AP funds report engagement progress on companies including Yahoo!, Wal-Mart, PetroChina

Funds amongst world’s first to report success or failures of engagement.

Sweden’s AP government pensions buffer funds have taken one of the world’s most transparent steps in corporate engagement by publishing a list of the companies they are in talks with as well as outlining progress on the discussions.
The list of companies, some of the world’s best known in their sectors, includes BHP Billiton, Bridgestone, Chevron, Duke Energy, Freeport-McMoran Copper & Gold, Grupo Ferrovial, L-3 Communications, PetroChina, Sodexho Alliance, Thales, Toyota, Wal-Mart and Yahoo! The AP funds lobby companies on environmental, human rights and governance breaches via a joint ethical council, which oversees SEK 900bn ($150bn) in assets.
The fund has graded its engagements according to whether it has seen ‘no sign of development’, ‘signs of development’, ‘weak positive development’, ‘positive development, or ‘very positive development’.
BHP Billiton, the global mining company, which the fund alleges violated the right of workers to sign collective agreements in Australia, came out worse, with no development following the AP engagement.Companies showing ‘signs of development’ included Walmart, Bridgestone, L-3 and Toyota. The AP funds allege Wal-Mart, the US supermarket giant, is associated with systematic violations of workers’ rights contrary to International Labour Organisation conventions. They said Bridgestone allegedly used child labour at the company’s rubber plantation in Liberia contrary to the UN Convention on the Rights of the Child. Toyota is being lobbied over anti-union activity in a subsidiary in the Philippines.
The funds said companies showing weak positive development included Yahoo!, Thales, PetroChina, Sodexho, Grupo Ferrovial, Duke Energy and Freeport McMoran.
The report said Sodexho, the French facilities management company, had been associated with inhuman conditions for inmates at a centre for immigrants in the United Kingdom contrary to the UN Universal Declaration of Human Rights and the UN Convention on the Status of Refugees. The ethical council said it was continuing discussions with Yahoo!
over violations of freedom of expression in China by disclosing user information about a journalist that led to his imprisonment. However, it noted that Yahoo! was participating in an initiative with NGOs and other internet technology companies to produce human rights guidelines.
Two companies on the AP engagement list, Chevron and Halliburton, showed positive engagement development. The funds said Halliburton had been removed from its watch list after it met the funds’ engagement objectives. Halliburton was investigated over bribery allegations in Iraq and Nigeria contrary to the UN Convention against Corruption. The AP funds said the company had “clarified its policy” and would comply with international guidelines.Chevron, which remains on the AP watch list, has been associated with violations of human rights in Nigeria contrary to the UN Basic Principles on the Use of Force and Firearms by Law Enforcement Officials.
The AP funds said Chevron had adopted a framework on human rights and the work of security personnel. The funds said they now awaited a report from Chevron on its implementation.
Carl Rosén, chairman of the ethical council, said: “This dialogue is the Ethical Council’s most important tool for encouraging companies to act responsibly. Our discussions are aimed not only at pressuring the companies in question to address documented violations. As long-term investors we also want to see them implement preventative systems to avoid similar violations in the future.”
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