The Environmental Expectations of Tradition in the Era of Sustainability: The Norway Pension Fund Global Action to Discipline Chinese Traditional Medicine Enterprises

 

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 How does one leverage normative power--that is a power to effectively influence the norms, behaviors and expectations of markets actors, including producers, consumers, regulators, and financiers--whee one is vested with a substantial amount of money but an administrative apparatus that is minuscule at best. That as been the existential problem of the construction of the disciplinary organs of the Norwegian Pension Fund Global. 

The answer that the administrative apparatus of the Norwegian Pension Fund Global--and its administrative apparatus--is to engage in the business of judging in ways that provide compact and highly concentrated direction in specific areas of engagement.  What that apparatus cannot do--precisely because of the limits of its capacity (and perhaps both its funding and its location within the Norwegian state organs system) is to serve as an all around quasi-judicial and quasi-accountability organs respecting the entirety of the investment universe, or the potential investment universe, with which the Pension Fund Global engages.  The framework of the ethics principles provides the structure that makes this easier.  The direction of Norwegian sensibilities around the hierarchy of rights and the importance of selected conduct provides another. 

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But that means that effectively, the SWF norm narrative apparatus (manifested through investigations leading to decisions of observation or exclusion from the investment universe, or a determination that the instrumentalities of Norges Bank engage in quite directed agendas as shareholders) is at its most effective when it provides concentrated direction among a number of archetypal actions from time to time. So the Ethics Council is reduced to the role (an important one to be sure nonetheless) of grand storyteller. These stories like all traditional tales--have sting--that is the purpose of the Pension Fund Global (though also to make money to enhance the welfare of Norway's population). And the stories are meant to eventually contribute to the construction of a view of the world to which these stories contribute. 

This, certainly, is one way to understand the periodic stories that are released (in the form of Ethics Council Recommendations and the moral to be drawn from them (in the form of the actions accepted by Norges Bank).  And the baseline for the development of these stories is both the Ethics Guidelines, and the Norwegian view of the principles embedded in international human rights as received by and valued through a Norwegian (and in a more general sense a European) lens. Thus the concentrated bursts of stories about the evils of munitions, of nuclear energy, of corruption, of human trafficking and labor undertaken with the indicia of slavery or coerced servitude.  Thus the selective interventions in interstate relations with human rights elements from occupation (with a focus on  the Jewish-Muslim wars around the Jordan Valley), to coerced population movements in southeast Asia (with a focus on Myanmar), and the like.

Today, the Norwegian human rights apparatus challenges the practices of traditional medicine when it bumps against the realities of environmental irreparable harm.  The Norwegians were careful.  They did not go after indigenous practices with environmentally destructive effects (that remains too sensitive and touches on issues og balancing indigenous versus environmental and bio-diversity rights in ways that may be too challenging for them).  But China is an easy target.  China is a first world state.  It is powerful.  It is modern.  It increasingly seeks an important place at the internationalist human rights tabvle.  It is only natural that having entered this space it might be judged not on its own terms but on the terms of the rest of the people in the room.  

Norges Bank announced its decision to revoke the exclusion of Hanwha Corp from the Fund. This was based on a recommendation by the Council on Ethics. Please find the Council's recommendation here:
https://etikkradet.no/hanwha-corp-revocation-of-exclusion/. Also, Norges Bank announced its decision to exclude the following companies: (1) China Traditional Chinese Medicine Holdings Co Ltd; (2) Beijing Tong Ren Tang Chinese Medicine Co Ltd; (3) Tong Ren Tang Technologies Co Ltd; (3) China Grand Pharmaceutical and Healthcare Holdings Ltd.  As was stated in the Press Release announcing these actions:

These are pharmaceutical companies that manufacture and market Traditional Chinese Medicine (TCM). The companies' products contain parts from globally threatened species such as horns from saiga antelope, leopard bones, pangolin scales and musk from musk deer.  The use of threatened animal species in TCM products may contribute to illegal wildlife trade and increases the risk to of these species becoming extinct. There is no information concerning the quantity of parts of threatened species that the companies use, where the animal parts originate from, what stockpiles exist and how these are replenished. When such data is not made available, the Council on Ethics concludes that the companies contribute to severe environmental damage.

The recommendations are quite interesting both for the way on which the Ethics Council has approached the issue of balancing and for its choice of target--the supply chains of Chinese traditional medicine.  Yet the real target may neither be the Chinese (except indirectly--the Pension Fund Global has relatively little effective power to affect the economic calculus of those businesses)--nor states. As a sidenote the cases are imortant as a signal that enterprises cannot hide behind what had once been substantial language barriers and that one of the consequences of Chinese internationalism is that  Chinese language communication is no longer preemptively opaque outside of China. Rather by using China to build a narrative baseline, it may be expected that other high value targets--targets that are infinitely more sensitive--including the practices if indigenous peoples) may be more readily made the subject of discussion in the financial and human rights sectors.   Critical in these assessments is the value of the defense that was asserted by these companies--that they fully complied with all legal requirements imposed under Chinese law. The difficulty here, of course, is that an assertion to that effect is not its proof, and the failure to suggest in more detail how that statement might be supported in fact is one step still to be undertaken,  The second, and more sensitive step--but one already  well developed within liberal democratic systems is that, at the transnational level, and with respect to international law/norms--compliance with national legal measures. For states like China, that provides not the end but tje start of hard conversations about the nature and limits of sovereignty in transnational polycentric governance spaces.  is largely irrelevant.

More interesting still is the  willingness to begin thinking through the issue of contributions to environmental harm and contributions to degradation of bio-diversity, through quantitative measures. That aligns with recent cases, especially out of Germany, and likely elsewhere, that suggests a joint and several liability approach as well as the privileging of bio-diversity over cultural rights and practices--at least of developed states. Lastly, the Ethics Council continues to seek the cooperation of companies that are the subject to its scrutiny.  That continues to be an issue and and Council continues to weigh that in its assessment--not unreasonably to be sure. Nonetheless, the imbalance of information and the sometimes ambiguously laconic responses from enterprises suggest not merely the difficulties of thorough assessment but also the extent of the influence of this body in certain sectors of economic production.

The Council of Ethics Recommendations summaries follow with links to the text.

 

Tong Ren Tang Technologies Co Ltd and Beijing Tong Ren Tang Chinese Medicine Co Ltd

29. September 2021

The Council on Ethics recommends to exclude Tong Ren Tang Technologies Co Ltd and its subsidiary Beijing Tong Ren Tang Chinese Medicine Co Ltd from the Government Pension Fund Global  due to an unacceptable risk of these companies contributing to severe environmental damage.

Both companies are Chinese pharmaceutical companies that manufacture and market Traditional Chinese Medicine (TCM). The companies’ products contain body parts from globally threatened species such as horns from saiga antelope, leopard bones, pangolin scales and musk from musk deer.

The use of threatened animal species in TCM products may contribute to illegal wildlife trade and increases the risk to of these species becoming extinct. There is no information concerning the quantity of body parts of threatened species that the company uses, where the animal parts originate from, what stockpiles exist and how these are replenished. When such data is not made available, the Council on Ethics concludes that the company contributes to severe environmental damage. The company has not disclosed any specific plans to replace the ingredients based on threatened species with other ingredients.

The Council on Ethics submitted its recommendation 15 March 2021. Norges Bank published its decision to exclude the company on 29 Septbember 2021.

Please find the Council’s recommendation here.

 __________

China Grand Pharmaceutical and Healthcare Holdings Ltd

29. September 2021

The Council on Ethics recommends to exclude China Grand Pharmaceutical and Healthcare Holdings Ltd from the Government Pension Fund Global  due to an unacceptable risk of these companies contributing to severe environmental damage.

China Grand Pharmaceutical and Healthcare Holdings is a Chinese pharmaceutical company that manufactures and markets Traditional Chinese Medicine (TCM). The company’s products contain body parts from globally threatened species such as horns from saiga antelope. The use of threatened animal species in TCM products may contribute to illegal wildlife trade and increases the risk to of these species becoming extinct. There is no information concerning the quantity of body parts of threatened species that the company uses, where the animal parts originate from, what stockpiles exist and how these are replenished. When such data is not made available, the Council on Ethics concludes that the company contributes to severe environmental damage. The company has not disclosed any specific plans to replace the ingredients based on threatened species with other ingredients.

The Council on Ethics submitted its recommendation 28 April 2021. Norges Bank published its decision to exclude the company on 29 September 2021.

Please find the Council’s recommendation here.

 

__________

China Traditional Medicine Holdings Co Ltd

29. September 2021

The Council on Ethics recommends to exclude China Traditional Medicine Holdings Co Ltd from the Government Pension Fund Global  due to an unacceptable risk of these companies contributing to severe environmental damage.

China Traditional Medicine Holdings is a Chinese pharmaceutical company that manufactures and markets Traditional Chinese Medicine (TCM). The company’s products contain body parts from globally threatened species such as horns from saiga antelope, leopard bones and pangolin scales.

The use of threatened animal species in TCM products may contribute to illegal wildlife trade and increases the risk to of these species becoming extinct. There is no information concerning the quantity of body parts of threatened species that the company uses, where the animal parts originate from, what stockpiles exist and how these are replenished. When such data is not made available, the Council on Ethics concludes that the company contributes to severe environmental damage. The company has not disclosed any specific plans to replace the ingredients based on threatened species with other ingredients.

The Council on Ethics submitted its recommendation 6  April 2021. Norges Bank published its decision to exclude the company on 29 September 2021.

Please find the Council’s recommendation here.