Norway SWF drops India, China firms on Myanmar arms deals

Norges Bank Investment Management continues to purge companies believed to be doing business with Myanmar's military government from its portfolio.
Norway SWF drops India, China firms on Myanmar arms deals

Norway’s $1.16 trillion sovereign wealth fund (SWF), the Government Pension Fund Global, announced it has excluded China's AviChina and India's Bharat Electronics (BEL) from its portfolio as of January 24.

The two companies have been excluded due to the “unacceptable risk that the companies are selling weapons to a state that uses these weapons in ways that constitute serious and systematic breaches of the international rules on the conduct of hostilities,” according to Norges Bank Investment Management (NBIM), which manages the fund.

The wealth fund places great emphasis on being a responsible investor in its recently issued strategy plan for 2023-2025. 

Diego Lopez,
Global SWF

“NBIM maintains a very active and hands on stewardship policy based on divestment, rather than engagement,” Diego Lopez, managing director at Global SWF told AsianInvestor.

ESG related concerns have led the giant SWF to drop large and well known companies such as Airbus, BAE Systems, Korea's Posco and Brazil's Vale in recent years.

“Very few asset owners maintain an active list of exclusions and it has been argued that engagement can produce better effects than divestment in the long run—one of the main proponents has been Japan’s GPIF," said Lopez.


AviChina is a Chinese company that develops and sells aircraft and aviation products. In December 2021, several light K-8 combat aircrafts were delivered to the armed forces in Myanmar, which NBIM’s ethics council believes have been produced by a company that AviChina controls.

BEL is an Indian producer of aviation and defence electronics. In July 2021, BEL delivered a remote-controlled weapons station to Myanmar. This weapons station has been developed to remotely control weapons from inside an armoured vehicle. The same vehicles have reportedly been used in attacks on civilians in Myanmar, the council said.

“The exclusion won’t affect sentiment on the [BEL] stock in India,” said Ambareesh Baliga, a Mumbai-based independent stock market expert.

“It will be interesting to know if the Norwegian fund has already sold the stock or has yet to sell its shares,” he said. "That could affect investors currently invested in the stock."

The fund owned 0.37 percent of the Chinese group and 0.32 percent of the Indian company at the end of 2021, according to the most recent figures available.

The wealth fund did not respond to an AsianInvestor query on whether the fund had sold its stake already in BEL and AviChina at the time of publication.

Myanmar has been in turmoil since the army overthrew an elected government in February 2021 and used heavy-handed force to suppress protests against its rule. Both before and after the coup,  armed forces have perpetrated extremely serious abuses against its civilian population, using combat aircrafts among other offences, according to several international institutions.


NBIM has taken the position that anyone selling weapons to Myanmar since 2018 must be aware that they could be used in violation of international law, as the abuses of the controlling military junta are well understood in the public domain.

After both AviChina and BEL did not respond to queries of the fund’s ethics council, a recommendation was made to NBIM on August 23, 2022, to divest from the two companies for selling military equipment to the armed forces in Myanmar.

BEL did not respond to AsianInvestor queries on its reaction to the exclusion.

Also read: Norway’s SWF eyes even higher levels of transparency

The wealth fund deals with responsible investment and ownership at three levels:  at the market level to elevate global standards for all companies; at the portfolio level to monitor environment, social and governance information and integrate this into fund management; and at the company level to promote good governance and sustainable business practices.


The SWF has regularly pruned its investment porfolio of companies deemed to be unsuitable when assessed against prevailing environemental, social and governance trends.

The Norwegian SWF divested from Thai national energy company PTT, and its PTT Oil and Retail Business unit (PTTOR) in December 2022. 

In this instance, the fund's ethics council said the two Thai firms' partnerships with Myanmar state-owned companies and their activities in the country provide the armed forces with “substantial revenue streams that can finance military operations and abuses.”

NBIM said the companies presented an "unacceptable risk” that they contribute to “serious violations of individuals' rights in situations of war or conflict.”

In September, GPFG excluded nine entities for producing tobacco and cannabis for “drugs” and severe environmental damage.

Indonesia’s Hanjaya Mandala Sampoerna was one of the entities excluded for its involvement in production of tobacco or tobacco products.

NBIM's ethics council also recommended the exclusion of India state-owned hydropower company NHPC and Korean zinc smelter Young Poong Corp  for contributing to severe environmental damage.

This story has been updated with new comments in the 4th and 6th paragraphs.

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