Siemens facing shareholder motion over controversial Brazilian dam project

Shareholder group files motions denying them discharge

The DKAA, a lobby group for small German shareholders with €12.5m invested in Siemens, has urged other shareholders to join it in voting against discharging Siemens’ management and controllers due to the firm’s involvement in the controversial Belo Monte dam project in Brazil.

The DKAA argues the industrial giant is violating the UN Guiding Principles, conventions of the International Labour Organisation (ILO), the recommendations of the World Commission on Dams and its own corporate governance guidelines. Since Siemens’ supervisory board had not prevented management from committing these violations, it too should be denied discharge, the DKAA added.

The DKAA is the Dachverband der Kritischen Aktionärinnen und Aktionäre, Association of Critical Shareholders.

Belo Monte has been criticised by the UN and the ILO both for causing the displacement of the local population and the partial destruction of the Amazon rainforest.

Siemens will hold its annual meeting on January 23 in Munich. There, shareholders will also vote on DKAA motions to deny the supervisory board re-election and to lower the dividend to €2.50 from a proposed €3.00 per share. DKAA wants the €421m garnered from the smaller divided to be awarded to the 20,000 local inhabitants that are to be displaced by Belo Monte.
Siemens owns 35% of Voith Hydro, a Germanengineering firm that is part of a consortium building the dam. Other members of that consortium are Siemens’ French and Austrian peers Alstom and Andritz, respectively. Siemens is supplying transformers to the hydroelectric project.

Asked why it was involved with Belo Monte, Siemens said: “The project makes a huge contribution to economic development and to improving the living conditions of the people in the region. Providing 11.3 GW of power to 35 million people – the equivalent of ten nuclear plants or 15 coal-fired ones – Belo Monte is one of the most modern and efficient hydroelectric plants in the world.” Siemens added that as a signatory of the UN’s Global Compact, it took human rights and environmental responsibility “very seriously.”

DKAA managing director Markus Dufner said he hoped other big shareholders concerned about sustainability would join his group in supporting the motions. He named Union Investment, a Frankfurt-based asset manager and UN PRI signatory, as an example.

Union told Responsible Investor it would divulge its opinion on the motions shortly before the meeting. “But what I can tell you is that we see the Belo Monte as problematic from a sustainability standpoint,” a spokesman said.

“We are therefore engaging with Siemens and also with Munich Re on this matter and feel that we are making progress.” Munich Re was ejected from the German sustainability index GCX almost a year ago for insuring the Belo Monte project. Link to Siemens AGM agenda