Norway’s Largest Pension Firm Divests from 16 West Bank-Linked Firms

Kommunal Landspensjonskasse (KLP), Norway’s largest pension fund company with $93.2 billion in assets, has divested from 16 companies—including telecom equipment giant Motorola—over their links to Israeli settlements in the West Bank.

“There is an unacceptable risk that the excluded companies are contributing to the abuse of human rights in situations of war and conflict through their links with the Israeli settlements in the occupied West Bank,” KLP said.

The pension fund said the Israeli settlements in the West Bank violate international law, including the Fourth Geneva Convention, which it said considers it a war crime. According to KLP’s guidelines for responsible investment, the pension fund “shall conduct due diligence in its investments and can decide due diligence-based divestments from companies if there is an unacceptable risk of companies being complicit in human rights abuses.”

KLP cited the UN’s Guiding Principles on Business and Human Rights, which say companies have a duty to respect and protect human rights in all the countries in which they operate, irrespective of whether the state itself upholds these rights.

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“The situation in the West Bank has worsened in recent months, and there is an ongoing danger to life and health, as well as human rights abuses,” KLP said. “The Israeli settlements have a negative impact on the Palestinians’ living conditions, since they result in the loss of property and livelihoods, restricted access to services and threats to their physical safety.”

KLP said that because of this, support for the maintenance of the settlements “constitutes an unacceptable and serious risk of continued infringement of the human rights of the Palestinians living in the territory and a weakening of their living conditions.”

The 16 firms are construction and engineering sector companies Alstom SA, Ashtrom Group Ltd., and Electra Ltd.; banks Bank Hapoalim, Bank Leumi Le-Israel, First International Bank of Israel, Israel Discount Bank, and Mizrahi Tefahot Bank; telecommunications companies Altice Europe, Bezeq the Israeli Telecom Corp., Cellcom Israel Ltd., and Partner Communications; integrated oil and gas company Delek Group; oil and gas refining firm Paz Oil Company Ltd.; renewable energy firm Energix Renewable Energies; and Motorola Solutions Inc.

KLP said it has contacted all the companies in order to establish a dialogue, but that the majority of them failed to respond. It said the few companies that replied did so at an overarching level and only referred to general guidelines without discussing the specific questions.

It said only Alstom has been willing to meet with the pension fund. However, according to KLP, Alstom denies it contributes to the violation of international law through its activities in the occupied territory. It also said Alstom referred to a French court ruling in its favor regarding its involvement in a West Bank project, but KLP notes that the case was thrown out on the basis that it was outside of the court’s jurisdiction.

Last month, Norway’s central bank Norges Bank said it would exclude two Israeli companies from the $1.3 trillion Government Pension Fund Global (GPFG) due to the “unacceptable risk” they contribute to systematic human rights violations. Norges Bank said it banned Shapir Engineering and Industry Ltd. and Mivne Real Estate for “systematic violations of individuals’ rights in war and conflict related to the building of homes and buildings in Israeli settlements in the West Bank.”

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Tags: Israel, KLP, KLP Funds, Motorola, Norway, Pension Funds, West Bank settlements

Japan’s $1.7 trillion Government Pension Investment Fund (GPIF) has reported that a survey it recently conducted shows its portfolio companies are proactively working on environmental, social, and governance (ESG) information disclosure.

The findings came from the pension giant’s sixthannual survey of listed companies that aims to evaluate the ESG stewardship activities carried out by its external asset managers. The survey, which received responses from 681 of the 2,186 targeted companies, focuses on how portfolio companies view asset managers’ engagement activities. It also tries to determine the actual status of constructive dialogue between the companies and asset managers, as well as the changes that have been seen since the previous survey.

The GPIF said companies are carrying out information disclosure not only through integrated reports, but also through new disclosure criteria such as the Task Force on Climate-Related Financial Disclosures (TCFD).

“Moreover, there has been a growing virtuous cycle, where the disclosure of non-financial information of investee companies including ESG information is further increased, and more and more investors have been utilizing such information,” the fund said in its report on the survey.

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The survey also found that due to the COVID-19 pandemic, 78.1% of companies said they saw changes in the content and themes of dialogues with institutional investors, particularly concerning the “S” in ESG, such as health, safety, and work reforms for employees. Additionally, more than half of the companies said their ESG initiatives have changed.

“Corporate governance” was indicated as the main theme in the companies’ ESG activities by 71.7% of the respondents. The theme indicating the largest increase in response rate from the previous survey was “climate change” (+9.7%), which is a repeat from the previous survey, followed by “health and safety” (+8.0%), and “environmental opportunities” (+3.8%).

The report said that “this indicates that increased attention is being paid to a wide range of ESG themes, such as environment (E), represented by climate change-related issues, and society (S), which reflects the impact of the COVID-19 outbreak in addition to governance (G).”

The survey also found that 31% of respondents have endorsed the TCFD, of which 67% said they had already followed the TCFD recommendations in disclosing information. And 90% of the respondents indicated that they disclosed information partially or fully in terms of governance, strategy, risk management, and indicators and goals. Additionally, many companies cited issues common to corporations and society as the major themes in their ESG activities, including corporate governance (71.7%), climate change (63.6%) and diversity (43.2%).

“For a pension fund like GPIF, a long-term orientation and the sustainable growth of its investee companies and the market as a whole are essential in increasing long-term investment returns,” Masataka Miyazono, president of GPIF said in the report. “GPIF considers that it is important to carry out engagement activities from a long-term perspective in order to increase corporate value over the long term, and thus encourages its asset managers to act in line with this policy.”

He added that “proactive disclosure of ESG information by investee companies is extremely important for investors to efficiently understand, carry out dialogues, and make investment decisions.”