Alleged human rights abuses at Vietnam-based apparel factories are the reason Norway Pension Fund Global, the world’s largest sovereign wealth fund, will no longer invest in Texwinca Holdings – a Hong Kong-based investment holding company in the yarn, fabric and apparel business.

Texwinca is the main shareholder in Megawell Industrial Ltd., which has come under fire for what Norwegian officials characterized as “serious or systematic” human rights violations at its Hugo Knit and Kollan factories in Vietnam. Discrimination against women, health and safety risks, and restrictions on the right to form unions are among the abuses alleged by the Council on Ethics, which advises Norges Bank – the central bank that runs Norway’s pension fund.

Recommendation to exclude Texwinca Holdings Ltd from the Government Pension Fund due to an unacceptable risk of the company being responsible for systematic human rights violations.https://t.co/tyFGG6Awy6

— Council on Ethics (@CouncilOnEthics) January 17, 2019

Influenced by the findings, Norges Bank said it has removed Texwinca from Norway’s sovereign wealth fund. According to reports, the Norwegian fund held 1.01% of Texwinca at the end of 2017, worth $7.7 million. The Norway Pension Fund Global is reportedly worth $983 billion.

Norges Bank noted that Texwinca claimed it doesn’t have control of Megawell’s operations and isn’t responsible for working conditions at the Vietnamese factories. Still, that wasn’t enough to convince the central bank, which said investing in Texwinca constituted an “unacceptable risk.” The Council on Ethics added that it “attaches importance to the fact that Texwinca has not helped to clarify this case and concludes that neither Texwinca nor Megawell are taking any responsibility for the prevention of human rights violations at the factories in Vietnam.” 

The cost of ignoring labour rights: Norway's $1 trillion sovereign fund, the world's biggest, has ejected Chinese #textile company Texwinca for its treatment of Vietnamese workers. via @jakpost https://t.co/aSz5kFkH1l

— Anna E. Ridgway (@AnnaERidgway) January 18, 2019

Counselor was not immediately able to confirm if the Kollan and Hugo Knit factories produce apparel for the North American promotional products industry. At least one source on supply chain intelligence notes that Hugo Knit sends shipments to the United States and Canada. The data showed that Uniqlo, a Japanese-headquartered apparel brand/retailer, was among recent recipients of Hugo Knit shipments in North America.

Counselor is reporting Norges Bank’s assessment of Megawell’s Vietnamese factories to alert any promotional products companies that might be sourcing from the plants. The allegations against Megawell come about a month after an Associated Press report revealed industry apparel supplier Badger Sportswear (asi/37876) was sourcing apparel from a Chinese factory the AP said was using forced labor. North Carolina-based Badger Sportswear has since ended its relationship with Hetian Taida Apparel Co. Ltd.