€213bn Nordic investor group completes ESG engagements with BHP, Nestlé and Deutsche Post

10-year anniversary for group comprising Folksam, Ilmarinen, KLP and PFA

The Nordic Engagement Cooperation (NEC), which is made up of four of the region’s largest asset owners, representing some €213bn in assets, has announced it has completed engagements with Anglo-Australian miner BHP, Swiss food and beverage giant Nestlé and German delivery firm Deutsche Post.

It comes as the Nordic ESG engagement group, which includes Sweden’s Folksam, Finland’s Ilmarinen, Norway’s KLP and Denmark’s PFA, marks its ten-year anniversary this month.

Details of the concluded engagements with the trio were revealed in the initiative’s Annual Engagement Report 2018, published last month.

The initiative was created to respond to incidents where “companies have breached international norms relating to corruption, environment, [and] human and labour rights”, with a focus on those within NEC’s “ability to influence”.

Since its launch in 2009 it has engaged with close to 40 companies globally.

NEC’s conversations with companies are supported by GES, the Stockholm based engagement specialist which was acquired by ESG research house Sustainalytics in January.

It started its engagement with BHP in 2016 following the 2015 Samarco tailings dam disaster in Brazil, which killed 19 people and affected thousands more.

Nestlé has also been engaged since 2016 in response to “allegations of labour rights violations” in the company’s Thai seafood supply chain.

And NEC added Deutsche Post – which operates the DHL Group – to its focus list in 2015, following reports of anti-union practices in several of the company’s global operations including India and Latin America, which were detailed in the 2017 engagement report.

NEC’s engagements typically last three years – but can be extended – and are closed when the investors see sufficient progress from companies.In the case of BHP this included “remedial measures” undertaken by the miner such as compensating victims, incorporating findings of Brazilian state investigations into internal reviews and the absence of any further tailing failures since Samarco.

The mining giant today has reportedly called on shareholders to veto a climate lobbying proposal filed by a group of international investors convened by the Australasian Centre for Corporate Responsibility (ACCR).

Other companies currently on NEC’s focus list for “norms-based engagements” include Canadian energy firm Enbridge (violations of indigenous peoples’ rights in relation to the Dakota Access pipeline), Volkswagen (emissions standards) and Royal Dutch Shell (corruption and human rights violations and environmental damage).

The initiative, however, also engages with “industry leaders” to support the development of “best-practices” within identified sectors.

Its current “proactive engagements” are focused on sustainable cotton and include conversations with fashion brands such as Burberry, Victoria’s Secret parent L Brands, Ralph Lauren and Primark.

Norges Bank Investment Management (NBIM), manager of Norway’s $1trn global fund, is also involved in the textiles project and is part of a push to create a network of companies focused on improving children’s right policies in line with the United Nations’ Guiding Principles for Business and Human Rights.

NEC’s engagement report also reveals that NBIM has already benchmarked 600 investee companies on the issue and initiated engagements with 12 sector leaders.

In 2018, NEC engaged with ten firms on 11 issues. They are Italian oil giant, Eni (corruption), US consumer goods producer Johnson & Johnson (product related injuries), and Swiss pharmaceutical manufacturer Novartis (corruption).

It rated six of these engagements as medium performance, four as high and one as low – though it doesn’t name which score belongs to which company.