ABP puts BNP Paribas, BMW and Total under engagement pressure

First ESG report by giant Dutch pension fund outlines company engagements.

BNP Paribas, BMW, Delhaize, Total and Schlumberger were amongst multinationals to come under engagement pressure last year from ABP, the €250bn ($315bn) giant Dutch pension fund. In its first report on the implementation of environmental, social and governance (ESG) issues into its investments, the fund said it had lobbied companies on concerns including child labour, responsible lending and interests in Burma and Sudan.
BNP Paribas, the French bank, was approached for discussions on why it is not a signatory to the Equator Principles on responsible project finance lending, as well as on unspecified issues of human capital management. The Equator principles have been signed by more than 60 banks, including French peers Calyon and Société Générale.
Delhaize, the Belgian supermarket chain, was called for talks on child labour and labour rights as well as healthy eating and food labelling issues.
French oil giant Total was questioned by ABP over its operations in Burma, as was Schlumberger, which was also asked to explain its business interests in Sudan. Regarding BMW, ABP initiated discussions on the company’s response to CO2 emissions in the light offuture EU regulations for the automobile sector. The fund did not say if the engagements had concluded. In the report, ABP gave an example of why it believes engagement, and potentially divestment in the case of lack of progress, can be financially material to the fund’s investments. The fund said it had invested in 2005 in Panalpina, the Swiss logistics and freight company. It said it subsequently discovered that the company was involved in an enquiry by the US Department of Justice into bribery in Nigeria, following which Panalpina suspended its operations in the country.
After engagement with the company, ABP said it decided Panalpina’s bribery policy was “unsatisafactory” and represented a financial risk, at which point it sold its investment. The fund said that shortly after the share sale, the European Commission announced it was investigating Panalpina for possible violation of competition rules.
The fund also revealed the difficulties in engaging with companies over human rights abuses and political instability in countries such as Burma and Sudan. It said: “Many are Chinese, Indian, Malaysian and Thai companies that are not responsive to shareholders.”

On corporate governance, it revealed that it had voted against the reappointment of management in 8.1% of cases at just under 5,000 shareholder meetings and warned corporations it would take a hard line on pay not linked to performance: “If companies perform worse than their direct competitors but nevertheless remunerate their senior executives more generously, ABP will vote against.”The fund also gave further insight into the $340.1m settlement made by Shell, the Anglo-Dutch oil company, to institutional shareholders in 2007 over its restatement of proven oil and gas reserves. ABP said it would receive between $4-10m under the settlement and noted that Shell had also agreed to make $12.5m available to private investors to participate in the compensation scheme.