Western Union’s ESG Reset

January 10, 2020

After coming under fire for working with a Myanmar military-backed bank, the firm changes course.

By Eve Tahmincioglu

Western Union announced this week that the company decided to stop using Myawaddy Bank, owned by the Myanmar military, as one of its agents. The bank has come under fire for the relationship given that the Myanmar military has been accused by the United Nations of genocide.

The decision comes nearly three months after Western Union’s CEO Hikmet Ersek was featured in Directors & Boards third quarter issue about the release of the company’s first environmental, social and governance report.

After the story ran, Directors & Boards was contacted by Mark Farmaner, director of Burma Campaign UK, an NGO based in London with a mission to restore human rights and democracy in Burma. He wrote, in part: “I was surprised to see Hikmet Ersek, CEO of Western Union, describe his company as operating to the ‘highest ethical standards.’”

“In Myanmar,” he continued, “Western Union uses Myawaddy Bank, owned by the Myanmar military, as one of its agents. The United Nations fact-finding mission on Myanmar has accused the Myanmar military of genocide against the Rohingya Muslim minority. They have called for sanctions of Myanmar military companies, stating that doing business with them is indefensible.”

A follow-up story about Western Union’s apparent ESG disconnect ran in Directors & Boards' fourth quarter issue titled: “ESG: PR or Societal Play.”

In it, a Western Union’s spokeswoman said the company “condemns human rights abuses,” and that “all agents selected to offer our services to the people of Myanmar undergo rigorous due diligence and they are an important conduit to making remittance accessible to the people of Myanmar. We take concerns about our agents seriously and as noted in our ESG report, will continue to engage with our stakeholders around this and other issues of shared concern.”

Clearly, there was a change of approach given the company’s announcement this week.

On Tuesday, Western Union spokeswoman Rachel Rogala sent an email to Directors & Boards about the company’s decision to stop using Myawaddy Bank.

“In Myanmar and other countries in conflict,” she wrote, “Western Union plays a critical role in connecting people — whether families sending money to loved ones to meet basic needs like healthcare and food, or humanitarian aid organizations in need of funds for the work on the ground. Providing these services requires the use of local agents remunerated by a commission payment. Western Union conducts agent due diligence and oversight through periodic reviews to determine whether these agents satisfy relevant regulatory requirements and Western Union policies.

“As a result of such a review, Western Union has ended its contract with Myawaddy Bank, effective immediately.”

The announcement was hailed by Burma Campaign UK’s Farmaner but he lamented how long it took for the company to change course.

“It is excellent news that Western Union have ended this business relationship with the Burmese military,” he says.

“It does highlight problems with their due diligence and putting policies and principles into operating practice. It also reveals a cultural and organizational problem that it took more than a year after we first contacted Western Union about this for them to conduct a review and conclude were not following their own policies.”

He adds, “it is clear directors at Western Union have laudable principles they want the company to stand for, but it doesn't seem to trickle down through the DNA of the company.”

Farmaner credited Directors & Boards' story for increasing the pressure on the company:  “I do think that your article helped get the attention of top management at Western Union, who recognized the problem they were facing with this business relationship.”