KLP re-admits Yahoo, drops companies over Uzbek cotton
Norwegian pension provider KLP has divested four companies over “unacceptable” risks of human rights violations but re-admitted internet company Yahoo nearly a decade after exclusion.
As part of its twice-yearly review of holdings, the local authority pension provider said it decided to exclude South Korean steel-maker POSCO, its subsidiary Daewoo International Corporation and Singapore-listed supply chain manager Olam International.
All three companies were excluded due to their use of cotton sourced from Uzbekistan, which the provider said increased the risk of its contributing to human rights and labour law violations.
In a statement, it said: “The use of child labour to harvest cotton has long been widespread in Uzbekistan.
“In response to international pressure, the country has reduced the scale of child labour but has done so by increasing the use of adult forced labour.”
KLP said all three companies acknowledged they were aware of the risks of Uzbek cotton but gave no indication that they would change their sourcing.
Jeanett Bergan, head of responsible investment at KLP Kapitalforvaltning, said the companies should seek to introduce systems that “uncover and prevent” child and forced labour within supply chains.
“Where violations of human and labour rights have been identified, KLP expects companies to respond by implementing reasonable measures to stop such abuses from continuing,” she said.
The provider also excluded Canadian agricultural retailer Agrium over its use of phosphates from Morocco, and announced that Yahoo would be re-admitted to its investment universe after a 2005 exclusion triggered by the company handing over data to the Chinese authorities that led to the arrest – and jailing – of a journalist.
Of the decision to once again invest in Yahoo, Bergen said: “Yahoo admits the incident that formed the original grounds for exclusion was worthy of criticism, and has introduced a number of measures to strengthen user privacy.”
She said KLP still felt there was a need to engage with the internet giant over freedom of expression but that the exclusion was no longer required.
KLP was not the only Nordic investor with concerns over Yahoo’s behaviour, with the Swedish AP funds engaging with the company over the incident in China.
The decision to divest the four companies comes weeks after the provider divested several dozen fossil fuel companies and re-allocated capital to renewable energy.