S&P ignored repeated red flags in ESG award to Thai company accused of land-grabbing

Indigenous and local communities are extremely vulnerable to abuse by companies, the UN has warned.

S&P Global gave a top sustainability award and a perfect score on human rights to Thai sugar giant Mitr Phol while being repeatedly warned that the company was linked to land-grabbing and involuntary resettlements.

RI previously reported Mitr Phol’s receipt of the S&P Silver Class Sustainability Award in February – ranking it among the global top 5 percent of companies within its industry based on S&P’s ESG scores – despite being sued in 2020 by more than 700 Cambodian families who say they were forcibly evicted to make way for sugar plantations without any form of compensation. Community leaders who opposed the evictions were arrested and assaulted, according to NGO reports.

The high-profile lawsuit is the first to be filed in a Thai court by foreign plaintiffs and is described by Amnesty International as a “watershed moment” for corporate accountability within the region.

According to S&P’s methodology, companies with excessive controversies are excluded from its ESG awards, based on “media coverage and publicly available stakeholder information provided by RepRisk ESG business intelligence”. The credit company did not comment on Mitr Phol’s selection when previously contacted by RI.

It has now emerged that RepRisk flagged at least 20 separate references to Mitr Phol’s involvement in the alleged land-grabbing incident between 2020 and 2022 alone.

According to RepRisk’s incident and analytics report – available to all clients via its Risk Platform offering – the risk incidents linked to land-grabbing and involuntary settlement were assessed at ‘medium risk severity’. ESG issues associated with the company include ‘Human rights abuses, corporate complicity’ and ‘Corruption, bribery, extortion, money laundering’.

“S&P staff are perpetuating a culture of impunity for corporate human rights abuses with real-world implications for communities that have suffered serious harm and are still struggling for justice”
Natalie Bugalski,
Inclusive Development International

Coverage of the land-grabbing incident is also widely available online and has been highlighted by other bodies such as the SDG-focused World Benchmarking Alliance, which noted that Mitr Phol – which received a score of 27.1 out of 100 in a recent industry-wide survey – “does not commit to recognising and respecting the legitimate tenure rights related to the ownership and use of land of local communities”.

Mitr Phol received a score of 100 for its human rights performance, according to S&P’s Global ESG Score product, compared to an industry mean of just 16, and an overall social score of 85 – one less than its peer group’s top score of 86.

While voluntary protections exist for indigenous and local communities – such as an International Labour Organisation convention and UN guidelines to consult and obtain the consent of communities for resettlement – they have been largely insufficient to prevent abuse, discrimination and marginalisation. Industry-led initiatives such as the Equator Principles and the OECD’s National Contact Point system have been similarly criticised for an inability to prevent a string of widely reported scandals including the Dakota Access Pipeline and multiple projects by Korean steelmaker POSCO.

‘Culture of impunity’

The UN estimates that more than 370 million indigenous peoples living in over 90 countries are particularly vulnerable to the impacts of commercial development and business activities due to their proximity to natural resources.

Commenting on the story, human rights research group Inclusive Development International co-founder Natalie Bugalski said that S&P was “perpetuating a culture of impunity for corporate human rights abuses with real-world implications for communities that have suffered serious harm and are still struggling for justice”.

She added: “It is incomprehensible how a company that is the subject of a high-profile class action lawsuit for land-grabbing, and which has already been found culpable by the Thai National Human Rights Commission, would be given a perfect score on human rights by S&P.”

It comes as S&P Global president and CEO Douglas Peterson argued in favour of a holistic approach to ESG scoring in a recently published open letter.

He said: “I believe strongly that financial markets can be a powerful force for good and that transparent and rigorous ESG scoring is an essential tool for market participants to evaluate and optimise their societal impact … I would argue that an ESG score does not support the basic principles of ESG investing if it considers risk alone.”

Peterson, who recently chaired the G7 Impact Task Force, added that it was “critically important to measure a company’s impact on society and the environment when assessing its ESG performance”.

S&P acknowledged requests for comment from RI but did not provide a statement.

Mitr Phol is one of only 74 companies to receive the S&P Silver Award out of more than 600 companies recognised by the ratings provider for leading sustainability practices in 2021. Seventy top-billed companies received the Gold award.

More than 7,500 companies worldwide were assessed by S&P for the awards.