The recent move by Norway's sovereign wealth fund to drop a Thai energy conglomerate from its portfolio raises questions about the reasons behind the decision but sends a warning to Thai corporates on their overseas investments.
The world's largest sovereign wealth fund announced that its executive board decided to exclude PTT and its subsidiary PTT Oil and Retail Business Plc (OR) as well as Israeli security and analytics software provider Cognyte Software Ltd from its portfolio.
The fund's ethics council said the Thai firms' partnerships with Myanmar state- and military-owned companies and their activities provide the armed forces with substantial revenue streams that can finance military operations and abuse.
The Israeli software provider is also considered by the fund as contributing to serious human rights abuses.
The fund's decision resulted in a drop in PTT and OR share prices despite the fact the funds do not have a substantial shareholding in either.
However, the Norwegian fund's move raised questions about the position of other multinational firms which hold investments in Myanmar, including American Chevron, which holds a majority stake in the Yadana Project, but did not come under pressure from the fund or other Western governments.
PTT Group has clarified its Myanmar stance, insisting it has no relation to the coup or violations of rights.
OR holds a 35% share in Brighter Energy, a joint venture that transports petroleum products and provides a storage service in Myanmar, according to a PTT statement. PTT executives reaffirmed the group's respect for human rights principles and said it was committed to building better societies and protecting the environment under sustainability goals.
As a minority shareholder, OR asked Brighter Energy to consider suspending construction of a storage facility, currently in the development phase, while the situation in Myanmar remains volatile and many countries have imposed sanctions against the country, said Disathat Panyarachun, chief executive of OR.
OR will not inject additional capital and has demanded Brighter Energy avoid financial transactions with people on a sanctions list, he said in a letter submitted to the Stock Exchange of Thailand.
The firm said it strictly complies with its policy not to be involved in violence or human rights violations.
The case of PTT is a warning sign to other Thai corporations which invest overseas. "Respecting human rights is one of PTT Group's most fundamental practices. We are deeply concerned about atrocities committed in Myanmar following the 2021 coup," said Auttapol Rerkpiboon, president and CEO of PTT Plc.
PTT is at the forefront of the Thai firms which abide with good governance and other internationally acceptable practices, such as accountability and transparency. But it has still suffered damage from the case because it invested in a country with serious rights problems.
These days, profits are not the underlining goal of global investment. Human rights, the environment, good governance and sustainability have become crucial criteria for investors and funds around the world. Now there are many frameworks which global organisations require multinational companies to observe.
Such criteria could become key investment risks if a company invests in a country which lacks acceptable standards to protect and preserve such critical issues. Thai corporates need to thoroughly study the criteria and consider such issues seriously in their investment plans.