Beyond the World news headlines
Fighter jet deal strains Norway’s ethics drive
Norway sees itself as a champion of ethical investment, applying pressure on corporations in worthy causes ranging from production of indiscriminately lethal weapons to ending child labour and increasing environmental responsibility.
If companies fail to meet its strict standards, they are blacklisted from Norway’s $300 billion oil fund. So far 27 firms have been banned from what many admirers call the most transparent sovereign wealth fund in the world.
Norway is rightly proud of its efforts to make companies more accountable to broad-based guidelines defined in documents on ethics and corporate governance from the United Nations and the OECD club of the world’s most developed countries.
But its decision to pick Lockheed Martin — a company the oil fund had blacklisted in 2005 — to supply 48 fighter jets in Norway’s biggest ever military contract shows the limits of its ethics drive.
After all, if Norway chose not to own Lockheed Martin shares on ethical grounds, because the U.S. group makes cluster bomb components, isn’t it hypocritical to hand the defence contractor a deal seen worth $20 billion?
Government officials like to publicly discuss their ethical approach to financial market capitalism, even though the state itself is not obliged to follow the rules set for the oil fund, which only invests in foreign stocks and bonds.
Norwegian government officials do not see any discrepancy, saying the Lockheed Martin offer was better than one from a rival Swedish contractor, which is not blacklisted. They have said that if the government had to comply with the oil fund’s rules, its hands would often be tied in defence contracts.
Balancing ethics and business is never easy, but this time there is little doubt over which has won out in Norway.