Posted inNORDICS

Pension fund exits firms with ties to West Bank settlements

Municipal and Health Norway’s (kommune- og helse-Norges) pension fund has pulled investments in 16 companies following a UN High Commission for Human Rights report about their activities relating to Israeli settlements in occupied Palestinian territory.

Kommunal Landspensjonskasse (KLP) is Norway’s largest pension fund; which, according to its website, has “conducted ethical filtering of its investments in securities since 2002”.

KLP announced its decision in a Norwegian language press statement on 5 July, having pulled NOK 275m (€27m) from the firms in June.

Risk of human rights violation

Kiran Aziz, senior analyst at KLP Kapitalforvaltning, said: “Our assessment is that there is an unacceptable risk that the excluded companies will contribute to human rights violations in war and conflict situations through their connection to the Israeli settlements in the occupied West Bank.

“This is anchored in the rules on occupation in the Hague regulations and the Fourth Geneva Convention.”

He continued: “This means that the companies have a responsibility to respect and protect human rights in all countries in which they operate, regardless of whether the state itself respects these rights.

“Conflict can involve a particularly high risk of human rights violations. Companies that operate in conflict areas should, therefore, exercise special care to avoid being involved in human rights violations and protect vulnerable individuals.”

Lack of dialogue

The decision to exclude the following 16 firms was made after KLP contacted the companies to establish a dialogue, it said.

But it was driven to act due to a lack of response.

Aziz added: “We always want to have a dialogue with the companies in order to be able to influence through our ownership.

“Where our influence did not yield results, we chose to exclude the companies.”

As of June 2021, KLP has sold shares and bonds in the following firms:

ALSTOM SA SHTROM GROUP LTD  
ELECTRA LTD  BANK HAPOALIM BM  
BANK LEUMI LE-ISRAEL FIRST INTL BANK ISRAEL  
ISRAEL DISCOUNT BANK-A  MIZRAHI TEFAHOT BANK LTD  
ALTICE EUROPE NV  BEZEQ THE ISRAELI TELECOM CO  
CELLCOM ISRAEL LTD  PARTNER COMMUNICATIONS CO  
DELEK GROUP LTD  ENERGIX-RENEWABLE ENERGIES  
PAZ OIL CO LTD  MOTOROLA SOLUTIONS INC  

Areas of concern

The 16 companies fall into four categories: banking, construction, infrastructure and telecomms.

Aziz explained that the banks were excluded, “because we believe, through the financing of housing construction, they contribute to the development, expansion or maintenance of the settlements”.

“The construction companies are excluded due to the delivery of materials and infrastructure. The exclusion of the telecommunications companies has been done because communication services are considered basic infrastructure for modern societies.”

KLP conducted individual assetments of four companies that provide energy, communications and monitoring services and took the decision to exclude all four.

“These services include access to electricity and fuel, and monitoring of the settlements’ external borders,” Aziz explained. “We believe that these services play an important role in the maintenance and continuation of the settlements.”

Starting a trend?

It is the second time in less than a month that KLP has announced its exit from an investment position following concerns about breaching the pension fund’s responsible investment policy.

On 23 June, KLP excluded Adani Ports and Special Economic Zone Ltd because of the company’s connection with Myanmar’s military.

The container port is being built on land owned by Myanmar’s military and KLP said there is “imminent danger” that the armed forces could use the port to import weapons and equipment, or as a naval base.

The decision saw the pension fund withdraw its NOK 9m investment.

Kirsten Hastings

Kirsten is international editor of Expert Investor and International Adviser. She joined Last Word Media in October 2015. Kirsten has a Masters in Financial Journalism from the...

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