yes24. 
    "The companies are placed under observation because of an 
unacceptable risk that the companies contribute to, or are 
responsible for, systematic violations of human rights," the 
board of the central bank wrote in a statement. 
    A spokesman for the two firms told Reuters they had 
conducted an internal investigation of working conditions at the 
Vietnam plant this year that resulted in efforts to improve 
working conditions and related issues. 
    The Norwegian fund is a managed by a unit of the central 
bank. The fund's ethics watchdog, the Council on Ethics, makes 
recommendations to the central bank's executive board, which 
decides whether to act.  
    The council recommended a prompt exclusion of the two firms 
from the portfolio, but the board of the central bank decided to 
put the stakes under observation. 
    "The Council on Ethics highlights that the companies have 
taken measures to improve the working conditions. The Executive 
Board believes that these measures provide sufficient grounds to 
observe the development in the future," the bank said. 
    Norway's sovereign wealth fund holds stakes in almost 9,000 
companies in 77 countries. 
    Ethics guidelines prevent the fund investing in makers of 
nuclear weapons, cluster bombs and tobacco, among other things. 
The guidelines also bar investment in firms deemed to be 
violating human rights or damaging the environment. 
 
 (Reporting by Terje Solsvik in Oslo, additional reporting by 
Heekyong Yang in Seoul; Editing by Gwladys Fouche) 
 ((terje.solsvik@thomsonreuters.com; +47 918 666 70; Reuters 
Messaging: terje.solsvik.thomsonreuters.com@reuters.net)) 
 
Keywords: NORWAY SWF/SOUTHKOREA