Norway wealth fund puts Malaysia’s Supermax Corp under observation

Updated: Jun 16, 2022, 10:36 GMT+00:00

OSLO (Reuters) -Norway's $1.2 trillion wealth fund put Malaysia's Supermax Corp under observation for two years on Wednesday, citing unacceptable risk that the company contributes to serious violations of human rights.

A general view of the Norwegian central bank, where Norway's sovereign wealth fund is situated, in Oslo

OSLO (Reuters) – Norway’s $1.2 trillion wealth fund has put Malaysian medical glove maker Supermax Corp under observation for two years, citing allegations of unacceptable risk that the company contributes to serious violations of human rights.

Supermax will have to show it is addressing changes the fund wants to see over the two year period, otherwise the fund could sell its holding in the company.

“The Executive Board has made the assessment that the company’s announced measures to improve living and working conditions for migrant workers leave uncertainty about future developments,” the fund said in a statement issued late on Wednesday.

When asked by Reuters for a comment on the Norway fund’s action, a Supermax spokesperson referred to its statement from June 2, which said the company is making efforts to align its human resource practices with International Labour Organisation (ILO) standards and expectations of international regulatory bodies.

The glovemaker said in the June 2 statement it had rolled out a new foreign worker management policy, which included upgrading workers’ accommodation and remediating migrant workers who had paid recruitment fees.

Supermax faces an import ban by the United States Customs since October due to allegations of forced labour at its operations, and in January Canada terminated its sourcing contract with the company after the allegations.

Based on the Norway fund’s website, its Supermax holding was valued at $4,283 on Dec 31, 2021.

The Norway fund also said it had revoked a 2015 exclusion of Malaysia’s IJM Corp Bhd.

IJM Corp was excluded in 2015 due to its activities in palm oil plants in Indonesia, and since these activities have been terminated there are no longer grounds for exclusion, the fund said.

IJM told Reuters in an email on Thursday the wealth fund’s decision to remove the company from its exclusion list was “in line with the divestment of IJM Plantations Berhad in September 2021.”

Norway’s wealth fund operates under ethical guidelines set by parliament and excludes companies from its investments that it says do not respect them.

The fund said it had also decided to end its “active ownership” for South Africa’s AngloGold Ashanti Ltd.

AngloGold Ashanti has been under special active ownership since 2013 because of allegations over serious environmental damage and serious violations of human rights related to activities in two goldmines in Ghana.

Active ownership means that the management of the fund, as opposed to its ethics watchdog, will engage in a dialogue with the company about the issues raised.

“The Executive Board now finds that the risk in terms of future developments appear to have been reduced,” it said, adding that going forward, the company will be followed up through ordinary ownership activities.

(Reporting by Victoria Klesty; additional reporting by Mei Mei Chu in Kuala Lumpur; Editing by Tom Hogue, Rashmi Aich and Jane Merriman)

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