Investors extend engagement with firm on Myanmar exit after NCP complaint

TeIenor’s withdrawal from country has been accused of being irresponsible, despite garnering praise from pension funds and asset managers

Investors wiII continue to engage with a Norwegian telecoms company over the ethics of its withdrawal from Myanmar, following a formal compIaint from civil society groups. 

Nearly 500 Myanmar-based organisations have backed a complaint lodged with the Norwegian National Contact Point (NCP), stating that Telenor’s decision to sell its Myanmar operations to Lebanese investor M1 Group went against OECD guidelines. 

NCPs promote the OECD guidelines for multinational enterprises on responsible business conduct and operate the national grievance mechanism set out in the guidelines.

Following a military coup in Myanmar in February, Telenor was accused of facilitating the repression of protestors by “hand[ing] over user data such as addresses and call history to the regime”. 

A number of responsible investors, incIuding Storebrand Asset Management, APG AM and DNB Asset Management, started a dialogue with Telenor over its activities in the country. Storebrand and APG were among those to praise the company for choosing to withdraw from Myanmar earlier this month.

But the swift exit is under fire for not meeting the OECD’s standards of responsible disengagement. 

The NCP complaint was filed today by the Centre for Research on Multinational Corporation, also known as SOMO, and accuses Telenor of failing to limit the potential adverse human rights impacts of the sale of its Myanmar operations, describing M1 Group as a firm with “a history of business in authoritarian countries”. It also alleges that Telenor did not engage adequately with relevant stakeholders in relation to the deal. 

The Norwegian NCP confirmed to RI that it has received a complaint regarding the issue and will “now follow the procedures for specific instances as described in the implementation procedures of the OECD guidelines.”

In response, Jan Erik Saugestad, CEO of Storebrand Asset Management, which owns 1.21% of TeIenor, toId RI: “Our current view is still that Telenor has been taking informed decisions based on careful consideration of human rights both for its employees and customers. The conditions for responsible withdrawal will be discussed further. We will continue our dialogue and engagement with Telenor on this issue.”

Karl Høgtun, a Senior Analyst for Responsible Investments at DNB Asset Management, which owns 1.54% of Telenor, said that the firm “has been quite open about the sale process being executed under extraordinary circumstances, and the company seems to have communicated many of the difficult aspects of the sales process”. 

“We will continue our dialogue with Telenor in order to understand better the issue of compliance with OECD guidelines – and what can be learned from the multiyear involvement in Myanmar and telecoms operations there,” he added.

Telenor’s largest shareholder is the Government of Norway, which owns 54% of the firm. When approached for comment on its response to the NCP complaint, the Norwegian Ministry of Trade, Industry and Fisheries told RI: “From a corporate governance perspective, Telenor's investment in Myanmar is under the responsibility of the company's Board of Directors and Management. Issues related to the investment and the company's situation in Myanmar should therefore be raised to Telenor.”

TeIenor and M1 Group did not respond to a request for comment. 

Joseph Wilde-Ramsing, a Senior Researcher at SOMO, toId RI: “Investors should demand that investee companies have a responsible exit plan in place before going into fragile or volatile contexts and that if [companies] do need to disengage that they do so responsibly.” 

Meanwhile, a $3trn investor coalition set up earlier this year to engage with portfolio companies on their activities in Myanmar has begun sending letters to target firms. 

Led by Storebrand AM and US-based Domini Impact Investments, the group is “requesting information and dialogue with the companies” according to Storebrand’s Head of Sustainable Investments, Kamil Zabielski.

Some companies have already responded to the letters, Zabielski added, but the group is “waiting for investors to be back from summer vacations before coordinating and taking further action”.

The initiative is targeting companies across all sectors, but will focus initially on Oil & Gas. It did not disclose specific firms. 

In May, Danish pension fund PFA “articulated its concerns” over Total’s activities in Myanmar. The French oil giant is a major producer of natural gas in the country, and has faced allegations its tax payments were funding the military-controlled state.

TotaI halted new projects in Myanmar and has publicly condemned the regime, but said it will not pull out of the country because it believes that would leave its workers vulnerable to forced labour, and would interrupt the energy supply for neighbouring Thailand. 

According to PFA’s website, Total “appears to have taken reasonable steps in the short term to assess the various dilemmas and consequences involved in withdrawing now”. However, the fund said it would continue to engage with the firm on the topic.