Global Compact agrees to mediate in NGO’s Western Sahara green bond dispute with Vigeo Eiris

PRI “in close contact” with its UN partner as dispute enters ‘integrity measures’ phase

The Global Compact, the United Nations’ corporate sustainability body, says it has agreed to mediate in a dispute relating to a Moroccan green bond between campaign group Western Sahara Resource Watch (WSRW) and Vigeo Eiris, the environmental, social and governance research house.

The matter centres on a dispute between WSRW and Vigeo Eiris over a green bond launched at the COP22 climate talks last year, which WSRW says is being used to finance solar projects in the Western Sahara area, which the UN classifies as a ‘non-self-governing territory’.
The bond in question, a 1 billion dirham (€258m) issue by MASEN, the Moroccan Agency for Solar Energy, was underwritten by a Moroccan state guarantee and sold via private placement to domestic banks. It won an award at the Climate Bond Initiative’s Green Bond Pioneer Awards this month.

But WSRW has called for greater scrutiny of the bond’s financing of three solar projects, two of them in locations that are outside Morocco’s internationally recognized borders (for background on the Western Sahara situation, click here).
As reported by Responsible Investor earlier this month, WSRW had formally called for the Global Compact to mediate – which it has now agreed to do.

“A decision has been made to establish a dialogue facilitation process between Vigeo Eiris and the Western Sahara Resource Watch in line with our integrity measures policy,” a spokesperson told RI.

But she said that for “confidentiality purposes” it wouldn’t disclose further details on the process.

The ‘integrity measures’ are not aimed at providing a remedy for alleged abuse but are rather a way to encourage dialogue between parties, the Global Compact says, stressing it is “not an adjudicatory body”.

But, for matters to get to the ‘integrity measures’ stage, they need to be “systemic or egregious abuse of the Global Compact’s principles,” according to GC policy.

“They should be sufficiently serious as to call into question whether the company concerned is truly committed to learning and improving.” Examples the GC gives include not only allegations of murder, torture etc. but also “serious violations of individuals’ rights in situations of war or conflict”.

The implementation of the integrity measures is overseen by the Global Compact Board, which is chaired by UN Secretary-General António Guterres and includes Vice-Chair Sir Mark Moody-Stuart, the former Shell CEO, and Unilever’s Paul Polman. PRI Chair Martin Skancke is also on the board.The process could also involve a number of other senior figures. Gavin Power, the Global Compact’s ‎Deputy Executive Director who sits on the board of the PRI (in an ex-officio capacity), was a recipient of WSRW’s request for mediation and has also been copied into the Global Compact’s communications with Responsible Investor.

On top of this Peter Webster, Director of International Affairs of Vigeo Eiris, is a director of the PRI elected by non-asset owners.

The PRI told Responsible Investor: “The PRI will keep in close contact with its UN partner, UNGC, throughout the process. We will await the outcomes of the Global Compact dialogue and will follow up after that.”

It went on: “There is a general requirement for PRI Board directors to ensure that the signatory with which they are connected maintain their status as a signatory in good standing at all times.

“There is a PRI Board Ethics committee that will consider the outcome of the UNGC dialogue (or the issue earlier if asked to do so by a PRI signatory).” The PRI added it is developing a policy on “egregious violation” of the spirit of the Principles following the recent consultation on signatory accountability.

Vigeo Eiris’s Webster has told RI that the company doesn’t agree with WSRW’s arguments, saying that they are “missing the target” about alerting investors to any potential risk of the green bond. Webster says the green bond has been issued to a limited group of investors that have decided not to make the verifier’s report public, but who wanted to go through the Climate Bonds Initiative’s verification process in order to make sure the bond achieves carbon reduction targets.

Just last month UN Secretary-General António Guterres called on Morocco and political group Frente Polisario to “take all necessary steps” to avoid escalation amid increased tensions in the region. The UN considers Polisario to be the legitimate representative of the local Sahrawi people.

As long ago as 2007, the UN Security Council called for “a just, lasting and mutually acceptable political settlement which will provide for the self-determination of the people of Western Sahara.” Its MINURSO 477-strong peacekeeping body has been operating in the region since 1991.

With reporting by Carlos Tornero.