GES Newsletter
December 1, 2008

Institutional investors played an important role in making Sodexo, one of the largest food services and facilities management companies in the world, to act on systematic human rights abuses at a detainee centre in the UK. Through a constructive dialogue led by the investors’ advisor GES Investment Services and actively supported by four Swedish National Pension Funds, the company was also encouraged to broaden its responsibilities by recently adopting a company-wide human rights policy.

In 2006, the UK HM Chief Inspector of Prisons (HMIP) directed harsh criticism against the Harmondsworth Immigration Removal Centre in London, because of its inhumane conditions. The report cited use of disproportional disciplinary measures, degrading treatments, inadequate complaint systems among other aspects. The centre is managed by Kalyx, a subsidiary of French company Sodexo, and had also been critcised by the HMIP in 2003 regarding the treatment of detainees.

According to analysis by GES Investment Services, the reported incident could be associated to a violation of the UN Global Compact Principles, of which the company is a signatory, as well as underlying international norms like the UN Universal Declaration of Human Rights and the UN Convention relating to the Status of Refugees. Consequently, GES recommended its clients in May 2007 to engage in dialogue and/or active ownership with Sodexo, or as an alternative, to exclude the company from their investment universe.

Since then, GES has continued to engage in dialogue with Sodexo on behalf of its clients, who altogether have investments of approximately €300 billion under GES’ advice. Some clients have also taken active part by writing letters to and meeting with the company, e.g. the First-Fourth Swedish National Pension Funds through their collaborative body the Ethical Council.

“Sodexo has been very responsive to our clients’ concerns and shown a real commitment in addressing both the problems at the UK centre as well as the risks of similar problems in their global operations. In October, they fulfilled our last revision criteria by providing documentation on a new company-wide human rights policy and how this policy will be integrated into the organization. Consequently, we now have recommended our clients to re-include the company in their investment universe”, says Helene Regnell, Research Director at GES Investment Services.

“This case is yet another proof of engagement being a successful investment strategy and we are very pleased to see a growing interest amongst clients to engage in active dialogue with companies in order to push for progress and positive change”, says Helene Regnell.