Human rights concerns prompt big divestmentsMarch 2010
The Church of England has sold its shares in the mining multinational Vedanta over worries about the company's community relations in India.
The church's Ethical Investment Advisory Group (EIAG) announced last month that the holding has been deemed 'inconsistent' with its ethical investment policy and said engagement with the company had achieved nothing.
The divestment, worth £3.8million ($5.9m, €4.3m) across all the church's investment bodies, stems largely from concerns over the treatment of local residents near Vedanta's alumina refinery in Orissa and a planned bauxite mine in the nearby Niyamgiri hills.
Poor relations with people living near both sites have attracted negative public attention over the past year, and recently prompted the head of the church, the Archbishop of Canterbury, to ask the EIAG to investigate the situation (EP11, issue 7, p5).
John Reynolds, the EIAG chairman, said: 'After six months of engagement we are not satisfied that Vedanta has shown, or is likely in future to show, the level of respect for human rights and local communities we expect of companies in whom the church investing bodies hold shares.'
In a separate move last month, the Joseph Rowntree Charitable Trust, which works to improve social justice in in the UK, Ireland and South Africa, sold its £1.9m stake in Vedanta, 'due to serious concerns about its approach to human rights and the environment, particularly in Orissa'.
Other investors that follow the trust's ethical policy, including the Marlborough Ethical Fund and Millfield House Foundation, have also sold their shares, taking the sum divested to £2.2m. A total of 77,600 Rowntree shares were sold following nine months' engagement with the company, which the trust said was fruitless.
Susan Seymour, chair of the trust's investment committee, said: 'Vedanta is pushing industrialisation to the detriment of the lives and lands of local people and at great risk to its own reputation. This behaviour may be legal but it is morally indefensible. Vedanta must realise that unless it makes significant changes soon, shareholders will continue to lose confidence in the company.'
The two divestments follow recent news that the London-based multinational has been judged to have breached the OECD's guidelines for multinationals.
The case, begun in December 2008, followed a complaint from the tribal rights group Survival International accusing Vedanta of various abuses, including the forcible eviction of indigenous people and toxic dumping on land in Orissa. The UK's national contact point (NCP) on the OECD guidelines upheld the charge and recommended measures to help Vedanta to observe the guidelines, including conducting impact assessments and following standards on consultation with indigenous peoples. Survival International claims Vedanta has so far ignored this advice.
Vedanta has responded to the NCP's final statement, saying it rejects the conclusions and has 'complied in all respects with Indian regulations, including consultations with the local community'.
Already a member? click here to login