The activist money manager with assets worth $1.3 trillion across the global markets owned a 2.8% stake in UPL as of December 31, 2021, and is the largest foreign institutional investor in the company. It is also the second-largest institutional shareholder in the firm after Life Insurance Corporation (LIC) which owns 10.5% in the company, BSE data showed.
In response to an ET query, a spokesperson for Norges Bank Investment Management – the investment manager of the fund – said, “The aim of our dialogue with UPL is to reduce the use of child labour at its subsidiary Advanta Seeds Pty Ltd, which produces various types of seed in India.”
Norges said it had ‘regular contact’ in 2021, including two meetings with representatives from both UPL and Advanta. “The companies continued to develop and improve their information campaigns during the year and updated their policies and contracts with farmers.”
UPL told ET the company does not encourage child labour.
“This unfortunate practice being referred to is about the child labour by a small pocket of the farmers in India, at their respective farms with whom Advanta seeds works,” said a company spokesperson. “To counter and prevent any such practices, UPL has launched ‘United Against Child Labour’ project in India which is a proactive initiative to eliminate all forms of child labour in seed supplier farms and to ensure education for all children.”
UPL said it has ‘briefed’ more than 3,500 seed growers in the last three years against child labour. The company posted revenues of ₹38,694 crore and a net profit of ₹2,871 crore for the year ended March 31, 2021.
Sovereign wealth funds are investment vehicles sponsored by governments that invest accumulated cash reserves in overseas assets. Norway’s fund led by Norges Bank has been at the forefront of shareholder activism, pushing for better compliance of environmental, social and governance (ESG) norms. Most recently, the fund announced that it will sell off its entire $2.83 billion portfolio investment in Russia following its war with Ukraine.
The use of child labour is considered a red flag by activist institutional investors since the practice is considered a human right violation internationally. In India too, there are strict laws in place against the employment of children.
Norges Investment Management first took cognisance of the matter in 2018 when Norges Bank – the parent of the investment manager – asked them to raise the issue of child labour with UPL.
Norges Bank Investment Management said UPL and Advanta have commissioned an external evaluation with field surveys of child labour in seed production, which had ‘promising results’.
“They (UPL & Advanta) prioritised improvements to supply chain monitoring, including new tools and staff training,” said Norges in its response to ET.
In 2016, the Norges Bank decided to exclude 52 global coal-based companies from its investment portfolio citing adverse environmental impact. The domestic companies that featured in this exclusion list included Coal India, Gujarat Mineral Development and NTPC.