The Council on Ethics recommends that Yunnan Baiyao Group Co Ltd be excluded from investment by the Government Pension Fund Global due to an unacceptable risk that the company is contributing to severe environmental damage.

Yunnan Baiyao is a Chinese pharmaceutical company which produces ingredients used in Traditional Chinese Medicine (TCM). The company uses and sells body parts from pangolins which is a globally endangered species. The use of threatened animal species in TCM products may contribute to illegal wildlife trade and increases the risk to of these species becoming extinct. There is no information concerning the quantity of body parts of threatened species that the company uses, where the animal parts originate from, what stockpiles exist and how these are replenished. When such data is not made available, the Council on Ethics concludes that the company contributes to severe environmental damage. The company has not disclosed any specific plans to replace the ingredients based on threatened species with other ingredients.

After the Council had submitted its recommendation to Norges Bank, the company informed the Council that that it had purchased pangolin scales legally from official stockpiles. In previous cases, the Council on Ethics has found that the use of body parts form endangered species entails an unacceptable risk of contributing to severe environmental harm, even if these are said to originate from legal stockpiles. The Council on Ethics maintained its recommendation, and informed Norges Bank about this 25 June 2021.

The Council submitted its recommendation 27 May 2021. Norges Bank published its decision to exclude the company on 21 December 2021.

Please find the Council’s recommendation here.

Please find the Council’s letter to Norges Bank here.