Several large Canadian pension funds have voted in favour of a shareholder resolution asking fertiliser producer PotashCorp to report on the risks of its operations in the disputed Western Sahara region.
The resolution, co-filed by the Congregation of the Sisters of Mercy of Newfoundland and Meritas Jantzi Social Index Fund, appeared at least year’s AGM and received only 6% backing from voters.
But at the company’s AGM in Saskatoon, Saskatchewan yesterday, the resolution attracted far greater support.
Although detailed voting tallies aren’t yet available, the company said the resolution was opposed by 68.36% of votes – suggesting around 30% investor support.
Backers included Canadian pension funds such as the British Columbia Investment Management Corporation (BCIMC), the Canada Pension Plan Investment Board (CPPIB) and the Ontario Teachers’ Pension Plan (OTPP), according to voting records on their websites.
PGGM, the €183bn Dutch pension investor, was one international institution which voted for the motion – saying it was in the best interests of shareholders given “several developments” in the Western Sahara situation.
OTPP said: “While we do not dispute that the company has in place policies and procedures governing suppliers, business conduct and social responsibility, we believe that the risks associated with the company’s business dealings in the Western Sahara are significant.”
BCIMC, meanwhile, points out that the proposal aligns with the UN’s Guiding Principles on Business and Human Rights and a risk report “would help protect the company from reputational and operational risk”.Those in support also point out that PotashCorp’s current disclosures are inadequate in allowing shareholders to assess the potential risk of the company’s sourcing of phosphate rock, the primary source for phosphorous in the firm’s phosphate fertilizers, from Western Sahara.
The resolution explains that though the region is part controlled by Moroccan authorities, Western Sahara is defined by the UN as a ‘non self-governing territory’ and its people, the Sahrawi, are entitled to self-determination.
The company advised shareholders to vote against the resolution, arguing it has “no physical presence, owns no assets and conducts no operations” in the relevant area in Western Sahara. It was “mindful” of the dispute and added it takes its human rights responsibilities and obligations “very seriously”.
Nina Markowska, engagement manager at GES Investment Services, the Sweden-based engagement group, says that her firm advised its investor clients to vote in favour of the resolution and has been engaging PotashCorp on this issue since 2010. She added that she was “very happy and quite surprised” to hear that the resolution attracted such support.
She said: “I’m not sure whether this will change what PotashCorp is saying about Western Sahara and their involvement there, but our hope is that this makes more shareholders aware of the problem and motivate them to demand more of companies in terms of human rights assessments.”