Greenpeace Luxembourg has announced that it filed a complaint on Monday 11 March 2024 with the OECD National Contact Point in Luxembourg against the sovereign pension fund (Fonds de Compensation de la Sécurité sociale SICAV FIS) for failing to meet the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct.
The complaint alleges that the sovereign pension fund's investment activities are in breach of the OECD Guidelines' recommendations on disclosure, environment, human rights and consumer interests.
Greenpeace Luxembourg has demanded that the fund sets up a sustainable investment strategy in line with the OECD Guidelines. The organisation also argued that the fund needs to conduct human rights and environmental due diligence to address any adverse impacts linked to their investments and establish a grievance mechanism that allows stakeholders to report sustainability-related issues.
"State-owned companies such as sovereign pension funds should be among the first movers in sustainable finance in conformity with nations' global legal commitments. By adopting climate and human rights compliant strategies, these entities can lead the transition towards a more responsible and greener financial sector," said Martina Holbach, campaigner at Greenpeace Luxembourg.
The organisation added that institutional investors with responsibilities under the OECD Guidelines, such as the sovereign pension fund, are expected by governments to conduct human rights and environmental due diligence, address climate and human rights risks in their value chains throughout their investment process, and use their leverage to prevent or mitigate adverse impacts identified as part of the due diligence process.
In February 2023, the Luxembourg sovereign pension fund released a new directive outlining its investment strategy for the years 2023-2027. Whilst the fund has made "minor strides in enhancing its sustainability practices", Greenpeace Luxembourg noted that its own recent research found that both the strategy itself and its implementation fail to meet the responsible business conduct standards of the OECD Guidelines.
Greenpeace Luxembourg's latest report Fonds de Compensation’s Unsustainable Investor Factsheet found that the sovereign pension fund continues to invest in more than 1,200 companies, which have been excluded by other institutional investors, "because of their adverse impact on people and the planet, including contribution to climate change, environmental damage, human rights violations or their involvement in controversial weapons". According to Greenpeace Luxembourg, these companies represent a total investment value of over €4.5 billion, or 36% of the fund’s portfolio of equities and corporate bonds and 20.6% of the total portfolio.
Greenpeace Luxembourg said that it had also screened the fund's investments using Urgewald’s Global Coal Exit List and Global Oil and Gas Exit List. The research similarly showed that the fund continues to invest in leading coal, oil and gas companies which "should be excluded" from its investment portfolios. Currently, the fund does not exclude any companies for climate reasons, noted Greenpeace Luxembourg.
The organisation added that it has "consistently advocated for an ambitious and sustainable investment strategy" for the sovereign pension fund since 2015. Greenpeace Luxembourg added that it has been offering comprehensive analyses and expert advice on the fund’s investments and its investment strategies. "However, [the fund] has not been responsive to Greenpeace’s recommendations," it argued.
"Meaningful stakeholder engagement is essential for companies committed to responsible business conduct. We hope that this complaint will contribute to re-establish the basis for ongoing two-way communication between the fund and civil society organisations," concluded Martina Holbach.
