Storebrand has placed the Swedish company Eolus Vind on its Observation List and has recommended measures to be taken by the company to address risks pertaining to potential human rights violations.
The move by Storebrand follows a landmark decision by the Norwegian Supreme Court on the human rights of indigenous peoples in a separate and unrelated project in the same sector. The decision sets a precedent for interpretation of impacts on indigenous peoples' rights, in an area which has seen conflicts arising between the social and environmental dimensions of renewable energy production. Although every case must be judged on its own merits, the judgement raises principled issues that we as an investor find relevant to consider when evaluating risks and taking investment decisions.
Enabling a just transition to a carbon neutral economy will require investments in renewable energy, but such investments must also respect the rights of indigenous peoples and other vulnerable groups, says Jan Erik Saugestad, CEO of Storebrand Asset Management.
On-shore wind project
Eolus Vind is the main project partner of Øyfjellet Wind AS in the operation of Øyfjellet Wind Park. Øyfjellet Wind Park consists of 72 wind turbines and an extensive network of access roads in a concession area of 40 km2 in a mountain area in Vefsn, Nordland. The project has 400 MW installed capacity and projected annual energy production is 1320 GWh.
The Sámi reindeer herders of Jillen-Njaarke district have expressed that the project creates significant negative impacts on their ability to continue their traditional livelihood of reindeer husbandry because the windmills impede the reindeer from using their natural migration route to and from seasonal grazing areas. This claim is contested by Eolus and Øyfjellet Wind.
Øyfjellet Wind Park has received all necessary permits from Norwegian authorities, which have found the project not to violate ICCPR article 27. However, the concession license was awarded by the Ministry of Petroleum and Energy before the ruling by the Supreme Court in the Storheia and Roan case, which disagreed with the Ministry's interpretation of the threshold for violation of Article 27. Although these cases are different, Storebrand is of the view that the Supreme court case does raise relevant considerations that ought to be considered when evaluating potential risks related to its investments.
The license for Øyfjellet Wind Park includes an obligation on the company to facilitate an agreement with the reindeer herders on mitigating actions. No such agreement is in place yet and court proceedings are set to commence in May 2023. Storebrand believes that without the implementation of appropriate mitigation measures there is a risk that the project may constitute a violation of the human right of indigenous people to enjoy their own culture, as protected by Article 27 of the International Covenant on Civil and Political Rights (ICCPR). The high vulnerability of the Southern Sámi culture, and the importance of reindeer herding for the survival of this culture and the Southern Sámi language, is a central consideration. Without the implementation of appropriate mitigation measures, the park may increase the cumulative impacts from other interventions in the reindeer herding district, including roads, railway, agriculture, hydropower etc., causing a risk that the threshold for a violation of ICCPR Article 27 may be passed.
Observation process and expectations
Storebrand Asset Management is committed to using our position to influence companies to operate with high standards of sustainability.
Storebrand has been in dialogue about the case with Eolus Vind since February 2021 and will continue engagement with the company, having communicated clear expectations to the company regarding measures and results considered to be critical for resolving the problem. We expect the company to continue its efforts to come to an agreement with the Sámi reindeer herders of Jillen-Njaarke about mitigating actions to allow traditional reindeer migration through the project area. To prevent future conflicts in other projects, the company should also adopt a policy on indigenous peoples' rights, in accordance with international best practice.
According to Storebrand's procedures, we expect companies under observation to show improvement within a pre-determined time, in order to be removed from this status. If the improvements are not achieved, the company can be excluded from our investable universe.