Investors fail to act on allegations against Lundin Petroleum

REPORT | 27 April 2017

Despite allegations that Lundin Petroleum has contributed to violations on human rights in Sudan, Swedish banks and pension funds have continued to invest and failed to comply with international standards, a Swedwatch report shows.

All companies have a responsibility to respect human rights in their operations. For investors, this responsibility extends to the operations of companies they invest in. In the new report “Fuel for conflict”, Swedwatch and Fair Finance Guide examine how Swedish banks and government pension funds have acted on allegations that the activities of Lundin Petroleum (formerly Lundin Oil) – a company in which they have invested millions of dollars of their customers’ and pension savers’ money – contributed to the killing and displacement of thousands of people in Sudan between 1997 and 2003. At the time, Lundin prospected for oil in southern Sudan as a brutal civil war was tearing the nation apart.

In the report, several investors state that the evidence against the company is insufficient – despite extensive information regarding the oil industry’s connection to human rights violations in Sudan. This information comes from UN Special Rapporteurs and organisations such as Amnesty International and Human Rights Watch.

The research shows that none of the investors in the report have lived up to their responsibilities. According to the international frameworks for business and human rights that they claim to endorse, investors must perform human rights due diligence for the businesses they invest in and use their leverage in order to influence the company to take responsibility.

The report shows that the most common way in which the investors have addressed the allegations has been to initiate dialogue with Lundin. However, these dialogues have not resulted in any tangible results for the affected victims, despite that the dialogue in some cases has been going on for more than ten years.

The fact that no investors have reacted stronger on the allegations against Lundin raises questions regarding how they assess the impacts of their investments on human rights. At the Lundin annual general meeting in 2012, the investors were presented with an opportunity to learn more about the issue. At the meeting, former shareholder Folksam proposed the initiation of an independent investigation to clarify the impacts of Lundin’s operations in Sudan. Only two of the investors included in this report voted in support of the proposal.

Today the seven biggest banks in Sweden and the government pension funds own more than 410 million dollars worth of shares in Lundin Petroleum. Many were invested already at the time of the company’s operations in Sudan and all but one have been listed among the company’s largest shareholders at some point.

Lundin has never acknowledged that the company in any way contributed to adverse impacts on human rights in Sudan. Instead, the company claims that it was a force for peace. Since 2009, Lundin is no longer active in the country. However, according to the guidelines the investors claim to follow, they should still conduct proper human rights due diligence to identify the adverse human rights impacts regarding their investments and act on these findings.

In the report, investors are recommended to:

• Conduct proper human rights due diligence regarding their investments in Lundin, focusing on the consequences of the operations in southern Sudan between 1997 and 2003. They should publicly communicate the activities and results of this process, in accordance with the UNGPs principle of “know and show”.

• Act on the findings of this process and address all adverse impacts on human rights that have arisen as a result of Lundin operations in Sudan between 1997 and 2003, then use their leverage to encourage Lundin to act in accordance with the UNGPs and address the impacts, be it through remediation or other means.

• Demand transparency and cooperation from Lundin when assessing and addressing adverse human rights impacts connected to the company’s operations in Sudan, through either investor due diligence or an independent investigation.