Norway’s KLP divests from Dakota pipeline companies over human rights violations risks

Norwegian mutual insurer and pension fund manager KLP has excluded four companies involved in the Dakota Access Pipeline (DAPL) joint venture: Energy Transfer Partners (ETP), Phillips 66, Enbridge Inc. and Marathon Petroleum Corporation.

Last month, CalPERS and 100 fellow investors asked major banks backing the Dakota Access Pipeline to address the tribe’s concerns. The group, which include four New York City pension funds, Boston Common Asset Management, Calvert, and Storebrand Asset Management, called on the banks to act “to protect the banks’ reputation, consumer base, and avoid legal liabilities.” And Nordea’s team for Responsible Investments has recommended an exclusion of the three companies behind the Dakota Access Pipeline.

Now, in the latest development, KLP has concluded that the excluded companies’ involvement carries “unacceptable risks of contributing to serious or systematic human rights violations” of the Standing Rock Sioux tribe, among other North and South Dakota ones.

According to recent media reports, KLP had not been able to document breaches of ESG criteria as to exclude the companies.

Annie Bersagel, Acting Head of Responsible Investments at KLP, told RI that this case has featured “more twists and turns” than expected and that has been “followed on a running basis” by KLP.

Bersagel, who visited the area last December, said that a game changer has been the statement on March 3 by the UN Special Rapporteur on the rights of indigenous peoples, Victoria Tauli-Corpuz.In her End of Mission Statement, Tauli-Corpuz warned that the approval of the 1,900km pipeline to transport unconventional oil was granted “without an adequate social, cultural or environmental assessment” and in “the absence of meaningful consultation or participation by the tribes”.

Tauli-Corpuz will prepare a detailed report for the United Nations Human Rights Council about the UN fact-finding mission, which covers the situation of other indigenous people, to be published in September 2017.

Regarding the Dakota Access Pipeline, she said: “The potentially affected tribes were denied access to information and excluded from consultations at the planning stage of the project.”

KLP has published a fourteen-page document explaining the rationale for excluding the companies.

It said it has engaged the companies and that they haven’t announced any intention to halt the construction in response to the UN Special Rapporteur’s statement.

KLP’s interests in the four companies amounted to NOK578m (€63.3m), including equity and fixed income. When evaluating the exclusion of the companies, KLP explained:

“As the operator, ETP was most directly involved, while Phillips 66 was a significant minority shareholder throughout the events described. Marathon Petroleum and Enbridge only recently became minority shareholders in the project, but entered with full knowledge of the process that preceded, including criticism regarding the lack of consultation.”