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Institutional investors consider tar sands litigation

IIGCC says potential for future legal proceedings are being looked at by signatories.

An investor climate lobby group consisting of many of the world’s biggest pension fund and asset managers says some of its members are weighing up the future cost of potential legal action against oil companies involved in controversial tar sands extraction projects in Alberta, Canada. The Institutional Investors Group on Climate Change (IIGCC), which comprises more than 50 European pension funds and asset managers with a combined worth of around €5trn, said in a new report that its members were focusing increasingly on the risk of environmental litigation. It said more than half of asset owner (pension fund) signatories said the issue was a concern in 2009, against just 15% previously. It said: “A number of investors mentioned that they are now considering future litigation issues in the oil and gas sector in relation to oil sand extraction.” Oil majors including Shell and BP have already faced high profile shareholder revolts at their AGM’s over tar sands extraction. Pension fund members of the IIGCC includeDenmark’s ATP, the Netherlands’ PGGM as well as the BBC Pension Trust, the BT Pension Scheme, the Environment Agency Pension Fund and various UK local authority schemes. The IIGCC’s 38-page report, compiled by consulting firm Mercer, found that its asset owner signatories were also becoming gradually more proactive in asking climate change-related questions when meeting with potential asset managers and integrating climate change into mandate requests for proposals. But it said they have been much slower in integrating these issues into subsequent contract agreements with fund managers. The report said few asset owners asked their investment consultants to consider climate change when short-listing fund managers or when advising on strategic asset allocation. Last week, the IIGCC named ATP’s Ole Beier Sørensen as its new chairman.
Link to IIGCC report