Vale is Excluded From Portfolio of Norway’s Largest Pension Fund After Brumadinho

By Xiu Ying, Contributing Reporter

RIO DE JANEIRO, BRAZIL – The Kommunal Landspensjonskasse (KLP), Norway’s largest pension fund, has excluded the mining company Vale from its investment portfolio last Friday (3rd) as a result of the collapse of the Córrego do Feijão dam at Brumadinho (MG).

According to KLP, the accident “constitutes an unacceptable risk” contributing to “serious human rights violations and serious environmental damage.”

The fund, which manages a total of R$294 (US$74) billion, sold the equivalent of R$43.9 million in the company’s securities held in its portfolio.

“It is also an aggravating factor that the company has been involved in two similar severe events in the space of a few years,” said Jeanett Bergan, head of responsible investment at KLP, in a statement referring to the collapse of the Mariana dam in Minas Gerais.

KLP reported having had several meetings with Vale to monitor how the company worked preventively after the Mariana accident and that, after the rupture of the Brumadinho dam, this work intensified.

However, the pension fund concluded that “Vale did not increase security measures after receiving reports, showing that there was high risk associated with the dam in Minas Gerais,” she noted.

“There is still uncertainty about what caused this year’s accident, but it is clear that what Vale did after the 2015 disaster was not enough to prevent further accidents and their severe consequences. It is clear that the company has intensified its work, but with two such serious accidents, it is difficult to have confidence in the company’s ability to maintain safety,” said Jeanett in the text, adding that “the inherent risk of accidents related to the company’s dam deposits is still high.”

KLP was being pressed to position itself more forcefully over Vale. In February, the site specializing in sustainable investment ESG Clarity questioned why KLP continued to invest in Vale in the wake of two accidents.

Jeanett replied that she had been holding meetings with the company and was monitoring the situation.

In 2015, the pension fund had suffered the same type of pressure, but claimed, at that time, that it made no sense to dispose of the securities because of their devaluation, according to the specific Portfolio Advisor site.

Vale, in turn, has been the target of discontent among organizations linked to sustainable investment.

In January, after the accident in Brumadinho, the Corporate Human Rights Benchmark (CHRB), an index that measures the conduct of companies with respect to human rights, suspended Vale from its listing, claiming that “it would not be appropriate to continue with Vale in the ranking” after the tragedy.

In February, the mining company was removed from the Brazilian Stock Exchange’s Corporate Sustainability Index (ISE), B3.

Petrobras also Removed from Portfolio

In 2016, KLP had already removed Petrobras from its portfolio, claiming that corruption which had occurred in the company and which had been revealed by the Lava-Jato operation was “vexatious” and represented an “unacceptable risk”.

A statement from the pension fund released at the time maintained that “the scale of the case, the amounts involved and the period of time during which it occurred are unparalleled anywhere in the world.”

(The information is from the O Globo newspaper)