Australian ESG researcher CAER faces legal action over fossil fuel divestment review for ANU

CAER says it stands by its work as mining firm Sandfire alleges “misleading” research.

Australian ESG research house, the Centre for Australian Ethical Research (CAER), is facing legal action from Perth-based copper mining company Sandfire Resources which alleges that CAER published “misleading” and “deceptive” research that lead to the Australian National University’s (ANU) decision last month to publicly divest Sandfire and six other fossil fuel companies.

The legal move could join a handful of cases where a company has tried to sue a research company for damages based on advice that has led an investor to sell its stake.

ASX-listed Sandfire says it has filed proceedings in the Federal Court of Australia based on the allegations, which it says were published in media releases by CAER and its London-based research partner EIRIS that appeared on the CAER website on October 19 and 20. CAER is standing by its research, which it says is mostly based on public domain information. It is understood that EIRIS is not cited in the legal documents lodged with the Federal Court.

Sandfire claims that the media releases contained unfair and inaccurate representations of the company. It says it formally engaged with CAER and sought a retraction of the media releases.

Duncan Paterson, CEO at CAER, told Responsible Investor: “CAER is Australia’s leading independent research organisation delivering high quality research on responsible investing. We stand by our work which is largely based on publicly available information applied using long standing internationally recognised research processes and principles.”
He said CAER could not comment further because of the legal proceedings.

Peter Webster, CEO of EIRIS, told RI: “There have been legal actions or threats over the years but never successful ones. Our job is to provide impartial research and we are not going to please all the companies all the time. These things happen.”ANU divested Sandfire and the other six fossil fuel companies last month following a review commissioned from CAER as part of the university’s socially responsible investment policy.

Its decision to divest A$16m – or 5.1% of its Australian equity holdings – sparked an intense debate in Australia and drew criticism from Prime Minister Tony Abbott who dubbed it “stupid”.

At the time of ANU’s announcement, Independence Group, one of the companies divested by ANU, said the seven fossil fuel companies were considering a collective response to the decision.

Sandfire also released a statement complaining that it was not consulted on the ESG research and suggesting that CAER had been subjective in its analysis.

In a statement made earlier this month and before the legal proceedings, the Responsible Investment Association Australasia (RIAA) group said the media attacks on CAER were “unjustified and inaccurate”.

RIAA said: “Many working in this market are very familiar with the strong reputation that CAER has in Australia as a long standing and well regarded research house and RIAA is keen to state that we stand behind them, as well as the other research companies.”

On its website Sandfire says it is a “socially responsible mining company with an impressive environmental record”.

Sandfire, in which controversial South Korean steel group, POSCO, has a 15% stake and a seat on the board following a strategic partnership signed in 2008, said it wouldn’t be making a further statement on the matter because of the court proceedings.