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RI Global news round-up week end 09/11/07

A round-up of the RI news you need to know.

A long-term review by the UK National Association of Pension Funds (NAPF) of the 2001 UK Myners Principles on trustee responsibilities, says smaller pension schemes need targeted support to tackle areas of under-compliance, notably on self assessment. The report said adherence to the Myners Principles should continue to be voluntary for schemes but with additional comply or explain reporting for those with assets in excess of £250m It said it preferred this option to a mandatory independent compliance review. Broadly, the NAPF said UK pension schemes had improved compliance with the 10 Myners principles over the last six years. The ten Myners principles focused on areas such as decision-making, setting clear objectives for the fund’s investments and active engagement with investee companies.
Nordea, the €165bn Nordic fund manager has hired Hermes Equity Ownership Services to engage in companies within its investment portfolios with the aim of adding long-term value. The Nordic fund manager said the hire of Hermes was part of an increased approach to responsible investing. Nordea is the first fund manager signed up to Hermes EOS, which to date has pension funds clients including Denmark’s PKA, the Irish National Pension Reserve Fund, The British Coal Staff Superannuation Scheme and the BBC Pensions Trust.
The $50bn Massachussets Pension Reserves Investment Management Board is selling $54m of shares in eight companies including Alstom andPetroChina, that have been targeted by the Sudan Divestment Task Force, a non-governmental organisation operating divestment campaigns in the US, and now targeting pension funds in Europe. Massachusetts recently became the 21st US state to adopt a policy to divest from companies working with the Sudanese government. US pension funds have now pulled assets worth hundreds of millions of dollars from companies operating in Sudan.
The Association of British Insurers (ABI) is threatening to put companies on its highest level of corporate governance failure – a red top warning – that will not allow fund managers to cast opposing votes on the same resolution at company AGMs, reports Thomson Investment Management News. It said Peter Montagnon, director of investment affairs at the ABI, had written to the government demanding changes to the new Companies Act over a clause that could prevent them from doing so. Fund managers can have multiple pension fund clients with different views on the same resolution. Stephen Haddrill, Director General of the ABI, has also called for the UK government to be tough with its forthcoming Climate Change Bill and face up to the consequences of more erratic and dangerous weather. He said this summer’s floods in the UK had cost the insurance industry more than £3bn.
Railpen Investment, one of the largest UK pension funds, has extended its corporate governance overlay mandate with Governance for Owners (GO) to cover its
£690m Japanese investments. GO opened a Tokyo office in September 2007, headed by Toshiaki Oguchi, a respected Japanese corporate governance expert.
Paul Frentrop, Netherlands director of Deminor, the European corporate governance agency, has been appointed as head of corporate governance with the investment division of ABP, the €215bn Dutch pension fund. Frentrop will take up the post at the beginning of next year. ABP is currently working on a policy for voting its entire global equity shares.
Innovest Strategic Value Advisors has introduced a screening tool to track corporations with operations in Burma. The screen has identified 138 companies with links to the country where a crackdown by the military government recently led to more than 20 deaths. Innovest has also received an award for “Innovation and Contribution to Carbon Finance” from the UN Environment Program’s Finance Initiative, in part for its work in assessing corporate carbon emissions for the Carbon Disclosure Project.
Morley, the UK fund manager, has formed a Shanghai-based asset management joint venture with China National Oils, Foodstuffs and Cereals. Morley, which has a long-established SRI team, is applying for a license to become a qualified foreign institutional investor in China.
The $176bn California State Teachers’ Retirement System, CalSTRS, has signed the United Nations Principles for Responsible Investment, agreeing to incorporate environmental, social and governance issues into investment decision-making.Three hedge funds allegedly plan to sue ArcelorMittal, the largest European steelmaker and investment banks, Morgan Stanley and Goldman Sachs, for $400 million (£192 millon), claiming that were short-changed over last year’s £26bn merger of the two companies. Monaco based, SRM Global Fund, London-based Trafalgar, and Deminor, a Brussels-based fund, are expected to file a lawsuit in Luxembourg claiming that the banks were not in a position to provide a proper fairness opinion on the deal because of the level of fees they were receiving from Mittal Steel.
Eight out of 10 UK citizens say a company’s environmental reputation affects their decision whether or not to purchase goods, according to Ipsos Mori’s 2007 survey of attitudes to corporate responsibility. About 40% said that social responsibility was also a very important factor in their buying behaviour.
New York city Mayor Michael Bloomberg has called for a national greenhouse gas tax on Friday, saying it would slow global warming and fund a US$500 a year tax cut for the average taxpayer. Under his plan, polluters like energy companies and utilities would have to pay US$15 per tonne of greenhouse gas they emit. The money would pay for a cut in federal payroll taxes, giving the average taxpayer the US$500 a year break.
Global banana companies are using tax havens to legally avoid paying large amounts of tax on their profits both in sales markets and developing countries where the bananas are grow, according to a report by UK newspaper, The Guardian. The paper said Dole, Chiquita, and Fresh Del Monte, which between them control more
than two thirds of the worldwide banana trade, generated over $50bn (£24bn) of sales and $1.4bn of global profits in the last five years. Yet they paid just $200m, or just over 14% of profits, in taxes between them over that period.
Companies that engage positively with their workforce can boost their financial performance, according to a report by Towers Perrin. It found that companies with high employee engagement experienced a higher operating margin (up to 19 percent), net profit margin, revenue growth and earnings per share(up to 28 percent) than companies with low employee engagement.
Limestone Investment Management has launched what it believes to be the first socially responsible equity fund focused exclusively on Central & Eastern Europe. The firm, founded this year by 5 ex-Hansa Investment Funds portfolio managers said companies in the region were beginning to understand the importance of sustainability in their operations, which would in turn improve their investment potential.