ABP manager seeks ‘unexploded bombs’ amongst Global Compact companies

APG Investments, the fund manager to the €250bn ($315bn) ABP pension fund in the Netherlands, says it is looking for what it calls a large number of “unexploded bombs” in terms of companies failing to adhere to their commitments to the United Nations Global Compact, in one of the largest ever such reviews by an institutional investor.
Rob Lake, head of sustainability at APG, told the TBLI Conference in Bangkok, that the manager was reviewing the 4,500 listed companies in its equity portfolios to test their implementation of issues including human rights and labour standards laid out in the Compact. Lake said the fund manager expected to find a “relatively large number” of failing companies.
“The next step will be to investigate these failing companies and to find out the facts. If we find malpractice we will try to engage with the company to remedy the problem. However, the final step could be to exclude companies if they will not move.”
Lake said the review would take some time because of the number of companies involved and the difficulty in accessing comprehensive information on companyaccounting and financial reporting in some markets.
Institutional investors have recently stepped up their pressure on companies to make good their pledges to the Compact.
In January this year, signatories to the United Nations Principles for Responsible Investment (UNPRI) representing $2.13 trillion in assets, announced they were targeting corporate signatories that had not reported on progress in adopting its ten action principles. The Global Compact was launched in 2000 by Kofi Annan, the former UN general secretary. Its corporate commitments range from
upholding union rights to the abolition of child labour. Investors say they fear companies adhering positively to the Compact are becoming frustrated at others taking a “free-ride”: vaunting membership but failing to deliver on action. Companies listed by the UNPRI as overdue in reporting progress on the Compact included Standard Chartered, ArcelorMittal and Bouyges Telecom in France. In total, the investors wrote to chief executive officers of 103 companies in more than 30 different countries.