The manager of Norway’s NOK11.2trn (€1.1trn) sovereign wealth fund has added three companies to its blacklist, all on human rights grounds – stocks in which it had a total NOK130.1m (€12.8m) invested at the end of December 2020.
Norges Bank Investment Management (NBIM), which runs the Government Pension Fund Global (GPFG), said it had excluded Honeys Holdings, Shapir Engineering and Industry and Mivne Real Estate following recommendations from the fund’s Council on Ethics at the end of last year.
According to the council, investigations into working conditions at two Myanmar factories owned by Japanese clothing firm Honeys Holdings found numerous labour rights violations, including harassment of workers and serious health and safety rules violations.
As for Shapir Engineering and Industry and Mivne Real Estate, the advisory body said the Israeli companies had been involved in building and letting property, respectively, in Israeli settlements in the West Bank, contributing “to the continuation of an illegal state”.
The GPFG had NOK19.2m invested in Honeys Holdings at the end of December 2020, NOK9m in Shapir Engineering and Industry and NOK102.1m in Mivne Real Estate, according to information on NBIM’s website.
NBIM blacklisted other textile companies back in September, also because of the way factory workers were treated.
Taiwan-headquartered Formosa Chemicals & Fibre and its unit Formosa Taffeta Co and Indian textiles firm Page Industries were excluded because of alleged human rights violations related to textile production in Vietnam and India, respectively.
Head of AP Funds’ ethical council warns climate action must happen by 2030
John Howchin, the secretary-general of the Swedish AP Funds’ Council on Ethics, said institutional investors’ best contribution to the carbon transition was their power to bring industry players together, and warned that concrete action on climate needed to happen as soon as this decade.
Speaking at the online Industry Transition Summit on Tuesday, he said: “During this decade we need to see tangible outcomes. There are a lot of great commitments for 2045, 2050 and what have you, but it needs to happen during this decade.”
Howchin, who is also a member of the advisory board of the Transition Pathway Initiative, said all the positive energy and good thinking that there was within industry, within politics and wider society needed to be harnessed.
“From the institutional investment side, the best thing we have is the convening power, and we plan to use that convening power to pull out those roadmaps in this ecosystem that we need,” he said.
There were some very good solutions to the climate problem out there, he said, but added that they needed funding. “We’re looking at transition bonds,” he said. “The institutional investment community is prepared to take part in this, and obviously we help the companies that we have in the portfolio,” Howchin said.
“But there’s going to be a lot of substitution; not all of these hard-to-break sectors will look the same in 10 years time and we need to acknowledge that,” he added.
Quality of company climate scenario reporting too poor, says AP7 chief
Richard Grottheim, chief executive officer of Swedish state-run pension fund AP7, spoke out yesterday about problems with green corporate reporting, alongside a study produced for the SEK722.5bn (€71bn) fund which showed only four of the world’s 14 biggest oil and gas companies report in accordance with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.
In a column in Swedish daily DI, Grottheim said the solution to the reporting problems he saw – the ever-greater burden on companies, and the difficulty investors had in using the sub-standard data they produced – lay in greater coordination, but also higher quality data.
The reporting initiative on firms’ projected development under different climate scenarios was an excellent concept, he said, but had got ”stuck halfway”.
“The companies feel that reporting has become a burden, while the investors find it difficult to use the information because it is too superficial, general, and difficult to compare,” the CEO said.
Grottheim said an analysis his pension fund had commissioned from UK-based Trove Research on how 14 of the largest oil companies reported on climate scenarios showed not only that just four of the firms reported according to TCFD recommendations, but also that more than a third of them did not report on climate scenarios at all.
“However, a bigger problem is that the climate scenarios differ greatly, so have limited value when basic assumptions are not reported,” he said.
Key assumptions had to be identified for each sector so that the scenarios could be compared and assessed, Grottheim argued, adding that the scenarios also needed to extend as far as 2050 if they were to give a useful description of future prospects.
“Companies such as Chevron and Conoco publish, for example, two-degree scenarios, but still draw the conclusion that demand for oil will remain robust until at least 2040, so a transition to carbon-efficient energy sources is not needed,” he said.
Looking for IPE’s latest magazine? Read the digital edition here.
- AP funds
- Climate change
- climate scenario analysis
- Corporate governance
- corporate reporting
- Council on Ethics
- human rights
- Investor Strategy
- labour rights
- Nordic Region
- Pension System
- Taskforce on Climate-related Financial Disclosures (TCFD)
- Transition Pathway Initiative