Norway’s Central Bank Excludes Jockey Page Industries from Investment by GPFG, the World's Largest Sovereign Wealth Fund, for Human Rights Abuses
Norges Bank, the central bank of Norway, has decided to exclude India-based Page Industries Ltd from investment by the Government Pension Fund Global (GPFG), the world's largest sovereign wealth fund. This decision is an outcome of a recommendation by the Council on Ethics of GPFG to exclude from investment Page Industries due to an 'unacceptable risk that the company is responsible for systematic human rights abuses'.
The Council, in its report had stated, "Investigations into working conditions at one of the company’s factories identified numerous labour rights violations, including verbal and physical harassment of employees and occupational health and safety hazards. The company also seems to restrict employees’ rights to organise."
The Council emphasised that Page Industries has not provided any information to help clarify the case or how it works to prevent norm violations at its facilities. In practice, it seems as though the company does little to prevent the abuse of labour rights in its operations.
Post the recommendations, Norges Bank decided to exclude from investment Page Industries, the exclusive licensee of JOCKEY International Inc for manufacture, distribution and marketing of the JOCKEY brand in India, Sri Lanka, Bangladesh, Nepal, Oman, Qatar, Maldives, Bhutan and the UAE.
Established in 1990 to invest the surplus revenues of the Norwegian petroleum sector, GPFG has over $1 trillion in assets, including 1.4% of global stocks and shares, making it the world’s largest sovereign wealth fund.
The Council on Ethics says it assessed the risk that Page Industries is contributing to or is itself responsible for systematic abuses of internationally recognised human and labour rights. The Council defines 'systematic' as abuses that do not appear to be isolated incidents, but rather constitute a pattern of behaviour. In its assessment of the future risk of human rights abuses, the Council says it attaches important to what the company has done to prevent norm violations occurring again.
The report from the Council on Ethics
, says, "The Council has based its assessment on its own investigations into the company’s garment factory Page Unit 3 in Bangalore in India.
"The Council attaches importance to the employees’ reports of humiliating verbal and physical punishments when employees return from lawful holiday or sick leave, fail to meet their production targets or make production errors, and the fact that this seems to be a well-entrenched practice among managers at the factory. This must also be seen in in light of the fact that the workers themselves seem to be obliged to bear responsibility for reaching the production targets even when production is halted for reasons that are neither their fault nor within their power to control."
"An aggravating factor is that the harassment is directed at subordinate employees, who are unable to defend themselves without being punished for it and must, therefore, be classed as vulnerable. The Council also attaches importance to what seem to be violations of national regulations relating to fire safety, personal protective equipment, electrical hazards and equipment maintenance, and indoor air quality that may pose a hazard to health. In the Council’s opinion, the company’s practices constitute a violation of the right to safe and healthy working conditions, including the right to freedom from harassment," the report says.
According to the Council, Page Industries has failed to help clarify the case or give it the permission to inspect the factory. It says, "...the company explained this refusal by saying it could not permit an inspection due to its agreement with the licence issuer. This proved not to be correct. Page Industries has further failed to comment on the draft recommendation to exclude it from investment by the GPFG. In consequence, the Council has had access to less information in this case than in other similar cases it has assessed. The information deficit applies to both the scale of the norm violations and what the company is doing to prevent norm violations."
In keeping with Report No. 20 (2008-2009) to the Norwegian parliament (Storting), the Council says it "takes the view that a lack of information about a company’s behaviour and, not least, a lack of willingness on the part of the company to provide information, may, in and of itself, add to the risk of contributing to unethical behaviour being deemed unacceptably high."
"In the Council’s opinion, it seems as though Page Industries does little to prevent the abuse of labour rights in its operations. The Council considers that the company does not in practice have a system capable of preventing, uncovering or remedying labour rights abuses in its operations. When the company furthermore fails to provide information about the matters in question or measures to safeguard acceptable working conditions, the risk of systematic labour rights violations becomes, in the Council’s view, unacceptable," the recommendation report says.
According to a report from Economic Times
, following recommendation from the Council, Page Industries' partner Speedo International said it would investigate the report. As per a Reuters report, the company manufactures Speedo products in only one Indian factory. Page Industries denied the allegations and said the report does not reflect the correct state of affairs of the units of the company, the newspaper says.
We sent an email to Page Industries. However, till writing this story, we have not received any reply from them. We will update this story as and when we receive any reply from Page Industries.
After hitting a 52-week high at Rs26,891 on 24 January 2020, and a low of Rs16,186 on 24 March 2020, Page Industries' shares are on a roller-coaster ride. It has not been able to participate in the rally that took place post-COVID-19 crash.