ENGLAND: Church sells shares in Vedanta mining company on ethical grounds

February 5, 2010

The Church of England announced Feb. 5 that it has sold its £2.5 million ($3.9 million) shares in Vedanta Resources because of the company's human rights record and its controversial plans to construct a bauxite mine and alumina refinery in Orissa, India. The church's Ethical Investment Advisory Group (EIAG) advised divestment (referred to as disinvestment in the U.K.) because its engagement with the mining company had produced no substantive results, the church said in a press release. "We are not satisfied that Vedanta has shown, or is likely in future to show, the level of respect for human rights and local communities that we expect of companies in whom the church investing bodies hold shares." The church's investment portfolio, managed by the Church Commissioners, is valued at approximately £4.4 billion (US$6.87 billion). The church recently wrote off £40 million ($78 million) in a failed Manhattan property investment. Survival International, a U.K.-based organization that supports tribal people worldwide, has been lobbying the Church of England to divest from Vedanta for more than a year. In a press release, Survival noted that in 2009 Vedanta was publicly rebuked by the U.K. Government "for failing to respect the human rights of India's Dongria Kondh tribe ... The government said that 'a change in the company's behavior' was 'essential.'" Stephen Corry, Survival International director, said: "The church's unprecedented and very welcome decision sends a strong signal to companies that trample on tribal peoples' rights: we will not bankroll your abuses. Anybody that has shares in Vedanta should sell them today if they care about human rights." Allegations about Vedanta's controversial mining plans were brought to the church's attention in June 2009 and the EIAG "has been examining the issues carefully since and has discussed them in a process of engagement with the company," the church's release said. John Reynolds, EIAG chairman, said: "I am a passionate advocate for engagement with companies when we have ethical concerns. We have an excellent track record of getting our concerns heard and acted upon by the companies in which the church investing bodies hold shares. In these circumstances the Ethical Investment Advisory Group advised that it would be inconsistent with the church investing bodies' joint ethical investment policy for the investing bodies to remain invested." The Survival press release noted that the Church of England is not the first organization to divest from Vedanta on ethical grounds. "In 2007 the Norwegian Government sold its US$13 million stake, saying 'there is little reason to believe that the company's unacceptable practice will change in the future,'" the release stated. "In addition, Martin Currie Investments sold their £2.3 million (US$3.6 million) stake last year, and BP's (formerly British Petroleum) pension fund reduced its holdings in Vedanta due to 'concerns about the way the company operates.'" Survival International says it is lobbying other shareholders, including the Rowntree Foundation, to reconsider their investments. Meanwhile, EIAG said it understands that the Indian government is still considering whether to give final approval for the mine project. "We respect the Indian democratic system," Reynolds said. "Our concern is that a company registered and listed in the U.K. should conform to the established environmental, social and governance norms expected in the London market -- or at least reassure its shareholders that it is committed to the journey." The EIAG said it will maintain contact with Vedanta. "We will be pleased to review our recommendation to the church investing bodies if the company addresses the concerns we have raised," Reynolds said. Vedanta has not yet commented about the church's decision.