Press Release – Norwegian Central Bank excludes companies from government Pension Fund Global because of their beaching practices

Evergreen and Precious Shipping loose investments from the largest sovereign wealth fund in the world

 

The Norwegian Central Bank announced today its decision to exclude ship owners Evergreen Marine Corporation, Precious Shipping, Korea Line Corporation and Thorensen Thai Agencies from the Government Pension Fund Global (GPFG) [1]. The exclusion is based on the companies’ poor management of their end-of-life ships and the sale of these for dirty and dangerous shipbreaking on the beaches of Gadani, Pakistan and Chittagong, Bangladesh.

 

The Norwegian Council on Ethics directs the Norwegian Central Bank, which manages the Government Pension Fund Global, on which companies should be excluded from investments in the fund, based on human rights and humanitarian violations, corruption and environmental degradation records. The GPFG is the largest sovereign wealth fund in the world, owning 1% of all investments worldwide, and the recommendations of the Council on Ethics weigh on other investors as indications of good financing.

"This is the first time that shipping companies have been excluded from an investment fund based on their poor shipbreaking practices, and coming from the largest investment fund in the world, it sends out a strong signal to all financial institutions to follow suit."
Ingvild Jenssen - Executive Director and Founder - NGO Shipbreaking Platform

The NGO Shipbreaking Platform has documented that in the last three years, 20 ships were sold by Evergreen, Korea Line, Precious Shipping and Thoresen Thai Agencies to beaching facilities in South Asia. The companies have been excluded from the GPFG because the beaching of their vessels cause severe environmental damage and serious human rights violations [2].

 

Whilst the exclusions so far are limited to companies that have sold their end-of-life vessels to be beached in Bangladesh and Pakistan, the reports clearly state that “to date, the Council on Ethics has not examined the way ships are broken up in India.” Many of the concerns raised by the Council also apply to the beaching practices in Alang, India. Indeed, as stated in their reports: “One particular problem with beaching is that shipbreaking takes place when the vessels are standing in mud and sand. As a result, the pollution leaches into the ground and is washed out with the tides. Even if arrangements were put in place at the beaching sites for the treatment of asbestos and PCBs, for example, the fundamental problem of containing and collecting the pollution would be impossible to resolve”. In light of this, the Platform encourages the Council on Ethics to also engage with companies that sell their ships for breaking on the beach of Alang, India.

 

According to the Council on Ethics, selling a vessel to a beaching yard “is a consequence of an active choice on the part of the company that owned the vessel to maximise its profit. In the Council’s opinion, that company must shoulder an independent responsibility for doing so. There are better ways of dismantling ships that are readily available to the shipowner, but these are more expensive”.

"Ship recycling is a heavy industry that requires industrial methods and infrastructure. We fully support the Council on Ethics conclusion that clean and safe ship recycling cannot be done on a beach."
Ingvild Jenssen - Executive Director and Founder - NGO Shipbreaking Platform

Bearing in mind that Taiwan used to be the destination for breaking ships before the boom of the industry in South Asia, it is particularly damning for Evergreen – a Taiwanese company – not to remember the legacy that the industry left in its country following the explosion in the port of Kaohsiung in 1988.

 

© Studio Fasching – Chittagong, Bangladesh – 2017

 

NOTES

 

[1] An additional company, the South Korean Pan Ocean Co Ltd, has been placed under observation. In its assessment of the likelihood that the company will in future contribute to such norm violations, the Council on Ethics has attached importance to the company’s assurance that it is willing in future to take the method of breakup into account as far as possible when making decisions on the sale of vessels for scrapping.

 

[2] The following serious concerns related to beaching are outlined by the Council of Ethics:
- continuous, innumerable and serious violations of a number of ILO conventions whose purpose it is to establish minimum standards which safeguard the lives and health of workers. Wide-ranging and serious violations of these conventions must be deemed to infringe fundamental rights to life and health, the sum of which must be said to constitute a serious breach of fundamental human rights.
- serious pollution and the dispersal of environmental toxins, which in turn have a negative impact on human health and ecosystems in the area.

 

Press Release – Platform supports banks’ introduction of responsible ship recycling standards

And another worker dies in May at Chittagong yard with an appalling accident record

 

Today, during the first day of NOR-Shipping in Oslo, Dutch banks ABN AMRO, ING Bank and NIBC, together with the Scandinavian DNB, announced that they are all introducing Responsible Ship Recycling Standards (RSRS) for their ship financing. The banks took the opportunity of making this announcement during the biannual industry gathering in order to raise awareness with the intention of including more banks into the initiative. The Norwegian fund, KLP, who in 2016 commissioned a report by the International Law and Policy Institute on shipbreaking, had also already taken a stance to reject beaching practices.

 

A collective move to include ship recycling conditions on loans by leading banks and financial institutions with large shipping portfolios is a positive step to imposing responsible practices on ship owners. When there is pressure for change coming from shipping financers, who understand that they have a direct tangible impact on the shipping industry, ship owners, rather than finding crafty loopholes in the law, will feel the bite if they do not choose to recycle responsibly off the beach.

"We welcome the leading role taken by the banks to ensure a departure from the unnecessarily dirty and dangerous practice of beaching, and expect that investors and clients of shipping that are increasingly pushing for higher standards for ship recycling will join the initiative."
Ingvild Jenssen - Policy Director - NGO Shipbreaking Platform