A Tale of how Alicorp lost an investor

Мария Гирич Мария Гирич Expert of Center Russia-OECD published Responsible business conduct
A Tale of how Alicorp lost an investor

Norges Bank Investment Management (NBIM) has divested all its holdings in Peru's largest consumer goods company, Alicorp S.A.A., after revealing that the company was acquiring palm oil from a plantation linked to severe violations of indigenous peoples land rights and deforestation in the Peruvian Amazon. The company deforested approximately 7,000 hectares of forests in the Amazon region of Ucayali.

The Bank divested a total of $12.3 million from Alicorp and has already included this fact in its public report on responsible investments.

Norges Bank Investment Management manages the Norwegian Government Pension Fund Global. As of September 30, 2016, the Fund has invested $ 892 billion in company assets around the world. The Norwegian Pension Fund consists of 2 independent pension funds: the Global State Pension Fund (oil fund) and the State Pension Fund (insurance fund). The Global Fund lists excess revenues from the Norwegian oil industry, which are invested in international companies and assets. In 2017, the value of assets reached 1 trillion US dollars (1% of the global stock market).

In 2013, several NGOs, Lok Shakti Abhiyan, KTNC Watch, Fair Green, Global Alliance, and ForUM, filed a complaint with the Norwegian National Contact Point against Norges Bank Investment Management, which, as part of the Fund's activities, violated the OECD Guidelines. The Fund was a minority shareholder (0.9% stake) of the South Korean steel company Pohang (POSCO), which planned to build a steel mill in the Indian state of Odisha. However, the construction led to the forced eviction of more than 22,000 people; there was a risk of violation of human rights, as well as the use of child labor. As a result, after a dialogue between the NGOs and the NBIM held by the Norwegian NCC, the NBIM assumed responsibility for taking measures aimed at implementing the OECD Guidelines.

Today, the Fund supports the development of standards and practices for sustainable development and corporate governance at the international and market levels, in particular, the Fund implements the UN Global Compact, UN Guiding Principles on Business and Human Rights, G20/OECD Principles of Corporate Governance and the OECD Guidelines for Multinational Enterprises, including sectoral Guidelines.

The Norwegian Government Pension Fund Global is a financial investor and minority shareholder in more than 9,000 companies worldwide. At the same time, in 2016 - 2017, the Fund stopped working with more than 150 companies that do not comply with the principles of responsible business. So, according to the report of Norges Bank Investment Management "Responsible Investment in Government Pension Fund Global" in 2017, the criteria of the product that the company produces were used to exclude companies. The NBIM stopped working with 20 tobacco companies, 16 companies producing special weapons, and 69 companies that conduct thermal coal mining or coal-based electricity production, that is environmentally "dirty" or anti-social. Three companies were excluded for serious or systematic violations of human rights, 17 for severe environmental damage, 1 for corruption, 5 for serious violations of basic ethical standards, 2 for serious violations of human rights in situations of war or conflict. Also, two companies were put under control in 2017 for serious or systematic violations of human rights, 1 for serious environmental damage, 3 for corruption, and 13 for thermal coal mining or coal-fired electricity production. When voting, the Fund takes into account the implementation by companies of responsible business practices.

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