Archive iR. One of the biggest German investment company began to get rid of the Nornickel shares

German corporations must demand that Russian extractive company Nornickel respect indigenous rights and environmental standards – or end business deals

After more than 21,000 tons of diesel leaked from a power plant tank in May 2020, causing the largest oil spill in the Russian Arctic to date, the company responsible, Nornickel (Norilsk Nickel), had to pay Russia’s highest fine to date.

In the satellite image, diesel oil spilled in the Ambarnaya River on May 31, 2020 is easily recognizable by its red color

But this is still a long way from repairing the damage, let alone addressing the causes. In addition to the sensitive ecosystem, it is above all the indigenous groups in northern Russia that have to suffer the consequences of Nornickel’s ruthless business model.

“It has been a year since Nornickel discharged diesel fuel into the rivers and lakes of the Taimyr Peninsula. The communities have been without fish since then and have not received any compensation. They do not know how they will live. As before, Nornickel refuses to talk to the affected indigenous communities.”- Gennady Schukin, Chairman of the Association of Indigenous Communities of the Taimyr Peninsula

German companies have known for years about Nornickel’s violations of international social and environmental standards. But the company continues to get loans from Commerzbank and Deutsche Bank without any problems. BASF is trying to improve standards, as nickel is particularly important for electromobility – so far, without serious success.

“What did Nornickel leave behind on the Kola Peninsula? Our territory was destroyed. But what does the company do? Nothing. It pretends to cooperate with us, but concludes secret contracts without consultation. We have no way to revive our traditional ways of life. Nornickel does not respect the rights of indigenous peoples.” – Andrei Danilov, Director of the Sámi Heritage Foundation, Montschegorsk

DWS, the asset management company is belonging to Deutsche Bank, on the other hand, has drawn the first consequences, as the identified grievances have not been remedied. DWS has removed Nornickel from a large proportion of its funds. At shareholder meetings, but also in our direct dialogs, we will continue to call for concrete steps to increase the pressure on Nornickel.

“It is very important for German companies building the green economy today to comply with international standards for indigenous peoples’ rights when working with their suppliers. It cannot be that some countries and communities have a clean living environment while indigenous peoples whose lands are mined for the green economy are left amidst devastated lands and ‘moonscapes’.” – Pavel Sulyandziga, Chairman of the Batani Foundation

Source – Association of Ethical Shareholders Germany

Answers DWS on Nornickel from the Q&A session of the 2021 DWS Annual General Meeting

Anita  Schneider:  Thank  you  very  much.    We  come  back  to  Mr  Kreuzkamp  and  a  very  comprehensive question.  The umbrella Organisation of Ethical Shareholders ask a whole host of questions with regard to the Russian group Norilsk Nornickel, who is claimed to infringe – to be responsible for several catastrophes and the violation of indigenous rights.  So, in which – how far is DWS invested in Nornickel?  Which risks of Nornickel were known to DWS?  What were the arguments saying that Nornickel was a responsible and trustworthy company?  What were  the  concrete  measures  and  researches  taken  by  DWS  when  it  comes  to  international,  social and ecological standards?  Because Nornickel is active in an ecologically sensitive area.  What measures has DWS taken after the catastrophic environment and human rights impact of the activities of Nornickel in the Arctic Circle in order to avoid or mitigate further damage done   by   Nornickel? Is   there   an   engagement   dialogue   with   Nornickel   on   ESG   and   sustainability, or are there plans to have such a dialogue?  If yes, which concrete topics are part of the dialogue?  If no, why don’t you think a dialogue is not important?  Are there clear criteria when or under which concrete conditions DWS would sell the shares of Nornickel if the company  does  not  speedily  improve  its  eco-balance  and  the  respect  of  indigenous  rights  speedily and comprehensively?

Stefan Kreuzkamp: Well, in the framework of the Smart Integration process that I already mentioned, we have been in a dialogue with Nornickel  for  two  years  now. In very concrete  terms,  we  addressed  the  management  of  ecological  risk. Because  there  is  no  discernible  progress,  we  clearly  reduced  our  inventory  in  Nornickel. Impassive  investment  vehicles,  however, where we reproduce a benchmark or index, this is not possible.  In our engagement database, we take stock of the status and also report on this in our active ownership report.  Please bear with us that DWS cannot give you any further details on individual companies.

Anita  Schneider:  Well,  we  have  received  a  follow-up  question  for  Mr  Kreuzkamp  and  it’s  from  the  association  of  critical  shareholders. Let me  read  this  out  to  you.    In  your  answer  regarding the dialogue with Nornickel, you mentioned that you had significantly reduced your shareholder  in  active  management. Now,  does  this  also  include  a  potential  future  full  divestment  or  is  there  still  a  schedule  for  Nornickel  to  achieve  improvements?    Thank  you  very much.  

Stefan  Kreuzkamp:  In  the  active  mutual  funds  which  are  subject  to  the  Smart  Integration  process,  the  stocks  were  sold  –  were  fully  sold  due  to  lack  of  progress. For  the  remaining  shareholdings  in  passive  investments  and  the  very  low  shareholdings  in  active  investments  which are not subject to a Smart Integration process, now, for them we will still try to remain in an active dialogue with the company in order to convince them to make more progress in the  area  of  sustainability. As  part  of  our  engagement  progress,  of  course,  we  reserve  the  right to take further escalation measures.

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