An investor engagement initiative with the solar industry regarding potential links to forced labour in the Xinjiang region, China, is progressing, RI has learnt.
Announced in October and coordinated by the Investor Alliance for Human Rights (IAHR), Kamil Zabielski, Head of Sustainable Investments at Storebrand Asset Management, told RI that 15 companies have been identified by the initiative. Lead and support investors have also been established – the Norwegian investor is leading the engagement work on two of the 15 companies.
Anita Dorett, Director of the Investor Alliance for Human Rights, confirmed that investor outreach to approximately 10 solar companies, which she declined to name, has occurred, with the aim to deepen this into engagement going forward. She confirmed that some investors have put themselves forward to lead on companies.
The investor action comes as the soIar industry has been increasingly plagued with human rights concerns, particularly in relation to the treatment of Uyghur Muslims in the Xinjiang region. A report by Sheffield University academics this year concluded the industry “is particularly vulnerable to forced labour in the Uyghur Region.”
Some companies in the sector are stepping up. In February the Solar Energy Industries Association (SEIA) issued a pIedge, signed by 175 solar companies, to “help prevent abhorrent practices and ensure that the products they are using do not have links to forced labour” – with particular reference to Xinjiang.
Although Dorett explains engagement on the issue in the solar space is a new area. “By comparison, when you talk about issues of forced labour in the apparel sector, people have been talking about it for so long that there's a lot of history of conversations and engagement. Everyone – both investors and companies – are finding their feet when it comes to solar.”
Zabielski explained Storebrand’s engagement effort involves dialogues with companies within the solar industry to assess their links to forced labour, and to encourage them to support the SEIA Solar Supply Chain Traceability Protocol; the development of new manufacturing sites outside China, as well as innovations in non-polysilicon based solar energy.
“We have also been following up with our information providers, with civil society organisations, and with other investors in the Investor Alliance on Human Rights to acquire further documentation on specific companies linked to the sector,” he said.
“Our approach is to both collect additional documentation on specific companies, but also to conduct a larger sector-based analysis mapping out the supply chain, companies with links to the solar sector supply chain, and the links between these companies and forced labour in Xinjiang,” he added.
Moving forward, Dorett said there is potential to investigate similar risks in the wind sector, “but currently we don't have the data.”
This latest investor initiative is part of a wider programme by the IAHR – which is part of the Interfaith Center on Corporate Responsibility (ICCR) – involving 65 institutional investors, including Storebrand, Boston Common Asset Management and Azzard Asset Management. Launched in March, the $4.4tn group said they were seeking to address “egregious human rights risks” in their portfolios over companies’ potential ties to the Xinjiang region.
At the time, the investors wrote to more than 40 companies – including Amazon, Google, Hugo Boss and Nike – asking them to map out business relationships in their supply chains and show how they are moving away from those linked to human rights abuses. The letters also requested more public disclosure, including on how the firms are working with affected people to seek remedy.
For Storebrand, some of its efforts in Xianjiang have led to divestments. Zabielski said Storebrand excluded controversial surveillance company Hangzhou Hikvision Digital Technology in the third quarter of this year.
In related news, leading investors, including Storebrand and Boston Common – alongside CalSTRS, Calvert Research and Management, and Domini Impact Investments – have released a statement expressing their deep concern about the evolving situation in Sudan.
Following the military coup in October, which led to the house arrest and then reappointment of Prime Minister Abdalla Hamdok, “civil society in Sudan has organized mass demonstrations which have been met with excessive force by the military and resulted in at least 40 people killed and hundreds injured”, the investor statement said.
Alongside expressing solidarity with the people of Sudan, the investors – coordinated by the Business and Human Rights Resource Centre, EIRIS Conflict Risk Network, and IAHR – laid out expectations for companies operating directly or indirectly through business partners including suppliers or distributors in Sudan.
These included providing assurances that employees or contractors will not face retaliatory action from companies if they choose to join demonstrations or otherwise exercise their freedom of expression; mapping the impact of the military’s actions and the conflict across their operations and business partners, and avoid inadvertent funding of Sudan’s military or security services; conducting effective human rights due diligence, and ensure that companies do not cause or contribute to human rights violations or conflict.
Former Vice President for Calvert Investments and member of the Investor Alliance for Human Rights' Advisory Council, Bennett Freeman, told RI: “For those of us involved in the Sudan divestment movement in the early-to-mid 00s, we were despondent over the lack of progress for years and then we were heartened by the democratic transition that got underway a couple of years. And we were then again distraught by the terrible setback in October.”
Moving forward, he hopes more investors will sign the statement and signatories will follow up with companies that they have in their portfolios.
EIRIS Conflict Risk Network’s CEO, Peter Webster told RI: “Everyone has their own approach, but an example I’ve become aware in promoting the statement is people considering how best to make this part of their regular ESG dialogue with companies (which will then inform their ESG risk and other assessments).”
On whether investors should conduct any sovereign engagement, Bennett said the coordinators would encourage it, “but it’s a tall order, there’s not much of a track record of investors – save maybe a few large institutional ones – engaging with sovereigns”.
Moving forward, the EIRIS Conflict Risk Network will be sending the statement to the higher risk companies that operate in Sudan and will be making the responses it receives from those companies part of the analysis it provides to investors who already have Sudan mandates.
“That analysis helps those investors decide if each company is taking sufficient ‘substantial action’ in Sudan to justify keeping its stocks and bonds in the investors’ portfolios,” Webster, explained to RI.
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