The $3.9 trillion ESG investing industry, which promotes itself as a way for investors to align their money with their values, is the fastest growing sector of financial services.  

“Activists on the ground have been risking their lives and liberty to stop the flow of money, weapons and other resources that has allowed the military to maintain its illegitimate grip on power,” said Debbie Stothard, founder and coordinator of ALTSEAN-Burma. “It’s shocking and devastating to see so-called ‘responsible investment’ doing the opposite.”

Companies receiving “sustainable investment” include weapons dealers that are arming the regime, tech firms serving the military-controlled national police force, and others that direct profits to the military, allowing it to surveil and violently crush dissent. Data compiled by Inclusive Development International and published today in an open-access online database show that ESG-labeled funds continued to hold shares in these companies even after Myanmar’s military was found responsible for two of the most egregious and well-publicized human rights crimes in recent history: the genocide perpetrated against the Rohingya and last year’s bloody coup and subsequent crackdown on pro-democracy protesters.  

“That dozens of companies with ties to Myanmar’s genocidal regime are included in ESG portfolios shows just how large the gulf is between ‘responsible investment’ marketing claims and reality,” said David Pred, executive director of Inclusive Development International. “The foundation of this fraudulent industry is a deeply flawed ESG ratings system, which is in urgent need of regulation.”

From responsible investing to ESG greenwashing

Tailoring investment strategies to consider ESG issues is increasingly common. Yet while the ESG investing industry is capitalizing on public demand for ethical and sustainable investing options, it is directing capital in ways that are neither – as evidenced by information revealed in the Myanmar ESG Files. 

This is in part because the process through which companies’ ESG practices are rated and then used to tailor investment portfolios typically only reflects information considered “financially material.” That means a company’s links to gross human rights abuses are only relevant insofar as they threaten its future profitability and share price. 

ESG ratings can also mask serious human rights abuses because they are based on an amalgamation of information about numerous indicators and a diverse range of environmental, social and governance issues. As a result, a company making and selling weapons used to perpetrate genocide and war crimes in Myanmar can effectively compensate for the reputational risks of that behavior and raise its ESG rating by, for example, committing to reduce its greenhouse gas emissions. 

The role of ESG index providers 

Firms that translate ESG ratings into suggested investment portfolios (ESG indexes), including MSCI, FTSE Russell and S&P Dow Jones Indices, have enormous leverage to improve human rights compliance among companies seeking a spot on their indexes. Under the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises, they have a responsibility to exercise that leverage – including by excluding companies that refuse to stop enabling the Myanmar military’s human rights abuses. Information documented in the Myanmar ESG Files demonstrates that all three firms are failing to do so.

The low bar for securing a place in ESG funds does more than direct “responsible investment” to the wrong place. It makes it harder to hold some of worst corporate offenders accountable. The “ESG” stamp of approval undermines the efforts of communities and human rights defenders to secure redress for corporate abuses by making investors less likely to engage and use their leverage to compel action. 

“Real socially responsible investing could be a crucial catalyst for advancing human rights in business,” said Pred. “But without a complete overhaul, the ESG investing industry is actually doing the opposite – greenwashing abusive companies and diverting energy from this potentially powerful force for good, with real human costs in Myanmar and around the world.”

Read the full report and access the Myanmar ESG Files database here: http://www.inclusivedevelopment.net/MyanmarESGFiles 

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Inclusive Development International joined over 200 civil society organizations from Myanmar and globally in urging international financial institutions like the World Bank, International Finance Corporation and Asian Development Bank to immediately freeze loans and other financial assistance to Myanmar in light of the recent military coup.  

The statement calls on the international financial institutions to halt all lending obligations and suspend disbursements, pending grants, and loans to all military and military-linked businesses and individuals, including military-linked “crony companies,” and companies with ties to individuals who have been internationally sanctioned. It calls for scrutiny of private sector loans to identify both pre-existing and new linkages between clients and military companies to ensure that no military-linked enterprise would benefit from either direct or indirect financing.

The statement urges due diligence on all loans in Myanmar to ensure they safeguard the rights of communities and their environment and protect civil space, and it emphasizes that humanitarian aid should be distinguished from finance that supports the junta.  It calls on the international financial institutions to work together and in solidarity with the people of Myanmar to demonstrate their respect for the rule of law and rejection of military violence by aligning themselves with strong targeted sanctions against the military and its cronies—not against Myanmar’s people. 

The full statement is available here.

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The Burmese Military stands accused of genocide.  UN International Fact-Finding Mission on Myanmar “found ‘genocidal acts’ in Burma’s 2017 ‘clearance operations’ that killed thousands and caused more than 740,000 Rohingya to flee for their lives to Bangladesh.”  It noted the military’s long history of brutality against other ethnic minorities.  In October, the UN Fact-Finding Mission warned of “a continued threat of genocide.” These crimes are enabled by the Burmese military’s business interests, including their lucrative partnership with Kirin. As a subsidiary of Kirin, New Belgium would become part of a key financial network empowering the Burmese army to continue committing genocide and crimes against humanity.

Legal mechanisms to bring the perpetrators to justice began in the International Court of Justice on December 10. International accountability may include the investigation of financial supporters of the Burmese army, including Kirin. Kirin’s subsidiary with the Burmese army, Myanmar Brewery, is already subject to sanctions in Canada, which could carry business risks for Kirin and New Belgium Brewing.

The organizations called on New Belgium employees to oppose Kirin’s continuing business partnership with the Burmese military, and published a letter urging New Belgium employee shareholders to be a “force for good” by adding their voice to support action for justice and human rights, and rejecting Kirin’s takeover of New Belgium Brewing.  The organizations supported calls for all businesses to divest from the Burmese military and for sanctions against military businesses, including Kirin’s Myanmar Brewery.

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The post Thai human rights body hears complaints against Tanintharyi coal mine appeared first on Inclusive Development International.

Representatives of indigenous Karen communities filed a complaint with the National Human Rights Commission of Thailand in June 2017 alleging human rights violations resulting from the activities of Thai companies operating an open-pit coal mine. The Ban Chaung mine has polluted the air and water, harmed the livelihoods of local people, and led to the illegal seizure of agricultural land, among other harmful impacts, according to the
complaint.

The mine is expected to harm as many as 16,000 people living in 22 villages in the Ban Chaung area of Tanintharyi Region, which experienced decades of conflict between Karen National Union forces and the Myanmar military.

The complaint, filed with the support of local NGO Tarkapaw Youth Group, Inclusive Development International and Spirit in Education Movement, called on the human rights commission to investigate the activities of the three Thai companies that have been connected to the mine: Energy Earth PCL, East Star Company and Thai Asset Mining Company. A fourth company, the Myanmar-based Mayflower Mining Enterprise Co., Ltd., holds the 2,100-acre mining concessions.

According to Tarkapaw Youth Group: “We are happy to see the Human Rights Commission actively investigating this complaint. Communities have suffered for years due to the impacts of the project. We hope that this will lead to a thorough investigation and that the Commission will take the necessary action to remedy harms caused by this project.”

The complaint alleges several serious human rights violations suffered by local communities in Ban Chaung, including the right to an adequate standard of living and the right to health.

Solid waste from the Ban Chaung mine burns and emits foul smoke, driving people away from their homes and making them dizzy and sick. The project has polluted local water sources that residents use for drinking, bathing and cooking. During the rainy season, this pollution flows into local streams and rivers, killing fish and crops, which harms people’s livelihoods, according to the complaint.

“Impacted communities have been pushing for years for the companies behind this project to remedy the harms they have suffered, but with no result”, said David Pred, Managing Director of Inclusive Development International. “We hope now that the companies have heard the message of affected villagers and will take all necessary actions to address them.”

Mayflower Mining received the concessions in 2010 and 2011 but is not involved in operations on the ground. Ratchaburi-based East Star and Kanchanaburi-based Thai Asset are developing the mine and related transportation infrastructure.

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The mine is expected to harm as many as 16,000 people living in 22 villages in the Ban Chaung area of Tanintharyi Region, which experienced decades of conflict between Karen National Union forces and the Myanmar military. The project has led to an influx of workers and armed soldiers from outside the area, making local people feel unsafe again following the signing of a provisional ceasefire agreement in 2012.

The complaint, filed with the support of local NGO Tarkapaw Youth Group and Inclusive Development International, asks the human rights commission to investigate the activities of the three Thai companies that have been connected to the mine: Energy Earth PCL, East Star Company and Thai Asset Mining Company. A fourth company, the Myanmar-based Mayflower Mining Enterprise Co., Ltd., holds the 2,100-acre mining concessions.

According to Tarkapaw Youth Group: “The government granted a mining permit for this project in a remote area that is very difficult to monitor. The Thai companies are working for their own benefit, while ignoring the impacts of the project. It is time for the government to review the Ban Chaung coal mine and take action. We also call on the National Human Rights Commission of Thailand to review the conduct of the Thai companies and take the necessary action to remedy any harms caused by this project.”

The independent National Human Rights Commission of Thailand is one of the few national human rights bodies in the world that investigates the overseas activities of private companies registered in its territory. At the conclusion of its investigations, the commission issues public reports detailing its findings.

The complaint alleges several serious human rights violations suffered by local communities in Ban Chaung, including the right to an adequate standard of living and the right to health. Solid waste from the Ban Chaung mine burns and emits foul smoke, driving people away from their homes and making them dizzy and sick. The project has polluted local water sources that residents use for drinking, bathing and cooking. During the rainy season, this pollution flows into local streams and rivers, killing fish and crops, which harms people’s livelihoods, according to the complaint.

The developers of the mine illegally seized agricultural land from local people, some of whom received no compensation, the complaint alleges. The complaint describes how the companies failed to seek the consent of the local Karen communities, violating their right of self-determination and threatening their traditional way of life.

“Coal mines are known to be among the highest-risk projects in terms of human rights, environmental and social impacts, and this one was developed in the middle of a region just beginning to recover from a brutal decades-long conflict,” said Natalie Bugalski, Legal Director of Inclusive Development International. “Yet the companies have completely failed in their duty to consult with local communities and carry out human rights due diligence.”

Mayflower Mining, reportedly owned by one of Myanmar’s wealthiest people, received the concessions in 2010 and 2011 but is not involved in operations on the ground. Ratchaburi-based East Star and Kanchanaburi-based Thai Asset are developing the mine and related transportation infrastructure. The Bangkok-based corporation Energy Earth signed an agreement in 2012 to fund the mine and distribute the coal to its network of buyers.

Representatives of the affected communities say they have tried in vain for years to negotiate with the companies developing the mine. They are now calling for the project to be stopped.

One community representative from an affected village summed up the complaint: “We are seriously impacted from the burning of the coal and we can see that the company is unable to manage this issue, which is making our lives unbearable. We are really afraid that the coal burning will last forever. We hope that the National Human Rights Commission of Thailand will investigate this project and ensure that Thai companies are not violating the rights of communities in Myanmar.”

This press release is available for download in Burmese here and in Thai here.

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