Lundin Energy AB has changed the name to Orrön Energy and is being charged by the Swedish authorities for contributing to serious and systematic violations of human rights and international law in Sudan. A criminal case is ongoing at the district court of Stockholm, where two former executives of Lundin Energy are charged with having contributed to the violations.
Norwegian People’s Aid has submitted the following resolution:
- Aker BP shall initiate a dialogue with stakeholders to explain Aker BP’s position and to respond to the concerns of the victims, with the purpose of finding a mutually acceptable solution.
- Aker BP shall initiate a dialogue with Örron Energy and its shareholders about how they pay compensation to the victims in South Sudan if they are sentenced by Stockholm District Court.
KLP’s assessment of the case is that the second section of the proposal is in line with the expectations outlined in the Transparency Act and UNs guiding principles on business and human rights. KLP is supportive of the second section of the proposal and the assessment is based on the following:
It has long been known that Lundin Energy in Sweden is accused of contributing to serious and systematic violations of human rights and violations of international law in Sudan in the period 1997.
KLP and the KLP Funds (KLP) aim to promote long-term and sustainable value creation in the companies in which KLP invests. This means influencing the companies through the exercise of active ownership, in which endeavour dialogue and voting at annual general meetings are the most important aspects. This is in line with the OECD document Responsible Business Conduct for Institutional Investors, in accordance with which KLP is expected to use its influence to encourage companies in its portfolio to prevent or reduce their adverse impact on people and the environment. The same expectations are enshrined in the Norwegian Transparency Act.
The case in question relates to Aker BP’s acquisition of Lundin Energy AB’s oil and gas business in Norway. Lundin Energy has been accused of contributing to serious and systematic human rights abuses and the violation of international law in Sudan in the period 1997–2003. It is alleged that 160,000 people were forcibly driven from their homes and 12,000 people killed.
Norwegian People’s Aid and other NGOs have filed a joint complaint against Aker BP ASA and Aker ASA with the Norwegian National Contact Point for the OECD. It is asserted that the merger between Aker BP ASA and Lundin Energy Norway will lead to the victims in South Sudan being excluded from the right to effective remedy. The OECD’s Contact Point has agreed to examine parts of the complaint, which concern the due diligence assessments expected from the companies in connection with the transaction. No final ruling on the matter has yet been issued.
KLP has clear expectations that all the companies in its portfolio perform detailed assessments of the risk of adverse impacts in matters entailing potential serious and systematic violations of fundamental human rights. In this case, reference is made to the massive media coverage of allegations of serious norm violations in South Sudan prior to the Swedish authorities’ decision to indict, just a few weeks before the acquisition’s announcement on 21 December 2021.
Due diligence assessments do not transfer liability from the entity that caused the adverse impacts to the company with which it has business dealings, see Chapter II of the OECD Guidelines for Multinational Enterprises. Nevertheless, companies engaged in a business relationship have an independent responsibility to use their influence and encourage the business entity that has (potentially) broken or will break the law, in order to prevent or reduce the adverse impact thereof. This is the duty to act which is also implicit in the proposed resolution from Norwegian People’s Aid.
The right to an effective remedy is a human right in and of itself, see Article 8 of the Universal Declaration of Human Rights, Article 2(3) of the International Covenant on Civil and Political Rights, and Article 13 of the European Convention on Human Rights. The right to effective remedy is crucial for protecting the other human rights and has been included as one of the three fundamental pillars of the UN’s Guiding Principles for Business and Human Rights. It was also included in the OECD’s Guidelines for Multinational Enterprises and has now been codified in the Norwegian Transparency Act. A merger or acquisition of a company may, depending on the specific circumstances, be associated with an adverse impact, for example on the right to an effective remedy. Reference is made, for example, to the fact that the OECD’s Due Diligence Guidance for Responsible Business Conduct (2018) points out that risk assessments should be updated when the company makes major changes, such as mergers and acquisitions.
Due to the seriousness and scale of these allegations, KLP expects – as a matter of principle – that particular care and attention must be demonstrated in the transactions concerned here. KLP expects that Aker BP has, where relevant, initiated suitable measures and exerted its influence to prevent and reduce ongoing and potential violations of the law. This means engaging in a dialogue with Lundin Energy about safeguarding the right of (potential) victims in South Sudan to effective remedy.
Aker BP’s board of directors informs the AGM that Aker BP is seeking to respect fundamental human rights and ensure that it operates sustainably, and that this is reflected in the company’s Code of Conduct and Human Rights Policy. Reference is further made to the fact that Aker BP endorses the OECD’s Guidelines for Multinational Enterprises and that compliance with the Code of Conduct is followed up by the company’s board and CEO on an ongoing basis.
In the first instance, KLP would like to acknowledge the company’s publicly expressed approach to respecting human rights. This is a correct and important ambition, which reflects KLP’s expectations with regard to the company. However, KLP would like to know more about which specific due diligence assessments were made at the time of the acquisition. KLP has been in contact with Aker BP to obtain information on this. The information it has received so far has been unsatisfactory.
KLP considers that the proposed resolution submitted by Norwegian People’s Aid is a specification of the responsibility that Aker BP already has pursuant to the above-mentioned expectations and principles, which are now also codified in Norwegian law. Unless Aker BP has already done so, it should take the steps proposed. The fact that the criminal case in Sweden has not yet been determined should not prevent this from being implemented.
KLP looks forward to continuing its dialogue with Aker BP on this important matter.