APG may vote against BP, Shell on tar sands

APG Asset Management warns it may join shareholder protests over the involvement of oil giants BP and Shell in controversial tar sands projects in Alberta, Canada.

APG Asset Management, the wholly-owned fund manager of the €180bn Dutch civil servants pension fund ABP, has warned it may join shareholder protests over the involvement of oil giants BP and Shell in controversial tar sands projects in Alberta, Canada.

APG says a group of 140 shareholders that have filed resolutions against the firms have a “solid case” and that it shares many of their concerns. “If the companies fail to provide us with adequate information, we will vote in favour of these resolutions,” APG said.

The Dutch giant’s statement comes as the tar sands issue has split the investor community – with the UK’s Local Authority Pension Fund Forum going against the tide by coming out last week in favour of BP, which holds its annual general meeting on April 15.

APG has been to Alberta, where it met with the management of five companies involved in the tar sands projects as well as the Prime Minister of the province. It and 32 other institutional investors have asked 17 oil companies to indicate how they deal with the various risks of the tar sands.

APG notes in its latest responsible ownership newsletter that the oil industry in Alberta seems surprised by the “regulatory clampdown and public protest”. And while the fund says the industry still has a long way to go to solve its problems, it adds that it observed on site that a lot of attention was being paid to energy efficiency and water consumption.Meanwhile, APG has taken a different tack from Dutch corporate governance foundation Eumedion about how to reward company management in terms of sustainable criteria. Eumedion, of which ABP is a member, advocates taking sustainability related criteria into account as well as total shareholder return. But APG says it is “cautious” about such non-financial targets. Although backing “in principle” the integration of sustainability criteria into pay, the fund argues that “these criteria must be aligned with the company’s strategy”. Thus Shell’s criteria of ‘operational excellence’ or ING’s ‘employee and customer satisfaction’ make sense.

APG says it does not support companies using their ranking in the Dow Jones Sustainability Index to determine executives’ long-term bonuses. “If the credit crisis has taught us anything, it is not to rely on ratings, and certainly not on general scores that say little about a company’s success. It is up to the company’s supervisory board to find the right criteria. As investors, we in our turn monitor them.”
Links to previous RI coverage:
> The shareholder resolution spat over BP’s controversial tar sands plans
> BP tar sands resolution campaign hit as UK pension funds back company management
> Mercer quizzes fund managers over controversial tar sands BP/Shell AGM resolutions