Norway’s pension fund raises the bar on business and human rights, draws praise
The world’s largest sovereign wealth fund has for the first time published a human rights policy. The fund expects companies to respect all human rights throughout all their operations, including in their supply chains. "This is a major step towards getting the private sector to respect human rights in its operations", says Rainforest Foundation Norway.
Norges Bank Investment Management (NBIM), which manages the Norwegian Government Pension Fund Global, on Thursday morning published a new policy on human rights, outlining how it expects companies the fund invests in to respect human rights and address human rights issues in their business practices.
"NBIM invests on behalf of current and future generations of Norwegians, and we expect nothing less than the highest standards for those investments, particularly with regards to human rights and the environment. This document is an important step in this direction", says Nils Hermann Ranum, head of policy and campaigns at Rainforest Foundation Norway (RFN).
The publication of the human rights policy is significant, as NBIM is a major player in global investment circles. The Norwegian Government Pension Fund Global is the world’s largest sovereign wealth fund. Its funds are invested in some 9000 companies in 75 countries. What NBIM as an investor says, is keenly watched and heeded the world over.
Applies to all companies
The policy makes it clear that “The responsibility to respect human rights applies to all companies”, and makes a strong connection to the UN Guiding Principles on Business and Human Rights (UNGP), adopted by the UN in 2011, and the UN’s International Bill of Human Rights.
"This can help organizations like ours - and society at large- to hold both NBIM and the companies it invests in worldwide accountable. We’re very pleased to see that NBIM is explicit about its expectation that all of the companies it invests in respect human rights and that they should lay strategies, monitor and report in an integrated and comprehensive fashion", says Ranum.
The document outlines that all companies NBIM invests in should have a human rights policy, integrate this into its operations and risk management, and report on the company’s performance regarding human rights. The responsibility for respecting human rights is not limited to the companies’ own operations, but includes “supply chains and other business relationships”.
"We are very happy to see that the Norwegian pension fund management expects companies to ensure that human rights are respected not only in their own operations, but also in their supply chain", says Ranum.
The emphasis placed on risk assessments and disclosure all the way through planning, execution and reporting on the potential human rights impacts of investments and operations is seen as positive and significant by RFN.
Should divest from companies that fail to respect human rights
"The policy helps to force companies who may not otherwise do so to think twice about the potential risks involved, it helps affected individuals and communities defend themselves against violations of their rights and seek redress after the fact. We expect NBIM to use its role as a huge investor to improve companies’ track record on human rights, and divest from companies that consistently ignore or fail to respect human rights", says Ranum.
The policy also outlines an expectation that companies establish or participate in grievance mechanisms for individuals and communities that may be adversely impacted by their operations.
"Grievance mechanisms are important for indigenous peoples and other local communities that are negatively affected by investments and projects, and open doors for compensation and redress if their rights are violated", says Ranum.