Question 3

Question 1

What is the main focus of Kreander and McPhail’s (2019) study?

Answer 1

The study examines how the Norwegian Government Pension Fund Global (GPFG) incorporates human rights into its investment practices and negotiates exclusion decisions, focusing on institutional mechanisms, complexities, and outcomes.

Question 2

What are the two research questions addressed in the paper?

Answer 2

How did the Norwegian Government incorporate its responsibility for human rights into the GPFG?
How were human rights issues negotiated when exclusion was considered?

Question 3

What theoretical approach does the paper use?

Answer 3

Neo-institutional theory, focusing on institutional logics and institutional complexity to explain field changes and decision-making processes.

Question 4

What are institutional logics, and how are they relevant to the GPFG?

Answer 4

Institutional logics are shared beliefs and practices that guide decision-making. The GPFG is influenced by three logics:

Finance Logic (NBIM): Focuses on maximizing financial returns.
Human Rights Logic (Council on Ethics): Prioritizes ethical considerations.
Political Logic (Ministry of Finance): Balances international relations and domestic diplomacy.

Question 5

What is institutional complexity, and how does it relate to the GPFG?

Answer 5

Institutional complexity arises when multiple logics coexist, creating tensions and conflicts. In the GPFG, the introduction of human rights logic clashed with existing financial and political logics, influencing decision-making.

Question 6

What role does the Council on Ethics play in the GPFG?

Answer 6

The Council monitors companies in the GPFG’s portfolio for human rights violations, provides detailed reports, and recommends exclusions based on ethical standards.

Question 7

How does NBIM approach human rights in its investment practices?

Answer 7

NBIM, driven by finance logic, initially focused on children’s rights. After adopting the UN Guiding Principles on Business and Human Rights (UNGPs) in 2011, it began addressing broader human rights issues, engaging with companies, and divesting in some cases.

Question 8

What role does the Ministry of Finance play?

Answer 8

The Ministry owns the GPFG, decides on exclusion recommendations, and operates within a political logic, often balancing ethical concerns with international relations and economic interests.

Question 9

Give an example of a case where human rights logic was dominant.

Answer 9

Walmart: The Council on Ethics recommended exclusion in 2005 due to labor rights violations. The Ministry accepted this recommendation, resulting in exclusion and influencing other Scandinavian funds.

Question 10

Provide an example of alignment between financial and human rights logics.

Answer 10

Monsanto: Instead of exclusion, the Ministry approved engagement by NBIM to address child labor issues. This alignment led to improved corporate practices and reduced violations.

Question 11

Describe a case where political and financial logics overrode human rights logic.

Answer 11

PetroChina: Despite evidence of human rights violations linked to its parent company, the Ministry rejected exclusion in 2011, citing insufficient evidence and prioritizing trade relations with China.

Question 12

What are the broader implications of integrating human rights into SWFs, according to the study?

Answer 12

The study highlights that integrating human rights into SWFs creates institutional complexity but also shows that accountability mechanisms can positively influence corporate behavior and set industry standards.

Question 13

How did the decision-making process change in 2015?

Answer 13

Exclusion decisions were shifted from the Ministry of Finance to the Board of the Bank of Norway, reinforcing the dominance of finance logic in the GPFG.

Question 14

How does the GPFG demonstrate that SWFs can be held accountable for human rights?

Answer 14

The GPFG uses mechanisms like the Council on Ethics and divestment policies to address human rights violations, showing that accountability is theoretically possible.

Question 15

What challenges limit SWF accountability for human rights issues?

Answer 15

Key challenges include:

The dominance of finance logic.
Political pressures influencing decisions.
Limited data and frameworks for addressing human rights.
Conflicting priorities among institutional logics.

Question 16

What are the four types of responses to exclusion recommendations identified in the study?

Answer 16

Accepting human rights logic (e.g., Walmart exclusion).
Alignment of logics (e.g., Monsanto engagement).
Dissonance leading to rejection (e.g., PetroChina exclusion refusal).
Dissonance leading to avoidance (e.g., Myanmar pipeline cases).

Question 17

What positive outcomes were observed from GPFG’s ethical practices?

Answer 17

The GPFG influenced corporate practices through engagement and exclusions, reduced human rights violations in some cases (e.g., Monsanto), and inspired other institutional investors to adopt ethical practices.

Question 18

Does the study agree with the statement that “SWFs cannot be held accountable for human rights issues”?

Answer 18

No. The study argues that SWFs can be held accountable through robust institutional mechanisms, though implementation is inconsistent and often limited by financial and political pressures.

Question 19

What conditions are necessary for SWFs to be effectively accountable for human rights?

Answer 19

Strong accountability frameworks, alignment of institutional logics, effective monitoring mechanisms, and sustained political commitment are necessary for SWFs to meaningfully address human rights issues.