Church of England disinvests from Vedanta Resources plc
The Church Commissioners and the Church of England Pensions Board have sold their shares in Vedanta Resources plc on the advice of the Church’s Ethical Investment Advisory Group (EIAG). As a result, none of the three national investing bodies of the Church of England hold shares in the company.
The EIAG advised disinvestment because its engagement with the company had produced no substantive results and the EIAG believed that it would be inconsistent with the Church investing bodies’ joint ethical investment policy to remain invested given the EIAG’s concerns about the company’s approach to relations with the communities where it operates.
Allegations about Vedanta’s alumina refinery in Lanjigarh, Orissa, and planned bauxite mine in the nearby Niyamgiri hills came to the EIAG’s attention in June 2009. The EIAG has been examining the issues carefully since and has discussed them in a process of engagement with the company. The EIAG Secretary paid a visit to India in November 2009 to see the refinery and mine site at first hand.
EIAG Chairman, John Reynolds, said: “I am a passionate advocate for engagement with companies when we have ethical concerns. We have an excellent track record of getting our concerns heard and acted upon by the companies in which the Church investing bodies hold shares.
“We are grateful to Vedanta’s senior management for making themselves available to meet us on a number of occasions. However, after six months of engagement, we are not satisfied that Vedanta has shown, or is likely in future to show, the level of respect for human rights and local communities that we expect of companies in whom the Church investing bodies hold shares.
“In these circumstances the Ethical Investment Advisory Group advised that it would be inconsistent with the Church investing bodies’ joint ethical investment policy for the investing bodies to remain invested.”
The EIAG understands that the Indian government is still considering whether to give final approval for the mine project.
John Reynolds stressed: “We respect the Indian democratic system. Our concern is that a company registered and listed in the UK should conform to the established environmental, social and governance norms expected in the London market – or at least reassure its shareholders that it is committed to the journey.”
The EIAG will maintain contact with Vedanta. John Reynolds said: “We will be pleased to review our recommendation to the Church investing bodies if the company addresses the concerns we have raised.”
The Church of England Ethical Investment Advisory Group (EIAG) makes recommendations on ethical investment policy to the Church of England's three national investing bodies (the Church Commissioners for England, The Church of England Pensions Board and the CBF Church of England Funds). It also conducts engagement with companies in whom the investing bodies hold shares. The EIAG includes representation from the General Synod, the Archbishops’ Council and the Council for Mission and Public Affairs as well as the investing bodies.
Vedanta Resources plc is a FTSE 100 mining company. The Church Commissioners and Church of England Pensions Board formerly held shares in the company worth approximately £3.8m. The CBF Church of England funds have held Vedanta shares in the past but did not hold any at the time the EIAG recommended disinvestment.
As part of his November trip to India, EIAG Secretary Edward Mason visited villages at the periphery of Vedanta’s Lanjigarh refinery. The EIAG concluded that tribes people in the refinery area had not been treated responsibly by Vedanta as the refinery project had been implemented. The EIAG was concerned that in the absence of a new approach from the company tribes people in the mining area would not be treated responsibly either.
Measures that Vedanta could institute to provide reassurance to investors include:
· Making available environmental and social impact assessments in relation to the Niyamgiri bauxite mine project and plans for mitigating negative impacts as a result of the mine
· Establishing externally facilitated communication mechanisms with communities who will be affected by the Niyamgiri bauxite mine project, including consultation on how corporate social responsibility funding for development will be spent
· Drawing up group-wide human rights, community consultation and environmental standards, policies and procedures and reporting on their implementation to shareholders.