Norges Bank, Norway’s central bank, which manages the country’s $1 trillion Government Pension Fund Global (GPFG), has added three companies to its exclusion list over alleged human rights violations and coal-related activities.
The bank said it decided to exclude Hong Kong-based Texwinca, an investment holding company engaged in knitted fabric and apparel businesses, “due to unacceptable risk that the company is responsible for serious or systematic human rights violations.”
It also decided to exclude Kansas City-based electric services company Evergy, and Australian investment firm Washington H. Soul Pattinson & Co Ltd. on an assessment of the fund’s product-based coal criterion.
Texwinca is the largest shareholder of Megawell Industrial Ltd., and has owned 50% of its shares for the past 20 years. According to GPFG’s Council on Ethics, investigations into working conditions at Megawell’s factories in Vietnam have uncovered systematic norm violations, including discrimination against women, numerous occupational health and safety hazards, and restrictions on freedom of association.
Although Texwinca claims that it doesn’t have a controlling influence over Megawell, and has no responsibility for the working conditions at the factories in Vietnam, the Council has judged otherwise. It said that because of the company’s dominant shareholding, and the fact that several individuals have been members of the boards and managements of both companies for many years, it presumes that Texwinca does indeed have a significant influence over Megawell.
“The Council attaches importance to the fact that Texwinca has not helped to clarify this case and concludes that neither Texwinca nor Megawell are taking any responsibility for the prevention of human rights violations at the factories in Vietnam,” said the Council. “When a company in this way disclaims responsibility for preventing norm violation and fails to provide information about conditions or its own initiatives in its operations, the risk of systematic labor rights violations becomes unacceptably high.”
As for Evergy and Washington H. Soul Pattinson, Norges Bank said it decided to exclude the companies based on the fund’s coal criterion, which states that companies with 30% or more of their activities in coal, and/or that derive 30% of their revenues from coal either directly or through other operations they control, may be excluded from the GPFG. Coal in this case refers to thermal coal.
“Before deciding to exclude a company, Norges Bank shall consider whether the use of other measures, including the exercise of ownership rights, may be better suited,” said the bank in a statement. “The Executive Board concludes that it is not appropriate to use other measures in these cases.”