RI Governance & Engagement, Oct. 27: Australia pilots Extractive Industries Transparency Initiative

RI’s regular round-up of governance news

The Australian government said today (October 27) that it will undertake a pilot of the Extractive Industries Transparency Initiative (EITI). Under the pilot, Australia will assess the transparency of its financial reporting arrangements for the resources sector against EITI principles, which the government said is considered a global benchmark for natural resource revenue management. “Given Australia’s very significant mining sector, we hope this decision will encourage other countries to adopt EITI,” said Foreign Minister Kevin Rudd. Announcement

Expert Corporate Governance Service, the European proxy voting partnership formerly known as European Corporate Governance Service, has said that 93% of the companies it analyses are audited by one of the “Big Four” accounting firms. “All roads in Europe lead to the Big Four (PwC, KPMG, Ernst & Young and Deloitte),” it says. ECGS recommends the separation of audit and advisory mandates.

Sjunde AP-fonden, the Swedish state premium pension fund, has appointed Institutional Shareholder Services (ISS) as its proxy voting consultant, according to a report in Global Money Management. The fund had tendered for a provider in June.

US telecoms giant AT&T is facing a shareholder resolution on open and free Internet access from institutional investors including the Nathan Cummings Foundation as well as individual investors including Mike D of rap group the Beastie Boys. Unless the proposal is blocked again, it’s expected to be voted on at the company’s annual meeting in April 2012. “Net neutrality is clearly a material issue of import for AT&T and for the whole country, which is why it’s critical that shareholders be heard,” said Farnum Brown, Chief Investment Strategist for Trillium Asset Management. Link

There’s been a development in a long-running human rights legal case against mining giant Rio Tinto, according to reports. The 10-year-old case alleges the company worked with the Papua New Guinea government to kill 10,000 people in retaliation for an uprising that forced a mine closure. Now the Ninth Circuit US Court of Appeals has revived the action, holding that the so-called ‘Alien Tort Statute’ doesn’t shield corporations from liability for violations of international law.CalSTRS, the California State Teachers’ Retirement System, says it will keep pressing for the separation of the Chairman/CEO roles at media giant News Corp. following the company’s annual meeting. “The results of the News Corp. annual meeting show strong support among shareholders, especially unaffiliated shareholders, for serious governance changes at the company,” CalSTRS says.
CalSTRS is sending letters to 122 companies expressing its dissatisfaction with their compensation practices, according to a CNBC report|editorspicks|&par=google. The fund is saying why it voted against the companies pay proposals during the 2011 proxy season. Some 22 letters have already been sent with more to come in the coming months. CalSTRS said it has yet to hear back from any of the companies that have been sent letters, CNBC added.
Proxy voting agencies have become an “acute” problem for investors trying to engage directly with companies, says Peter Montagnon, senior investment advisor at the UK’s Financial Reporting Council. One of the key issues was “how can we get them working much better,” he was quoted as saying at the National Association of Pension Funds Conference by Professional Pensions.

The Council of Institutional Investors, the $3trn (€2.1trn) US investor association, has written to Securities and Exchange Commission Secretary Elizabeth Murphy, supporting the thrust of an August 3 petition by legal scholars for an SEC rule on corporate political disclosure. “Shareowners have a right to know whether and how their company uses its resources for political purposes,” the CII states. CII site

Plaintiffs including the Policemen’s Annuity and Benefit Fund of Chicago and the Boilermakers National Annuity Trust have got the go-ahead for a credit crisis-related class action suit against Washington Mutual Bank. They allege the bank lied about the quality of $10bn in mortgage-backed securities it sold. Link