RI global news round-up

Scandinavian fund managers and insurance companies are selling so-called ethical investments while investing in nuclear weapons and cluster bomb manufacturers, according to research by Swedish newspaper Dagens Industri. The paper said pension insurance companies including Alecta, Skandia Liv, Lansforsakringar and SEB Trygg Liv owned shares totalling SEK700m in arms manufacturers such as Honeywell, Raytheon and Northrop Grumman.
The newspaper said Skandia Liv has an internal ethical policy against nuclear and cluster bomb investments.
Lansforsakringar told Dagens Industri it followed international conventions ratified by Sweden and its investment in Raytheon was due to a passive US equity portfolio.
Alecta told Dagens Industri it was reviewing its policies. By contrast, the newspaper said pension funds and fund managers including AP3, Banco, KPA Pensions and the Norwegian Petroleumfund were examples of investors adhering to clear ethical guidelines.

The Save Darfur Coalition is targeting asset managers including Franklin Templeton Investments, JPMorgan Chase, Capital Group, Fidelity Investments, and Vanguard with a campaign to urge them to sell shares in PetroChina and its former parent, the China National Petroleum Corporation (CNPC), because of their operations in Sudan, where government sponsored militia have been accused of genocide.

*The pay of US chief executives (CEO), private equity*and hedge fund managers should be taxed higher to bring their compensation levels in line with European norms, according to a study by the US Institute for Policy Studies and United for a Fair Economy. It said the 20 highest paid US CEOs made an average $36.4m each in 2006, nearly three times the $12.4m for their European counterparts, but much less than the average $657.5m each of the 20 highest-paid US private equity or hedge fund managers made last year.
Dutch finance minister Wouter Bos wants a salary cap for Dutch business leaders, according to Dutch daily newspaper NRC Handelsblad. The newspaper reports that Bos believes executive salaries are too high and that the relation between reward and performance is no longer clear. The paper said the minister had been in discussions with representatives from Shell, Akzo Nobel, ABN Amro and Philips.

UK ethical investors are quids in this year, according to research by Moneyfacts, the on-line search engine which found that returns from SRI funds had returned 18.3% in the past year compared with 13.7% from the average non-ethical option.
French bank Société Générale has adopted the Equator Principles on responsible environmental and social policies in project finance lending. Last month, the bank came under fire from WEED (World, Economy, Ecology & Development) a German-based consortium of NGOs, for its part financing, along with Germany’s DekaBank, and Bank Austria, of €1.1bn ($1.47 bn)

for the controversial llisu dam project in Turkey.

Fortis, the Dutch financial services group has established an international advisory board for corporate social responsibility (CSR). The board will comprise academics, NGOs, CSR research and business an analysts, and will act as advisory body on CSR topics to the group executive committee, it said.

UK oil and gas firms have shown a “pathetic” response to the need for investment in carbon-capture and storage (CCS) projects, industry leaders were told at the start of the Offshore Europe conference this week, according to the Aberdeen Press and Journal newspaper. Jonathon Porritt, a founder director of sustainable development charity, Forum for the Future, said there had been a lacklustre commitment from the sector to CCS.

Chung Mong-Koo, head of the world’s sixth largest automaker Hyundai Automotive Group, has escaped jail and been given a suspended sentence for creating a multi-million dollar slush fund, after an appeal court ruled that his imprisonment would badly damage South Korea’s economy, reports Agence France Presse.

The Access to Capital Coalition, a US association for minority and women business leaders, which includes Earvin “Magic” Johnson, the former baksetball star, said it opposed raising the tax rate on carried interest, for private equity fund managers’ earnings, arguing that the proposal would hurt investments in neglected areas. The group is part funded by the Private Equity Council, a lobbying group formed by some of the biggestbuyout firms.
French oil group, Total, said this week that climate change prevention would become part of its ‘core business’. Total managing director, Christophe de Margerie, said that global warming was a ‘real issue” which the group must “actively combat.”

The group will attend a forthcoming high-level round table in France, including NGOs, company leaders, trades unions and the government, to debate France’s reponse to the issue.
Henderson Global Investors has launched its first sustainable and responsible investing (SRI) strategy into the US institutional marketplace. The strategy will mirror Henderson’s Industries of the Future Fund, one of the company’s UK-domiciled SRI offerings.

UMB Financial Corp in the US has launched the world’s first actively managed international ‘terror-free’ equity fund, excluding companies with ties to countries that support terrorism. UMB Asset Management will run the investment portfolio.

China Labour Watch, the New York-based labour rights group, alleges that Chinese workers making toys for Hasbro, Disney, Sega and other big companies work under ‘brutal’ conditions. In a report, the NGO says that while labour conditions have improved slightly in recent years, especially within the economically important Pearl River Delta region of southern China, workers still operate in “devastatingly brutal” conditions.

German union IG Metall has warned the chief of German car manufacturer, Porsche, that the company will face a fight from unions if it tries to reduce the importance of of employee representatives on the board of Volkswagen, reports Agence France Presse. Porsche is Volkswagen’s largest shareholder. IG Metall representative, Hartmut Meine, is reported as saying: “We will not accept any change to Volkswagen’s collective agreement, nor its system of co-management.”Bafin, the German regulator, has warned DaimlerChrysler, the German car company, that it faces a heavy fine for its late market announcement two years ago of the departure of ex-chief executive, Jürgen Schrempp, according to Handelsblatt, the German daily newspaper. Bafin says the company did not respect its duty of market disclosure.