GES Newsletter
May 28, 2012

Very few companies operating in Burma are prepared to deal with the human rights risks that they are exposed to, shows a new benchmark report from GES. More than half of the rated companies even lack the most basic requirement, a company-wide human rights policy. The report results will provide basis for GES’ enhanced Burma engagement efforts together with Nordic pension fund clients Folksam, KLP and LD.

The Burma Benchmark Report was produced by GES for clients of its Burma Engagement Service, commenced in 2007, to serve as a concrete tool to manage investor opportunities and risks accentuated by the recent positive political development.

In previous engagement, GES and its clients Folksam (Sweden), KLP (Norway) and LD (Denmark) have urged companies to apply and disclose information on human rights policies and management adapted to the specific situation in Burma and encouraged companies to apply heightened managerial care in order to ensure the respect for human rights in all business activities. Further to this, companies were urged to promote the improvement of the situation for human rights even beyond the areas of operation through broader engagement with peers and other stakeholders.

The new benchmark report builds on the very same requests, but elaborates further the investor perspective on the underlying dilemmas and the expectations of companies. Most importantly, it provides an overview of what level of preparedness the companies demonstrate in these areas, as disclosed in their own public reporting.

29 companies that are operating in Burma and are part of GES’ clients’ holdings have been analysed and compared based on criteria derived from well-established international guidelines. These include a public commitment to respecting human rights globally, human rights due diligence in Burma, risk management related to contracting of security personnel, engagement with business partners, peers, authorities and local stakeholders as well as transparency and accountability.

The report reveals large gaps in terms of companies’ reported human rights risk awareness and preparedness, both on a global level and in Burma specifically. 16 companies lack the equivalent of an explicit company-wide human rights policy, rendering them a total assessment of “Lowest level of human rights risk preparedness”. Only three of the companies indicate that they apply human rights due diligence or heightened risk awareness to their operations in Burma. Out of these three, only two companies were in total assessed as having a “High level of human rights risk preparedness”. The rest, eleven companies, had a medium/low level.

GES’ Research Director Anna Zetterström Bellander comments the results:

“This generally poor level of preparedness does not only pose a risk for potentially affected people, but also leaves the companies exposed to legal, financial, operational and reputational risks. Together with Folksam, KLP and LD, we are therefore taking an active role in the debate about how to invest responsibly and sustainably in Burma’s future. We have already received substantial response from the companies on the report results, which will be interesting to follow up on in meetings that we are planning. We are also hoping that more investors will join us as we step up our engagement with companies active in the country.”

GES and Nordic investors act on poor Burma ratings

GES Newsletter
May 28, 2012

Very few companies operating in Burma are prepared to deal with the human rights risks that they are exposed to, shows a new benchmark report from GES. More than half of the rated companies even lack the most basic requirement, a company-wide human rights policy. The report results will provide basis for GES’ enhanced Burma engagement efforts together with Nordic pension fund clients Folksam, KLP and LD.

The Burma Benchmark Report was produced by GES for clients of its Burma Engagement Service, commenced in 2007, to serve as a concrete tool to manage investor opportunities and risks accentuated by the recent positive political development.

In previous engagement, GES and its clients Folksam (Sweden), KLP (Norway) and LD (Denmark) have urged companies to apply and disclose information on human rights policies and management adapted to the specific situation in Burma and encouraged companies to apply heightened managerial care in order to ensure the respect for human rights in all business activities. Further to this, companies were urged to promote the improvement of the situation for human rights even beyond the areas of operation through broader engagement with peers and other stakeholders.

The new benchmark report builds on the very same requests, but elaborates further the investor perspective on the underlying dilemmas and the expectations of companies. Most importantly, it provides an overview of what level of preparedness the companies demonstrate in these areas, as disclosed in their own public reporting.

29 companies that are operating in Burma and are part of GES’ clients’ holdings have been analysed and compared based on criteria derived from well-established international guidelines. These include a public commitment to respecting human rights globally, human rights due diligence in Burma, risk management related to contracting of security personnel, engagement with business partners, peers, authorities and local stakeholders as well as transparency and accountability.

The report reveals large gaps in terms of companies’ reported human rights risk awareness and preparedness, both on a global level and in Burma specifically. 16 companies lack the equivalent of an explicit company-wide human rights policy, rendering them a total assessment of “Lowest level of human rights risk preparedness”. Only three of the companies indicate that they apply human rights due diligence or heightened risk awareness to their operations in Burma. Out of these three, only two companies were in total assessed as having a “High level of human rights risk preparedness”. The rest, eleven companies, had a medium/low level.

GES’ Research Director Anna Zetterström Bellander comments the results:

“This generally poor level of preparedness does not only pose a risk for potentially affected people, but also leaves the companies exposed to legal, financial, operational and reputational risks. Together with Folksam, KLP and LD, we are therefore taking an active role in the debate about how to invest responsibly and sustainably in Burma’s future. We have already received substantial response from the companies on the report results, which will be interesting to follow up on in meetings that we are planning. We are also hoping that more investors will join us as we step up our engagement with companies active in the country.”

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