The 10 largest shareholders as at 7 July 2020 Numbers of shares Subscription capital/votes, %
Nemesia¹ 95,478,606 33.39
Global Retail Investors 27,185,168 9.51
The Vanguard Group 6,952,551 2.43
Norges Bank Investment Management 4,732,513 1.66
State Street Global Advisors 4,318,870 1.51
Invesco Asset Management 3,467,397 1.21
China Investment Corp. 3,350,569 1.17
Nordea Investment Management 3,318,831 1.16
Lundin Directors, Management and Employees 3,315,928 1.16
Miura Global Management 3,255,000 1.14
Other shareholders 130,549,181 45.66
TOTAL 285,924,614 100.0

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

The 10 largest shareholders as at 31 December 2019 Numbers of shares Subscription capital/votes, %
Nemesia¹ 95,478,606 33.39
Equinor 13,955,845 4.88
Vanguard 6,252,395 2.19
BlackRock 5,231,599 1.83
Miura 4,575,000 1.60
USS Investment Management 4,550,000 1.59
JP Morgan Asset Management 4,283,142 1.50
Norges Bank 3,810,979 1.33
State Street Global Advisors 3,679,146 1.29
Nordea Funds 3,506,103 1.23
Other shareholders 140,601,799 49.17
TOTAL 285,924,614 100.0

The 10 largest shareholders as at 30 September 2018

                                                               Numbers of shares                  Subscription capital/votes, %

Nemesia¹                                                   94,376,494                                    27.7

Equinor                                                      68,417,676                                    20.1

JP Morgan Asset Management               4,557,248                                      1.3

The Vanguard Group                                4,531,728                                      1.3

Nordea Investment Management           4,363,630                                     1.3

Swedbank Robur Fonder                          4,320,008                                    1.3

Schroder Investment Management        2,809,761                                    0.8

Wellington Management                          2,659,892                                    0.8

Handelsbanken Fonder                            2,516,722                                     0.7

Blackrock Fund Advisors                          2,340,656                                   0.7

Other shareholders                               149,492,630                                  44.0

TOTAL                                                      340,386,445                                 100.00

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

With a holding of 33% of the shares, the family Lundin is firmly in control of the company, the more as less than 60% of the shareholders usually register for voting at the AGM and no single other investor is holding a significant share. The Norwegian Oil Fund is the third largest and main European shareholder with only 1,66% of the shares. The main Swedish financial institutions, traditionally the backbone of the company’s institutional shareholder base, have been divesting over the past years. Swedbank, AP-funds, Handelsbanken, Skandia, and SEB have all disappeared from the shareholder top-10, with only Nordea remaining for the time being. For decades, Swedish financial institutions filled the company’s Nomination Committee, but in 2020 only Nordea did not turn the invitation down. Consequently, Ian Lundin had to bring in Mr Azarc, a Geneva-based expert in private wealth management and tax dodging. US-based investors are now the most prominent non-family owners of Lundin.

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 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 divested in 2012 and they are the only major investors that are known to have acted on the company’s human rights record.

Lundin Petroleum figures in major index funds, including several funds that are screened for human rights criteria. All major investors in Lundin Petroleum claim to respect human rights and to have an engagement and/or exclusion policy for companies with a controversial human rights record.

Shareholder responsibilities

The right to a remedy is a core tenet of the international human rights system, and the need for victims to have access to an effective remedy is recognized as a crucial component of the responsibilities of businesses. The UNGP oblige businesses to assess if they contribute to adverse impact, to address past adverse impact, and to account for their findings and response. 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 investee companies handle allegations of adverse human rights impacts. It is a UNGP requirement that shareholders assess if and to what extent investee companies have contributed to human rights violations and responded properly, and their findings and conclusions must also be publicly communicated. This requirement cannot be substituted by a decision by a state to investigate an alleged offender of specific crimes. In the Lundin case, shareholders that are waiting for the outcome of the criminal investigation and take no action by themselves, are failing their human rights duties.

It is the responsibility of an investor 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 Petroleum are among the severest in recent history. Many investors have engaged with the company about its legacy, but without tangible results.

On 12 June 2017, the Office of the High Commissioner on Human Rights published an opinion suggesting that unsuccessful engagement can 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 have a responsibility to prevent 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 their company’s human rights impacts. To do that is the duty of the company itself. Due to the extreme severity of the case, if the company fails this duty, its investors must do this themselves, or they will be seen as an accomplice in the denial of the right to remedy.

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 the stake in Block 5A was sold a long time ago and Lundin Petroleum 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 and there is no doubt that victims have been denied their right to remedy for those impacts. The fact that Lundin is no longer active in Sudan does not relieve it from its responsibility to know and address the impacts that is has had.

From a legal perspective, the term adverse human rights impact refers 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 abuses. Benefitting from war crimes is always morally intolerable, even post hoc and indirectly, and even more so if victims continue to be denied their right to effective remedy.

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 are creating a false impression, distracting and misguiding investors with moral intentions. Several rating companies accurately describe facts about the criminal investigation, but they do not give it much weight in the 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 ESG issues. 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 does not matter for your ESG ratings what you do to people or the environment, but if that costs you money.

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 also 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 disappointing 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, 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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