Norway's largest pension fund excludes Adani Ports

Adani Ports and Special Economic Zone Ltd has been excluded from investment by Norway's largest pension fund, KLP and the KLP Funds with effect from June 2021. This due diligence-based divestment has been implemented on the grounds that Adani's operations in Myanmar and its business partnership with that country's armed forces constitutes an unacceptable risk of contributing to the violation of KLP's guidelines for responsible investment.

India's largest commercial port operator, Adani manages 12 ports in India, with logistics accounting for an important part of its business activity. Adani has entered into a business partnership with the military-owned conglomerate Myanmar Economic Corporation (MEC) for the construction of a new container port in the city of Yangon. KLP was invested in Adani at the time the company was excluded.

"When Adani signed the agreement, information about the armed forces' abuses was publicly available. This should have given Adani reasonable grounds to act with particular prudence with respect to the MEC, which owned the land. The company must exercise particular care when it operates in locations where there is war or conflict. Nor has the company adequately performed the necessary human rights due diligence assessments. There are reasonable grounds to suspect that the company puts commercial considerations before the risk to human rights," KLP said.

The agreement's potential termination was conditional on the financial consequences following from sanctions imposed by the US Department of the Treasury's Office of Foreign Assets Control (OFAC), and not on the behaviour of the armed forces. Even though no further financial transactions are carried out, the agreement is valid for a term of 50 years, which means that the risk of contributing to future violations does exist.

In addition, the agreement's object concerns a permanent and important piece of infrastructure, which may be used beyond the term of the agreement. In KLP's view, the company has failed to take such steps with respect to the agreement as would constitute due diligence but has instead continued its business partnership with the MEC. Adani has therefore not acted with sufficient prudence in its choice of business partner in a country where there has been an ongoing conflict, involving systematic and extremely serious abuses that affect a very large number of people, for many years, it said.