The Danish pension fund for academics, P+, has divested from 10 Chinese companies as it highlighted conflicts within ESG investing.

In a blog post on its website, P+ head of responsible investments, Kirstine Lund Christiansen, said the pension fund has reviewed its portfolio and divested from 10 Chinese companies that it believes are closely connected to the problems in Xinjiang.

A further 10 companies that are exposed via their supply chains have been placed under heightened observation and active ownership.

“We have also intensified our dialogue with the asset managers who have invested in solar energy on behalf of P+, to increase their focus on the issue and responsible corporate behaviour in supply chains,” she wrote.

The problems in Xinjiang province involve the ethnic minority Uyghurs, which independent sources have documented that the Chinese state systematically oppresses Uyghurs.

According to reports, which are based on both testimony and leaked documents from Chinese authorities, Uyghurs are, among other things, being exposed to surveillance and arbitrary detention, just as they risk ending up in internment camps and being put to forced labour.

Solar cell production has been identified as one of the industries where the risk of links to forced labour is very high, according to research by Sheffield Hallam University.

Therefore, Lund Christiansen has highlighted the conflict between investing in solar cells, an area that China has invested heavily in. Chinese manufacturers are sitting on over 80 per cent of the market according to an estimate from the International Energy Agency.

“From a market perspective, concentration in itself can be worrying. But it is particularly worrying that the Chinese-dominated supply chains entail a high risk of the possible use of forced labour,” she said.

“The controls that are carried out at the factories in Xinjiang often appear opaque. And tracking raw materials across a complex supply chain is difficult. The result is that, as an investor, you all too often bump your forehead against a Chinese wall of lack of transparency.

“The situation in Xinjiang thus emphasises that climate-friendly investments are also full of dilemmas. It is therefore important that we as investors think of sustainability in a broad sense and that we take our precautions so that the investments are made with respect for both people and the climate,” she stated.

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