Norway fund’s BAE Systems ‘ban’ is hypocritical

A Eurofighter Typhoon fighter jet, produced by BAE Systems Plc, stands on display in front of the company's chalet prior to the opening of the Farnborough International Airshow in Farnborough, U.K., on Sunday, July 13, 2014. The Farnborough International Air Show, which runs July 14-20, is this year's biggest forum for aircraft introductions and sales. Photographer: Simon Dawson/Bloomberg

Norway’s pension fund’s blacklisting of BAE Systems, along with eight other companies, is counterproductive, and a threat to the Scandinavian nation’s own sovereignty, writes Alec Marsh

News that Norway’s $1.1 trillion sovereign wealth fund has sold out of BAE Systems and blacklisted it in a move towards becoming an ethical investor exposes the country to charges of hypocrisy.

As founding member of Nato, not only are Norway’s armed forces counted among the British defence giant’s customer base, but who or rather what do the Norwegians suppose will come running to their rescue in time of need?

Were the worst-case defence scenario to happen, and Norway (population 5.2 million) to experience a security breach from a bellicose neighbour — for instance, Russia — how do the citizens of Oslo presume that their sovereignty would be recovered? Thanks to a BAE Systems-built jet fighter, missile, tank or warship in the hands of its Nato allies, of course (under article five of the 1949 treaty no less).

Of course, the Norwegians do not apparently object to that conventional part of the company’s business. Rather, they have decided to blackball BAE Systems because of work they say it conducts in the ‘production of key components for nuclear weapons’ for the US government, according to the statement from Norges Bank, which manages the fund on behalf of the Norwegian government. It noted that as of 2015, the fund owned 1.76 per cent of the company.

Such principled opposition is all very well and good, and — who knows — Norwegians, already deemed to be among the happiest folk in the world, may well sleep even easier at night knowing that they’re not supporting such grotesque weapons, but the fact remains that it’s these very same weapons, held by Norway’s allies in Nato, that are the ultimate guardians of the Nordic country’s security. Indeed, nuclear weapons are the ‘core component’ of its deterrence and defence, according to the alliance.

The broader point is that ethical owners are precisely what we need for companies such as BAE Systems.

The good news is that in and of itself, the decision by Norway does not appear to have had an impact. (Indeed, BAE System’s share price was unaffected.) But there are fears that where the ethical Norwegians go, others will follow and there’s no doubting the rising importance of ethical investing. Whether this poses a serious long-term challenge to defence companies such as BAE Systems remains to be seen. What’s clear, though, is much as we (and Donald Trump) may have sincere regard for our friends and neighbours in Norway, their position on nuclear weapons is wrong-headed. Each year, don’t forget, the Norwegians kindly present Britain with a Christmas tree in thanks for military help in the Second World War. Frankly, they’d be better off backing one of Nato’s key military suppliers.