Amid rising geopolitical tensions, many investors are withdrawing from China. However, Norway’s $78 billion pension fund, KLP, is pursuing a different strategy. Instead of pulling out, KLP has increased its engagement with Chinese mining companies that might be violating labor rights and responsible extraction practices.
Kiran Aziz, head of responsible investment at KLP, emphasized the importance of engagement. Last year, she visited China to connect with companies in the MSCI China Index. Aziz believes that building relationships and trust is key to influencing corporate behavior.
Despite these efforts, KLP has faced significant challenges. Out of 32 Chinese metal and mining companies in its portfolio, only eight responded to KLP’s outreach, and just five engaged in meaningful dialogue. This highlights the difficulty of engaging with investor-shy companies, especially in China.
KLP’s approach contrasts with other investors who have chosen to exclude China from their portfolios. By continuing its engagement efforts, KLP aims to drive positive change in corporate practices rather than simply walking away from the challenges. This strategy underscores KLP’s commitment to responsible investment and its belief in the power of dialogue to influence corporate behavior.
