Executives running the world's largest sovereign wealth fund has put a company in which it invests under observation due to links to the military in Myanmar.
The Council on Ethics, which evaluates whether companies the Government Pension Fund Global invests in are consistent with the fund's ethical guidelines, recommended that Japanese consumer goods company Kirin Holdings Co. be put under observation "due to unacceptable risk that the company contributes to serious violations of individuals' rights in situations of war or conflict," a news release said.
GPFG, which had 10.91 trillion Norwegian kroner ($1.27 trillion) in assets as of Dec. 31, had a 2.4 billion kroner investment in the firm as of that date, according to its website.
The recommendation was made based on Kirin's business cooperation with an organization that has ties to Myanmar's military. However, Kirin recently announced its intention to end the business cooperation. Norges Bank, which oversees the wealth fund, will follow up on the implementation of this change as part of its observation.
Kirin is "deeply concerned by the recent actions of the military in Myanmar, which are against our standards and human rights policy," a Feb. 5 news release said.
The firm has invested in the country in 2015. "Given the current circumstances, we have no option but to terminate our current joint-venture partnership with Myanma Economic Holdings Public Co. Ltd., which provides the service of welfare fund management for the military. We will be taking steps as a matter of urgency to put this termination into effect."
GPFG's executive board also decided to implement "active ownership" for industrial engineering and steel production company ThyssenKrupp. The decision follows a recommendation by the council to place the company under observation due to unacceptable risk that it contributes to or is responsible for gross corruption.
Norges Bank has been in talks with the company for "a long period of time. We therefore have a good foundation for active ownership on the issues to which this matter relates," the release said.
The exclusion of building firm Atal SA/Poland was revoked. The company had been excluded since 2017 due to unacceptable risk that it has contributed to serious human rights violations by using North Korean workers at construction sites in Poland.
"As a result of a resolution in the UN's Security Council, all North-Korean workers have now been sent out of Poland. Therefore, there are no longer grounds for excluding the company," the release said.
GPFG has small stakes in more than 9,000 companies around the world.
