Friday, February 5, 2010

Church of England sells stake in Vedanta

S Kalyana Ramanathan / London February 06, 2010

Withdraws investment over Orissa project.

Metals and mining major and Anil Agarwal-controlled Vedanta Resouces today received a moral blow to its proposed mining project in Orissa after the Church of England withdrew its investments in the company, citing ethical reasons for the decision.

The Church Commissioners and the Church of England Pensions Board have sold their shares in Vedanta Resources on the advice of the Church’s Ethical Investment Advisory Group (EIAG).

The proposed aluminum project in Orissa faced a serious backlash from environmental and human rights activists regarding the displacement of the local Dongria Kondh community in the Niyamgiri Hills.

The Church’s investment in the Vedanta stock is relatively small, at £2.5 million, but a divestment would be a powerfully symbolic gesture and a victory for campaigners.

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. After six months of engagement (with the company), 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, however, said it will maintain contact with Vedanta. “We will be pleased to review our recommendation to the Church investing bodies if the company addresses the concerns we have raised,” said Reynolds.

At the time of going to print, a response from Vedanta could not be obtained.

The Church is not the first organisation to disinvest from Vedanta on ethical grounds. In 2007, the Norwegian government sold its $13 million stake, saying, “there is little reason to believe that the company’s unacceptable practice will change in the future”.

In addition, Martin Currie Investments sold its £2.3 million stake last year, and BP’s pension fund reduced its holdings in Vedanta due to “concerns about the way the company operates”.

NGO Survival International Director Stephen Corry said, “The Church’s unprecedented and very welcome decision sends a strong signal to companies that trample on tribal peoples’ rights: we will not bankroll your abuses. Anybody that has shares in Vedanta should sell them today if they care about human rights.”

Survival is lobbying other shareholders, including the Rowntree Charitable Trust.

In October 2009 The UK National Contact Point (NCP) for the OECD Guidelines for Multinational Enterprises upheld Survival International’s allegation that Vedanta Resources had failed to put in place an adequate and timely consultation mechanism to engage the Dongria Kondh community, whose health and environment would be directly affected by the company’s plans to construct a bauxite mine in the Niyamgiri Hills.

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