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Norwegian OECD Natl. Contact Point rejects complaint linking Norges Bank's investments to forced & child labour in Uzbekistan

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17 July 2015

NGOs call on Norges Bank to exclude Daewoo & Posco from its investment universe

Author: Cotton Campaign

"Norway Refuses to Assess NBIM’s Financial Link to Forced Labor- NBIM urged to exclude Daewoo International for profiting from forced labor", 14 Jul 2015

After Norway’s decision to ignore the issue of forced labor in Uzbekistan, the Cotton Campaign, Korean Transnational Corporation Watch and Anti-Slavery International call on NBIM to make its own decision and add Daewoo and its parent company Posco to NBIM’s list of companies excluded from investment consideration due to human rights violations. The complaint presented evidence of systematic forced labor in the cotton sector in Uzbekistan, Daewoo International’s repeated admissions that it uses the forced-labor cotton for its Uzbek operations, and NBIM’s investment in Daewoo...The NCP’s decision to reject the case means NBIM and the complainants do not have access to mediated dialogue. Notably, NBIM’s policy is to exclude companies when there is an unacceptable risk that the company contributes to or is responsible for systematic human rights violations, including forced labor...Therefore, we urge NBIM to exclude Daewoo International and Posco from its investment universe...

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Company response
17 July 2015

Norges Bank Investment Management's response

Author: Norges Bank Investment Management

Norges Bank Investment Management has been entrusted with safeguarding and building financial wealth for future generations. Our work on responsible investment is an integrated part of the investment process and has three pillars: improving industry standards, exercising our ownership rights responsibly, and monitoring and managing the risk in the fund’s investments by integrating a range of factors. We seek to safeguard investments in more than 9,000 companies worldwide by promoting good corporate governance standards and encouraging businesses to improve social and environmental standards. We express our expectations to companies we invest in through publicly communicated documents and by engaging directly with companies.

Our expectations and principles build on international standards such as the UN Global Compact, the OECD Principles of Corporate Governance and the OECD Guidelines for Multinational Enterprises.The Norwegian Ministry of Finance has issued guidelines for observation and exclusion of companies from the fund’s portfolio, and has set up an independent Council on Ethics to monitor the fund’s portfolio and evaluate whether or not the fund’s investments in specified companies are inconsistent with these guidelines. According to the guidelines, companies may be put under observation or be excluded if there is an unacceptable risk that the company contributes to or is responsible for serious or systematic human rights violations, such as forced labour or the worst forms of child labour. The Council on Ethics gives advice and recommendations to Norges Bank’s Executive Board, who decides on the exclusion of companies from the fund’s investment universe based on these recommendations. In 2015 we have sent several cases to the Council on Ethics for their review.

17 July 2015

Norwegian OECD Natl. Contact Point decides not to proceed with case on Norges Bank's investments in Daewoo & Posco

Author: Norwegian National Contact Point for the OECD Guidelines for Multinational Enterprises

"NCP Norway concludes two new specific instances regarding NBIM", 2 Jul 2015

The Norwegian Contact Point for the OECD Guidelines has considered two specific instances concerning Norges Bank Investment Management – NBIM. The complaints raise questions of principle concerning application of the OECD Guidelines in relation to financial institutions. The complaints concerned are:

  • United Steel Workers and Birlesik Metal IS concerning the Government Pension Fund Global’s investments in the US company Crown Holdings Inc and its alleged violations of labour rights in its subsidiaries in Canada and Turkey.
  • The Cotton Campaign, Anti-Slavery International and KTNC Watch concerning the Government Pension Fund Global’s investments in the Korean companies Daewoo International and POSCO, and their alleged use of child and forced labour through a subsidiary in Uzbekistan’s cotton industry.

The complaints raise questions about what type of due diligence can be expected of a minority shareholder, and questions of principle concerning application of the OECD Guidelines in relation to financial institutions. A process is ongoing in the OECD to specify expectations of the financial sector, including of minority shareholders.

‘The NCP’s task is to promote the OECD Guidelines. A new consideration of the same questions of principles concerning the financial sector’s compliance with the Guidelines, so shortly after the last consideration and at the same time as the ongoing clarification process in the OECD, will not further the effectiveness of the Guidelines,’ says Ola Mestad, NCP Chair.

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