It’ll be my way or the highway
Trust us or sell your shares.” Or, in other words, ‘it’ll be my way, or the highway’.
That’s how Lundin’s CEO Ashley Heppenstall recently responded to ever-increasing pressure to get to the bottom of the petroleum company’s human rights impacts during prospecting in southern Sudan between 1997 and 2003.
Though the Swedish oil company insists that it has neither caused nor contributed to the atrocities that were ongoing there through its activities, NGOs including the European Coalition on Oil in Sudan (ECOS), Amnesty International and Human Rights Watch beg to differ.
Allegations made by ECOS connects Lundin to serious negligence related to the death of thousands of civilians and when almost 200,000 people were driven from their homes because the Sudanese government wanted to take control of oilfield Block 5A. Lundin Oil owned prospecting rights in the area.
Human Rights Watch’s 2003 report “Oil, Sudan and Human Rights” refers to Lundin Oil as a key player, stating that they, together with other oil companies, ignored Sudanese government practices used to clear land for the companies’ activities. It concluded that Lundin has benefitted from the government’s continued abuses of human rights.
With these reports in mind, a Swedish prosecutor is currently investigating Lundin’s involvement. So the jury is still out on the degree Lundin should be deemed responsible for what was going on in Sudan.
Everything came to a head during the company’s AGM on May 10, when some Scandinavian institutional investors requested that Lundin pull together an independent inquiry on its human rights impacts in Sudan. Lundin claims that this process would get in the way of the Swedish inquiry, and rejected the suggestion outright.
The Lundin board claims to be misunderstood and Heppenstall’s challenge is a reflection of his frustration. Though the CEO recanted his words after a storm of protests – the comment is lingering in my mind because it says a lot about how the company perceives the role of investors and how it chooses to communicate with them.
After a tumultuous discussion, an unexpected 22% of their shareholders voted to establish an independent inquiry into Lundin’s operations in Sudan. Now, the Lundin family is running a company whose interests are split to its core.
Although the Lundin case has as many layers as an onion, there are some key take-aways. And it all comes down to Ruggie.
When doing business, you can’t turn a blind eye to the social and political contexts of your operations. This means that every company has the responsibility to avoid causing or contributing to negative impacts through its own activities and to address each impact when they occur. In a case like this one, a transparent human rights impact assessment is the only credible way to instill trust in a company’s approach.
What’s more, it is the responsibility of every company to meet the expectations of its investors, including interested parties. Because rather than a ‘my way or the highway’ attitude, building trust rides on a two way street, Mr. Heppenstall.