GES Newsletter
March 31, 2011

Following recent criticism in Danish media, G4S, the international security solutions group, has publicly announced that they are pulling out of their most controversial operations in the Occupied Palestinian Territories (OPT) on the West Bank. The decision was based on a thorough review with input from various sources, including GES Investment Services.

In 2002, Group 4 Falck (later renamed G4S) withdrew from several contracts providing armed security officers to residential settlements in the OPT because “the occupation was illegal according to humanitarian law”. Since then the company has not performed such work, nor bid for any such contracts. But in November 2010, Danish media reported that G4S had begun operations in the region again, which raised criticism and initiated an engagement process with e.g. GES Investment Services.

In a press release published on March 11, G4S stated:

“The services from which the company withdrew in 2002 can not be compared to those provided today. In order to help us understand all of the issues and to come to a satisfactory conclusion regarding today’s operations in the area, we have taken a number of steps:

• G4S engaged Professor Hjalte Rasmussen, from the University of Copenhagen, who is a well-known and leading authority in international law, to review our business on the West Bank and provide a legal opinion. After visiting the region, Professor Rasmussen concluded that G4S does not violate any national or international law.

• In addition to the legal opinion, we have been conducting a review of our business in the region against our own Business Ethics Policy and have sought input from a number of sources including customers and a number of socially responsible investment groups such as GES Investment Services.

After a thorough review, we have concluded that a number of our contracts with private enterprises in the area for traditional security and alarm monitoring services are not discriminatory or controversial and in fact help to provide safety and security for the general public no matter what their background.

However, we have also concluded that to ensure that our business practices remain in line with our own Business Ethics Policy, we will aim to exit a number of contracts, which involve the servicing of security equipment at the barrier checkpoints, prisons and police stations in the West Bank.

We will aim to complete this exit as soon as possible, but also recognise that we have contractual obligations to our customers, which we must take into consideration.

We would like to take this opportunity to thank everyone who has taken the time to engage with us on this issue and for their support in helping us to reach a satisfactory decision.”

Arvinder Tiwana, Research Analyst at GES Investment Services, commends G4S proactive response to investor concern: “G4S has – again – demonstrated an excellent approach to investor dialogue, just like we have previously experienced with them in a successful engagement process regarding labour standards in emerging markets. We welcome their decision as it further reduces the ESG risks that are central to responsible investors.”

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