(October 1, 2013) — International retailer Walmart is one
of four companies to be dumped from Swedish pension portfolios following years
of engagement to try and improve governance.
A note from four of the country’s state pension
funds said these investors—worth a combined $140 billion—said they would divest
their holdings in Walmart, mining firm Freeport McMoRan, and potash producers Incitec
Pivot, and Potash Corp.
The funds’ combined Ethical Council had been engaging
with these companies on a number of issues over recent years. “In spite of a
strong commitment to this process, the Ethical Council has been unable to
achieve its objectives,” the note said. “It has therefore chosen to terminate
the dialogue and issued a recommendation to each fund to exclude the companies’
shares from their investment portfolios. All four funds have elected to follow
the recommendation.”
Engagement is the Ethical Council’s primary tool for
encouraging companies to act responsibly,
said Christina Kusoffsky Hillesöy, chairman of the Ethical Council. She explained:
“Exclusion from the investment portfolio is a last resort when other avenues
have not worked. This is therefore a setback for us in so far as we have been
unable to secure lasting improvements despite several years of active
engagement. We do not believe further interaction with these companies will be
fruitful and have therefore recommended that the AP funds exclude them from
their investment universe.”
Kusoffsky Hillesöy said the Ethical Council engages with
around 200 companies every year in a bid to make a difference. As long-term,
responsible and active investors, the AP funds seek to drive positive change in
environmental and social governance
at companies worldwide.
Walmart was red-flagged due to its US business being linked
to systematic abuses of workers’ rights, in contravention of the ILO core
convention on working rights. The company also denies employees their right to
form and join trade unions.
Despite meeting with Walmart and discussing these issues,
the council concluded that “Walmart continues to fall short of its dialogue objectives”.
Freeport was dumped due to environmental concerns around one
of the company’s bases in Indonesia and its continual disposal of waste into
nearby watercourses.
“Freeport’s chief executive officer and chairman have
informed the Ethical Council that the company reserves the right to release
waste into rivers,” the note said. “The Ethical Council’s has therefore
concluded that further dialogue is likely to be ineffectual and that there
remains a continued risk of further treaty violations due to the company’s
reluctance to exclude the possibility of deploying its controversial waste
processing practices in future projects.”
The two potash companies were excluded due to their purchase
of “phosphate from a Moroccan supplier that mines its product in Western
Sahara. Western Sahara has been under Moroccan occupation since 1975 and is on
the United Nations’ list of non-self-governing territories that should be
decolonised.”
The council has engaged with the companies since 2010,
urging them to find alternative suppliers and stop other actions that violate
international humanitarian law.
“The Ethical Council concludes that further dialogue with
Potash and Incitec Pivot would be to no avail as neither company has indicated
an intention to cease procurement of phosphate from Western Sahara in the near
future or been able to demonstrate that the extractive process accords with the
interests and wishes of the Western Saharan people.”
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