Investors exhort firms to act on adverse human rights impacts in Myanmar

On the 06/04/21 at 7:15AM


Adrien Paredes-Vanheule

The Myanmar military coup, that occurred on 1 February 2021, has left a number of asset owners directly or indirectly exposed to companies with direct business activities or business relationships in Myanmar.

A growing number of institutional investors, worrying about both the populations persecuted in Myanmar and the negative human rights toll on their portfolios, are raising their voices in through the Investor Alliance for Human Rights. They will soon release an investor statement regarding the country’s current situation and global companies still operating business there.

Norwegian asset manager Storebrand AM, New York-based impact investor Domini Impact Investments and human rights-focused non-governmental organisation Heartland Initiative lead the investor statement, seen by Asset News, and seek the support of other financial institutions. They are calling on companies having business ties with the Asian country to assess human rights risks and harms they may have or are causing by indirectly or directly enriching Myanmar’s military junta. Swedish public pension fund AP7 remains among the statement’s first signatories.

The statement recalls that the military’s repressive crackdown against pro-democracy protesters has led to hundreds of deaths, including summary executions, and thousands more detained, tortured, and injured. It targets multinational companies still operating in Myanmar, especially those having committed to the United Nations Guiding Principles on Business and Human Rights (UNGPs). “By contributing to violations of human rights, companies expose themselves and their investors to material legal, financial, and reputational risks,” the investors say.

The investor coalition exhorts all companies to “immediately map their business activities, relationships and/or investments across their value chain in Myanmar to identify and assess human rights risks and harms that they may have or are causing, contributing to, or are linked to.”

Investors expect from the concerned public companies to assess and address all identified actual and potential human rights impacts of their business activities and relationships, take steps to mitigate and prevent them. They insist on drawing and implementing ways to remediate to adverse human rights impacts including those on their in-country staff and local stakeholders. Investors also want companies involved in Myanmar to publicly report on due diligence efforts and procedures in place to cease, prevent and mitigate those negative human rights impacts.

Asset owners worried about Myanmar even before the coup

Some institutional investors are starting to curb the Myanmar effect in their portfolio. For instance, on 19 May, the Norwegian sovereign wealth fund had excluded Honeys Holdings, a Japanese company focused on the design, sale and manufacture of women clothing and accessories. The exclusion was “due to unacceptable risk that the company contributes to systematic violations of human rights.”

The decision actually relied on a recommendation from its Council on Ethics of 25 November 2020, before the military coup in February. The Council on Ethics had recommended Norges Bank to exclude Honey Holdings after having considered workers’ rights at two factories that the firm owns in Myanmar.

Earlier, at the end of March, Dutch pension provider APG and Dutch largest pension fund ABP - and APG's largest client - had issued another statement on the political situation in Myanmar, terming the situation “extremely worrying.” 

APG had said it invests in several multinationals that are active in Myanmar and may have business or financial relationships with the military junta. At the time, the pension provider added talks were ongoing with these companies on the matter for “quite some time, including before the coup.”

On issuers’ side, French energy multinational Total Energies, together with Chevron, proposed to suspend cash distributions of Moattama Gas Transportation Company (MGTC) at a MGTC’s shareholder meeting.  

“MGTC gas transportation system carries the gas produced from the Yadana field operated by Total Exploration & Production Myanmar to the Myanmar/Thailand border over a distance of 400 kilometers. Total continues to act as a responsible operator of the Yadana field, maintaining the production of gas in accordance with applicable laws, so as not to disrupt the electricity supply that is vital to the local populations of Myanmar and Thailand,” said the French company on 26 May.

In a statement, Total Energies condemned the violence and human rights abuses occurring in Myanmar and said it will comply with any decision that may be taken by the relevant international and national authorities, including applicable sanctions issued by the EU or the US authorities.

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