The Church of England yesterday offloaded its stake in the controversial FTSE 100-listed mining group Vedanta Resources, saying that the company's respect for human rights fell below its standards.
The Church is the latest in a string of organisations to attack the India-based miner over concerns about the safety of its alumina refinery in Lanjigarh in Orissa state, and its planned bauxite mine at the nearby Niyamgiri mountain. Pressure groups such as Survival International allege that the mine will destroy local forests, while the mountain itself is considered sacred by the local Dongria Kondh tribe.
John Reynolds, the chairman of the Church's Ethical Investment Advisory Group (EIAG), said: "After six months of engagement, 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 has made a lot of money from its Vedanta shares. The company's stock has increased by a massive 296.2 per cent in the last 12 months as production targets have been surpassed and the global commodity market has recovered. The Church has hitherto defended its stake by arguing that it is better able to influence the companies in which it has shares.
Vedanta, and its billionaire chairman Anil Agarwal, has consistently refused to discuss the concerns raised by Survival, but in a statement issued yesterday, it said: "We are disappointed by the Church of England's decision to sell their holding in Vedanta.
"Vedanta remains fully committed to pursuing its investments in a responsible manner, respecting the environment and human rights.
"We work with a number of NGOs and with the authorities in India, the world's largest democracy, ensuring all our projects are conducted in compliance with the law and international best practice. We will continue to engage closely with the Church of England to address the concerns they have raised."
Mr Agarwal owns a 60 per cent stake in Vedanta, worth about $6bn.
"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," said Stephen Corry, the director of Survival. "Anybody that has shares in Vedanta should sell them today if they care about human rights."
In an email seen by The Independent , the pension fund of the oil giant BP confirms that it has cut the amount it invests in Vedanta, because of "concerns about the way the company operates".
Last October, the department for Business, Innovation and Skills criticised Vedanta over its plans in Orissa. Three years ago the Norwegian state pension fund withdrew its entire stake in the group, saying the company's operations were causing an "unacceptable risk of contributing to severe environmental damage and serious or systematic violations of human rights".
Amnesty International, which will publish a report on Vedanta next week, added last night that the company's human rights record is "unacceptable".
Despite the high-profile criticism, Vedanta's four biggest private shareholders – AllianceBernstein, Wellington Management, Standard Life and JP Morgan Asset Management – refused to discuss their stakes yesterday, or the allegations against the company. All lost money yesterday as Vedanta's shares slipped by nearly 4 per cent.Reuse content