European investors take action against Burma

European institutional investors are stepping up actions against companies operating in Burma following the approval of sanctions against the country by European Union foreign ministers this week, including an embargo on the export of wood, gems and metals. GES Investment Services, the Swedish governance group, which advises investors managing assets of approximately €250bn ($357bn), said it was cooperating with the Church of Sweden, Swedish insurance company Folksam and Norwegian life insurance company KLP on “precautionary engagement” with companies they invest in to ensure they have no links to human rights violations in Burma. The military-led country has clamped down on public protests in recent weeks. Several protesters have been killed by the army and others have been imprisoned without trial. Dutch pension funds, PGGM, the €86bn healthcare scheme, and PNO Media, the €2.7bn industry-wide pension fund for the broadcasting sector, have started talks with companies active in Burma to gauge any links to human rights abuses. A spokesman for PGGM said the final stage of engagement could be divestment if discussions are not satisfactory. Magnus Furugård, president and managing director of GES Investment Services, said: ”Our clients are very concerned about the development in the country and naturally see a connection between the political risks and the financial. The EU’s new sanctions underlinethe complexity in high risk countries like Burma. But these sanctions only affect one percent of Burma’s trade with the EU. We have to continue to find new ways of handling the other 99 percent.” Furugård said GES would screen companies in the MSCI World Index to see if they complied with the OECD’s risk management tool for business in “weak governance zones”, defined as investment markets where governments are incapable of taking responsibility or unwilling to. He said the ultimate sanction recommended to investors would be divestment from companies with interests in Burma. He said GES would also be trying to build a coalition with other European investors to take a stance on Burma. European investors have previously come together to protest over human rights in Burma and the continued house arrest of opposition politician Aung San Suu Kyi. The Burma Campaign UK group has produced a list of what it calls “dirty” companies with operational or financial interests in Burma (see useful link) Last week, New Zealand Prime Minister Helen Clark demanded a briefing about investments by the $13.1bn New Zealand Super Fund in oil companies operating in Burma after press reports revealed the fund had invested heavily in firms operating in the country. The fund’s investment guidelines say it should specifically avoid prejudice to New Zealand’s reputation as a “responsible member of the world community.”