APG sends warning to mining firm Vedanta on ESG issues

Giant pensions manager abstains at AGM vote over ESG concerns.

APG Asset Management, the wholly-owned fund manager of the ABP Dutch civil service pension fund, has sent a strong signal of discontent to FTSE100-listed mining firm, Vedanta Resources, over the management and disclosure of social and environmental issues.
APG has abstained on the vote on Vedanta’s report and accounts, set to take place at the company’s annual general meeting (AGM) in London today. It said: “While we recognise the improvements made on disclosures we don’t believe that they are yet sufficient to understand how Vedanta manages social and environmental challenges.”
The pension fund manager has also abstained on the re-election of former Indian politician and diplomat Naresh Chandra as a director. Chandra chairs Vedanta’s health, safety and environment committee. APG said it was “concerned about a lack of strategic management on social and environmental issues”.
Vedanta is under fire from investors and NGOs over its operations in the state of Orissa in eastern India, although it has denied allegations of environmental pollution or human rights violations. A group of NGOs including ActionAid and Amnesty International and celebrities such as Bianca Jagger will protest at today’s shareholders’s meeting over allegations that Vedanta plans to build a bauxite mine on the homeland of the Dongria Kondh people in the Niyamgiri Hills in Orissa state.
APG is still a holder of Vedanta stock, unlike its peer PGGM. The latter recently sold its €13m Vedanta holding after saying it had failed in “intensive efforts” to get the firm to devote greater attention to the environmentand human rights issues. Other investors such as the Church of England and the charitable Joseph Rowntree Trust have also exited the stock. ESG research firm EIRIS says Vedanta needs to widen the remit of the HSE committee to include ESG issues and train and allocate responsibility at board level on ESG risks. It also wants a link between pay and ESG performance. It would like the company to support standards such as the OECD Guidelines for Multinational Enterprises, the UN Global Compact and the Extractives Industries Transparency Initiative.
Proxy voting group PIRC is also proposing the removal of Chandra. It said: “The failure of the group to engage with explicit investor-led ESG concerns over the impact of group activities… [is] evidence of a lack of competent oversight.”
PIRC said the collapse of a chimney at a power plant in India run by BALCO, a subsidiary, which killed 40 workers exposed “weaknesses in health and safety controls” that are a significant indicator of poor governance.
Vedanta says it carries out CSR reporting using the Global Reporting Initiatives G3 Sustainability Guidelines and that it is aligned to the IFC’s Guidelines and Performance Standards on Social and Environmental Sustainability for the Metals and Mining Sector, the Principles of The United Nations Global Compact and the GRI G3 draft supplement on Metal and Mining Industries.
“Partnerships and stakeholder engagement are key pegs of our sustainability strategy,” Vedanta says on its website.