Shareholder statistics

The 10 largest shareholders as at 31 December 2020Numbers of sharesSubscription capital/votes, %
T. Rowe Price6,061,5502.12
Norges Bank4,568,8381.60
State Street Global Advisors3,350,5691.40
Saudi Arabian Monetary Agency3,303,4441.16
Other shareholders145,111,13050.75

¹ An investment company wholly owned by a Lundin family trust.

¹ An investment company wholly owned by a Lundin family trust.


Holding 33% of the shares, the family Lundin is firmly in control of Lundin Energy. As only 2/3 of the shareholders register for the AGM, the family always wins the vote. The Government Pension Fund of Norway is the fifth largest and main European shareholder with only 1,6% of the shares. The main Swedish financial institutions are gradually divesting and longer figure among the shareholder top-10. US-based investors are now the most prominent non-family owners of Lundin. As they do not wish to join the Nomination Committee, one seat is now taken by Aksel Azarc, a Geneva-based expert in private wealth management and tax dodging.

Swedish financial institutions have been loyal investors in Lundin since the early days of its activities in Sudan. A review by Swedwatch of 20 years of annual reports (from the 1996 Sands Petroleum report to the 2016 Lundin Petroleum report) shows that all Swedish state-owned pension funds, the AP-funds (AP1, AP2, AP3, AP4), have been among the largest shareholders in Lundin Energy at some point during the last ten years, except for AP7.

Most major private Swedish financial institutions have also at some time been among the largest shareholders, including Swedbank, Nordea, SEB, Handelsbanken, Skandia, Folksam, and Länsförsäkringar. AP1 sold its shares in 2015. Folksam and AMF Pension are the only institutional investors that are known to have divested, in 2012, because of the company’s human rights conduct.

Lundin Energy figures in major index funds, including funds that are screened for human rights criteria. All large  investors in Lundin Petroleum endorse the UN Guiding Principles for Business and Human Rights and claim to respect the right to remedy of victims of human rights violations. They also have engagement and/or exclusion policies for companies with controversial human rights records.

Shareholder responsibilities

The right to remedy is a core tenet of the international human rights system and an essential component of the UNGP. Businesses must assess if they contribute to adverse impact, address adverse impacts and publicly account for the way they handle these issues. Shareholders in a company are directly linked to adverse human rights impacts of operations of a company through their business relationship (UNGP 13). It therefore matters to shareholders how companies handle allegations of adverse human rights impacts. They are required to assess if and to what extent investee companies have contributed to human rights violations and responded properly, and publicly communicate their findings and conclusions. This duty cannot be substituted by a decision by a state to investigate a crime. Shareholders who wait for the outcome of a criminal investigation into human rights violations without taking action by themselves, are failing their human rights duties.

It is the responsibility of investors to engage with investees and use their leverage to prevent, mitigate, and address adverse impacts. If the investor lacks sufficient leverage and is unable to increase it and end the adverse impact, the investor should consider ending the relationship. Here the severity of the adverse human rights impact must also be considered: the more severe the abuse, the more quickly the enterprise will need to see change before it takes a decision on whether it should end the relationship. (UNGP 19). The allegations against Lundin Energy concern the worst crimes known to mankind and investor engagement with the company about its legacy has achieved nothing.

On 12 June 2017, the Office of the High Commissioner on Human Rights published the opinion that unsuccessful engagement may create a duty to contribute to remedy.  `In practice, there is a continuum between ‘contributing to’ and having a ‘direct link’ to an adverse human rights impact: a bank’s involvement with an impact may shift over time, depending on its own actions and omissions. For example, if bank identifies or is made aware of an ongoing human rights issue that is directly linked to its operations, products or services through a client relationship, yet over time fails to take reasonable steps to seek to prevent or mitigate the impact—such as bringing up the issue with the client’s leadership or board, persuading other banks to join in raising the issue with the client, making further financing contingent upon correcting the situation, etc.—it could eventually be seen to be facilitating the continuance of the situation and thus be in a situation of ‘contributing.’

The members of the Lundin Consortium were and are demonstrably non-compliant with the UNGP. At a minimum, their shareholders should have prevented them from continuing to disregard essential UNGP requirements. Because of the maturity and severity of the case, compliance will have to be prompt, full, and publicly accounted for. Unless they become visibly and fully compliant without delay, or shareholders convincingly and publicly refute all allegations against them straight away, shareholders themselves are flouting their UNGP obligations.

Lundin Energy is systematically confusing the criminal investigation into war crimes with its human rights impacts. These are not identical. The Swedish Public Prosecutor is gathering evidence about complicity in war crimes of two individuals. He is not assessing Lundin’s human rights impacts. The company must do that itself and does not. In such an extremely severe case, if the company fails this duty, investors must do this themselves. As they don’t investors in lundin Energy have become accomplices in denying victims of war crimes their rights.

Responsibility for past abuses

Some shareholders argue that remedy is no concern for them if the crimes were committed before they bought shares. Other shareholders argue that remedy is no concern for them because Block 5A was sold a long time ago and Lundin Energy today is no longer involved in human rights abuses. However, there is overwhelming evidence that Lundin’s operations have had severe adverse human rights impacts that have not been redressed. Duties do not disappear by walking away.

From a legal perspective, the term adverse human rights impacts refer not to the action which results in an adverse human rights impact, but to the impact itself: the removal or reduction of the ability of an individual to enjoy his or her human rights (OHCHR Interpretive Guide, page 15). The right to effective remedy is a human right that is created by a violation and that that only ends with the provision of remedy or the demise of the victim. For as long as individuals have a reduced ability to enjoy their human rights the adverse impacts remain, and so does the responsibility to remedy them. The relegation of today’s injustice to the past perpetuates the denial of a human right. By ignoring their past impacts, Lundin Energy, Petronas and OMV are today disrespecting the human rights of the people who were harmed then.

A significant part of Lundin Energy’s value is based on the acquisition of Norwegian assets with its Sudanese profits, as reported in the company’s 3Q 2003 report. Consequently, Lundin’s current shareholders and business partners are seen to be benefitting from war crimes. Benefitting from such crimes is always morally intolerable, even post hoc and indirectly, and even more so if the victims are ignored.

What about Lundin’s high ethical ratings?

Considering the exceptionally severe allegations that Lundin Energy is facing and the evidence that the company still does not respect human rights today, it comes as a surprise that it is receiving very high Environmental, Social and Governance (ESG) ratings by companies like Fitch, MSCI, FTSE Russell, RepRisk, Robecosam, Sustainalitics, and Vigeo Eiris. These ratings create a false impression and misguide investors. Several rating companies accurately describe facts about the criminal investigation, but they do not give it much weight in their rating. None of these rating companies factor in whether the company’s response to the ‘controversy’ is in line with its human rights obligations. This is deliberate. Whether or not a company is respecting human rights carries little weight in prevailing ESG rating methodologies. Rating agencies do not assess environmental and social impacts of companies. Rather, they assess the risk to investors to lose money because of the way ESG issues are managed. Explaining Lundin´s AA rating in a letter to PAX in August 2017, MSCI wrote `While our methodology oversight committees do occasionally permit adjustments to the model to place higher weight on a particular issue when there is a serious controversy, this happens only when we believe the controversy is or is likely to become highly financially material to the firm in the future. In Lundin’s case, while the allegations are serious and we have documented our assessment as such, we believe it unlikely that they will have significant long term negative financial impact on the firm.’ In other words, it doens’t matters for your ESG rating what you do to people or the environment as long as it doesn’t affect the shareprice.

The fact that Lundin´s Chairman and CEO are both personally under criminal investigation creates a conflict of interest; a fundamental governance issue that is missing in ESG assessments.

About the high ratings themselves, it is surprising to see that the available evidence about complicity in war crimes and the company’s poor response carries only marginal weight in ESG ratings. The UN OHCHR states that it is a ‘… universal baseline responsibility that all companies have to respect human rights …’ and that nothing can ‘ … be used to offset or compensate for a failure to meet this responsibility.’ In existing rating systems, however, a company’s biodiversity policy can offset gross and systematic human rights violations. This is confusing and at odds with the very concept of human rights.

Many investors have no time to digest the data underlying ESG ratings, which is why these are made in the first place. In most cases this will do, but in unusual and extreme cases it can be problematic and investors may later regret it. The use of a simplified rating system for complicated, high-risk issues can have embarrassing outcomes. Clients may at some time find out that they are directly linked with totally unacceptable practices through their investments, having no other excuse than to point at a positive rating. This would eventually also be embarrassing for the rating company itself.

The rating industry should substantially raise the weight of highly salient issues in their ratings. And they should simply refrain from rating companies that are mishandling issues of paramount importance, e.g. credible allegations of complicity in war crimes.

Fuel for Conflict

Swedwatch and Fair Finance Guide Sweden are experts on the UN Guiding Principles. In April 2017, they published the report Fuel for Conflict – Investors and the Case of Lundin Petroleum in Sudan, in which they argue why shareholders in Lundin Petroleum have failed their duties. These are their recommendations to them:

  1. Conduct proper human rights due diligence regarding their investments in Lundin, focusing on the consequences of the operations in southern Sudan between 1997 and 2003. They should publicly communicate the activities and results of this process, in accordance with the UNGPs principle of “know and show”.
  2. Act on the findings of this process and address all adverse impacts on human rights that have arisen as a result of Lundin operations in Sudan between 1997 and 2003, then use their leverage to encourage Lundin to act in accordance with the UNGPs and address the impacts, be it through remediation or other means.
  3. Demand transparency and cooperation from Lundin when assessing and addressing adverse human rights impacts connected to the company’s operations in Sudan, through either investor due diligence or an independent investigation.

All institutional investors have so far rejected the findings of the report, raising serious concerns about their understanding of their human right commitments.

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