[T]he Council on Ethics recommended to exclude the company Texwinca Holdings Ltd from the Government Pension Fund due to an unacceptable risk of the company being responsible for systematic human rights violations.

Texwinca is a Chinese company that produces yarn, knitted fabrics and garments. Texwinca owns 50 per cent of the shares in Megawell Industrial Ltd, making it that company’s largest shareholder... Texwinca states that it does not have a controlling influence over Megawell, and that it has no responsibility for the working conditions at the factories in Vietnam.

The recommendation is based on investigations into working conditions which uncovered systematic norm violations at Megawell’s factories in Vietnam, including discrimination against women, numerous occupational health and safety hazards and restrictions on freedom of association. Texwinca’s dominant shareholding [...] leads the Council to presume that Texwinca has 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. The Council on Ethics considers that when a company in this way disclaims responsibility for preventing norm violation [...], the risk of systematic labour rights violations becomes unacceptably high.