Norwegian mutual insurer and pension fund manager KLP has excluded Innophos Holdings due to the risk emerging from the purchase of phosphate rock sourced in Western Sahara, a non-self-governing territory occupied by Morocco, effective from June 2018.
Innophos is a US-based, Nasdaq-listed provider of specialty ingredients, which uses phosphates to make “food and beverages tastier and more nutritious” and “vitamins and supplements healthier and more readily available to the body”, according to the firm’s business description.
KLP excluded Innophos because the acquisition of phosphate rock from Western Sahara is an unacceptable risk which violates ethical standards and KLP’s Responsible Investment Guidelines, the institutional investor stated.
According to Innophos’ 10-K filing, the phosphate is supplied by Canadian fertilizer firm Nutrien, which is also excluded from many investor portfolios having inherited those exclusions from predecessor firms Agrium and PotashCorp, which merged in January this year.
Innophos disclosed to the SEC: “The phosphate rock that it utilized by Nutrien to supply MGA [merchant green phosphoric acid], to our Geismar, Louisiana facility is subject to those social and political conditions in Western Sahara, where Nutrien sources the phosphate rock, which territory has had a long history of social and political upheaval.”In January the CEO of Nutrien told an investor conference that the firm planned to stop sourcing phosphate rock from Western Sahara partly due to “shareholder preference”.
Chuck Magro said that Agrium’s contracts will end by the end of 2018 while PotashCorp’s imports were “under review” and that there would be an update on the issue by “the middle of the year.”
Campaign group Western Sahara Resource Watch has engaged with Nutrien again, asking questions about three bulk carriers with a cargo of 160,000 tonnes of phosphate rock sourced in Western Sahara en route to North America.
In a letter to Nutrien, WSRW wrote: “The company is on a similar import-track to last year’s, and nothing indicates that the company has an intention to end, or even reduce, its imports from Western Sahara.”
KLP has joined other institutional investors who have already excluded Innophos due to human right-based objections, among others: the Norwegian Government Pension Fund, Norwegian financial services group DNB, Swedish bank SEB, Danish banks Danske Bank and Sydbank as well as Luxembourg’s Fonds de Compensation.