Amazon is set to be excluded by Storebrand Asset Management from its Swedish funds over allegedly unfair business practices.
“Our decision is based on the company’s shortcomings in living up to our criteria regarding corruption and the misuse of market dominance,” the NKr1.1 trillion ($113.4 billion; €110.8 billion) investor revealed in its Sustainable Investment Q2 Review, published on Tuesday.
The Norwegian manager cited fines in excess of €1 billion recently levied on Amazon subsidiaries by the Italian Competition Authority for what the investor described as “abuse of dominant market position through promotion of its own logistics service and preferential treatment of sellers who use the service to ship their goods on the Amazon’s platform”.
A spokesperson for Amazon told RI: “We strongly disagree with the decision of the Italian Competition Authority (ICA) and we have appealed. The proposed fine and remedies are unjustified and disproportionate. More than half of all annual sales on Amazon in Italy come from small and medium-sized businesses, and their success is at the heart of our business model. SMBs have multiple channels to sell their products both online and offline: Amazon is just one of those options.”
Bård Bringedal, CIO of Storebrand Asset Management, told RI that a division of ISS ESG – the data provider used by the manager in the Swedish market and for all Swedish funds – flagged the issues with the global retailer under a “norms-based criterion”.
At the time of publication ISS had not responded to a request for comment on the data provided to Storebrand.
Asked what this criterion referred to, Bringedal said: “Conduct-based norm breaches are companies that contribute to serious and systematic breaches of international law and human rights, companies involved in serious environmental degradation, including the climate, and companies involved in systematic corruption and financial crime.”
Regarding non-Swedish funds, Bringedal told RI: “For other funds, we have an ongoing evaluation and will be assessing how the company will respond to the many shareholder resolutions that were voted on during the AGM. We are also part of the Investor Alliance for Human Rights, where we are discussing together the next steps with regard to engagement with Amazon.”
Storebrand AM currently has exposure to Amazon of $185 million via index-tracking or low tracking error products, according to Bringedal. “We have no active positions,” he added.
The e-commerce giant is one out of 25 companies axed by the Norwegian investor in Q2.
This is not the first time that Storebrand has made headlines over its prolific divestments, having axed Activision Blizzard over alleged gender discrimination earlier this year, and US oil and gas giants Exxon and Chevron in 2020 due to anti-climate lobbying efforts.
The investor has also placed renewable energy provider Eolus Vind on its “Observation List” following engagement on the potential impact of the Øyfjellet Wind Park on native communities. The project, currently under construction, will be Norway’s largest wind power installation, with 72 wind turbines – however, concerns have been raised about its impact on local Sámi reindeer herders.
Firms placed under “observation” by Storebrand are expected to show a series of improvements within a preliminary period of one year in order to be removed from the list. If the improvements are not achieved, the “company can be excluded from the investable universe”.
Storebrand has asked Eolus Vind to carry out a “new and proper consultation process” and “adopt a policy on respect for indigenous people’s rights”.
In response, a spokesperson for Eolus Vind told RI: “There have been extensive and thorough consultations throughout the entire several years’ long licensing process, aimed at finding agreement and adapting the project to limit negative effects and finding the best solutions. To us, it is very unclear what Storebrand is referring to when they ask Eolus to carry out another consultation process.”
The spokesperson said that the company is “developing a company policy on human rights and formalised guidelines for indigenous people’s rights, to further clarify and express our commitment to respecting human rights”.
Storebrand reported that 74 percent of the 587 engagements it conducted in Q2 were made collaboratively with other investors, and that this approach would continue to be utilised significantly in the future.