Clumsy (Mis)Alignments: Norges Bank Excludes Companies due to an unacceptable risk that the companies contribute to serious human rights abuses

 

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As has become its custom, on 15 December 2022, Norges Bank has announced another batch of decisions. This time,  following recommendations by Council on Ethics, it has decided to exclude the companies PTT PCL, PTT Oil and Business PCL and Cognyte Software Ltd due to an unacceptable risk that the companies contribute to serious human rights abuses. The Council's recommendations on the exclusion of PTT PCL and PTT Oil and Business PCL may be found here. The Ehtics Council's  recommendation may be found here. The recommendation on the exclusion of Cognyte Software Ltd may be found here.

In better news for a company, Norges Bank also announced its decision to discontinue its observation of Leonardo SpA. The basis was a Council determination that  Council the risk of gross corruption in the company’s operations no longer is unacceptable. The recommendation on the discontinuation of observation may be accessed here. 

The action against PTT PCL; PTT Oil and Business PCL continue Norways use of the Pension Fund Global as a private sector sanctions instrument.  In the process they have expanded, in an interesting way, the reach of complicity principles--in this case with the abuse of its citizens by the military government currently in control of Myanmar (Burma). In this case, the connection is a joint venture for building important infrastructure and capacity with the military-owned conglomerate Myanmar Economic Corporation (MEC). 

In February 2021, the armed forces in Myanmar staged a coup d’état, after which the military has intensified its extremely serious abuses of civilians. Through their activities in the country, PTT and PTTOR provide the armed forces with substantial revenue streams that can finance military operations and abuses. The companies’ business partnerships with MOGE and MEC represents an unacceptable risk of contributing to extremely serious norm abuses in the future. (here)

Recall that the trigger is the risk and not the realization of harm. In that context broad inferences can be drawn from a relationship.  This produces potential conflict with the UN Guiding Principle of Business and Human Rights. It is not clear that, for example, the company runs a greater risk of contributing to human rights harms in Burma by leaving or by staying. See UNGP ¶ 24 ("Where it is necessary to prioritize actions to address actual and potential adverse human rights impacts, business enterprises should
first seek to prevent and mitigate those that are most severe or where delayed response would make them irremediable"). Neither Ethics Council nor Company directly considered this, though the company sought to justify its actions by the economic benefit it provides to Thailand (in part).  A pity. 

It may be time to rethink the way that the Ethgics COuncil and Bank continue to serve as quite clumsy instruments for sanctions programs against states that are deemed to fall beyond the bounds of acceptable conduct.  Being more open about this would substantially streamline the process and align Norges Bank action better with the sanctions programs of the Foreign Ministry.  Unless of course making those those connections murky is the object of current practice.

The Cognyte Software Ltd action continues to evidence the special relationship between Norway and Israel. But that is an old and to some extent uninteresting policy story.  Much more interesting is the way that the decision broadens the concept of causation to a cocktail composed of a "must have known that some of its customers have been accused of extremely serious human rights violations" standards combined with a foreseeability standard tied to risk.  Nonetheless, what really animated the interest of Ethics Council and Bank was a report released by Meta (Meta, Threat Report on the Surveillance-for-Hire Industry, December 2021), annoyed that Cognate was using its platforms for data driven interventions without its permission targeting people that, without permission were considered out of bounds for the sort of aggressive interventionist surveillance undertaken by the company. That report was augmented by reporting by CSOs and others in other places suggesting a connection between the company, its services, and governmental activities that would be deemed unacceptable by Norway (at least without its permission and according to the law of Norway, including its sense of its international obligations). 

This is not to excuse the bad behavior of the company; it is however, a suggestion that in this area (once one gets over the thrill of dinging an Israeli company, something of a sport apparently among Norwegian elites) that the Ethics Council (and more broadly the Ethics Guidelines) ought to consider a blanket ban on companies offering surveillance services and equipment, rather than engage in this sort of one off exercise. that tends to leave mote holes than it can possibly plug.

Taken together, the exclusions suggests the way that both Ethics Council and Norges Bank continue to fail in their basic duty by a stubborn insistence on the perpetuation of a way of approaching the issue of exclusion (and more generally the discipline of financial interventions). And that is the greater pity.  Surely their hearts are in the right place; their textual authority less so, and their strategic vision (as well as their willingness to take interpretive and inferential leaps) in need of rejuvenation. By now, it ought to seem clear to everyone (except perhaps among the drivers of these practices in Norway), that the Ethics Council and Bank are lurching toward a blanket unwillingness to invest in companies that facilitate the operations of the Myanmar government (at least until the military government is overthrown) on the not unreasonable assumption that all such economic intervention facilitates the dictatorship, and thus is capacity to breach Ethics Guidelines. It is as clear that applying emerging European principles (again sadly underdiscussed), that the Ethics Council and Norges Bank are also stumbling toward a blanket presumption .that the economic field of tech enhanced surveillance (hardware, software, and consultation) runs too great a risk of causing human rights harms to be permitted to constitutive a part of the Pension Fund Global's investment universe.  As the late Duke of Edinburgh is said to have uttered on more than one occasion, perhaps it is just time to get on with it. And move on.