Luxembourg, 11th of March 2024 – Today, Greenpeace Luxembourg filed a complaint with the OECD National Contact Point in Luxembourg against the sovereign pension fund Fonds de Compensation de la Sécurité sociale SICAV FIS (FDC SICAV) for failing to meet the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct [1]. The complaint alleges that FDC SICAV’s [2] investment activities are in breach of the Guidelines’ recommendations on disclosure, environment, human rights, and consumer interests. 

Greenpeace Luxembourg demands that FDC sets up a sustainable investment strategy in line with the Guidelines. Additionally, the fund needs to conduct human rights and environmental due diligence to address any adverse impacts linked to their investments and establish a grievance mechanism that allows stakeholders to report sustainability-related issues.

“State-owned companies such as sovereign pension funds should be among the first movers in sustainable finance in conformity with nations’ global legal commitments. By adopting climate and human rights compliant strategies, these entities can lead the transition towards a more responsible and greener financial sector”, said Martina Holbach, campaigner at Greenpeace Luxembourg.

Institutional investors with responsibilities under the Guidelines, such as FDC, are expected by governments to conduct human rights and environmental due diligence, address climate and human rights risks in their value chains throughout their investment process and use their leverage to prevent or mitigate adverse impacts identified as part of the due diligence process. 

In February 2023, the FDC released a new directive outlining its investment strategy for the years 2023-2027. Although the Fund has made minor strides in enhancing its sustainability practices, Greenpeace Luxembourg’s recent research reveals that both the strategy itself and its implementation fail to meet the responsible business conduct standards of the Guidelines. 

Greenpeace Luxembourg’s latest report Fonds de Compensation’s Unsustainable Investor Factsheet shows that FDC SICAV continues to invest in more than 1200 companies, which have been excluded by other institutional investors [3], because of their adverse impact on people and the planet, including contribution to climate change, environmental damage, human rights violations or their involvement in controversial weapons.

These companies represent a total investment value of over 4,5 billion euros, or 36% of the Fund’s portfolio of equities and corporate bonds and 20,6% of the total portfolio.

Greenpeace Luxembourg also screened the FDC’s investments using Urgewald’s Global Coal Exit List and Global Oil and Gas Exit List [4]. The research shows that FDC SICAV continues to invest in leading coal, oil and gas companies which should be excluded from its investment portfolios. Currently, FDC does not exclude any companies for climate reasons.

Since 2015 [5], Greenpeace has consistently advocated for an ambitious and sustainable investment strategy for FDC, offering comprehensive analyses and expert advice on the Fund’s investments and its investment strategies. However, FDC has not been responsive to Greenpeace’s recommendations.

“Meaningful stakeholder engagement is essential for companies committed to responsible business conduct. We hope that this complaint will contribute to re-establish the basis for ongoing two-way communication between the Fund and civil society organisations.”, concluded Martina Holbach.

Notes:

[1] The OECD Guidelines for Multinational Enterprises on Responsible Business Conduct (RBC) are the most comprehensive international standard on RBC. The OECD Guidelines reflect the expectations from governments to businesses on how to act responsibly. They cover all key areas of business responsibility, including human rights, labour rights, environment, bribery, consumer interests, as well as information disclosure, science and technology, competition, and taxation.

The OECD Guidelines require that all OECD members and adhering governments establish functioning National Contact Points (NCPs). The NCP serves as a non-judicial grievance mechanism to help resolve conflicts arising from alleged violations of the OECD Guidelines by businesses. This mechanism provides a forum for discussion by facilitating conciliation or mediation between the complainant and the enterprise.

Greenpeace is the first Luxembourgish NGO to file a complaint with the National Contact Point.

[2] FDC was established in 2004 and its legal mission is to prudently manage the reserve of the general pension scheme and to earn an effective return while diversifying risks. In 2007, it created an open ended investment company called FDC SICAV FIS, which invests the assets in all types of securities. Luxembourg’s private sector employees are legally obliged to pay into the social insurance and pension scheme of the State and cannot currently choose another pension fund.

[3] According to the Financial Exclusion Tracker: https://financialexclusionstracker.org/

[4] https://www.coalexit.org, https://gogel.org. Both databases are used by financial investors worldwide to exclude coal, oil and gas investments from their portfolios, based on clear criteria.

[5] In September 2019, Greenpeace Luxembourg took legal action against the Minister of Social Security Roman Schneider, in charge of FDC, for failing to provide information on the alignment of the fund’s investments with the goals of the Paris Agreement. Additionally, the fund did not disclose climate-related financial risks associated with its investments. This case highlights the importance of transparency and accountability in sustainable investing.