Paul Myners, UK Financial Services Secretary, has called for shareholders to take “front-line responsibility” for the companies in whose equity they have invested their client funds. In a speech this week to the British Bankers Association, Myners said: “It is important to stress that regulation cannot be the sole load bearing instrument in ensuring that our financial system is sound and able to fulfil its role in the wider economy. The greater component of strain has to be taken by governance and investor stewardship.”
Myners also talked extensively about potential issues with the concepts of shareholder value and fair value in investment
Link to speech
ShareOwners.org, an organisation that says it is non-profit and non-partisan has launched with the aim of educating and organising US investors to support short- and long-term financial market reforms. The organisation said a survey of US investors it had commissioned by Opinion Research Corporation found that more than three out of four (79%) of 1,256 US investor respondents wanted to “see strong action taken to correct the problems that exist today” in the financial markets. Richard Ferlauto, director of corporate governance and pension investment, American Federation of State, County and Municipal Employees (AFSCME), and chair of ShareOwners.org, said: “As of today, the average American investor has a way to weigh in on and be heard about needed financial markets reforms. The severe losses suffered by tens of millions of Americans in their 401(k)s, mutual funds, traditional pension plans and other investments all point to the need for a new emphasis on shareowner rights and meaningful regulation in order to ensure the financial security of American families.”
Link to site.
Brendan Barber, general secretary of the UK Trades Union Congress, has said that fund managers that are meant to exercise ownership rights and responsibilities are failing to do so, after the TUC annual fund manager voting survey received responses from just 40% of UKfund managers compared to 68% five years ago. On the TUC blog, Barber said: “What is worse is that many will not even tell the unions that represent thousands of pension fund savers whether or how those ownership responsibilities were exercised.”
Link to report
The Canadian Shareholder Association for Research and Education (SHARE) and FundVotes have published their second annual report looking at Canadian mutual fund voting practices. Amongst other findings, it reveals that funds are more likely to vote against re-election of board directors this year than in previous years.
Link to report
Almost half (49%) of all UK pension funds intend to spend more time investigating the actions of their fund managers on engagement issues. In its 2009 Engagement Survey, The National Association of Pension Funds (NAPF), whose members run £200bn (€235bn) in assets, said three quarters (78%) would review the reporting provided to them by their managers, which 56% felt could be improved. Just under two thirds (57%) said there would be increased attention on manager proxy voting. The survey found that in addition to voting at UK company meetings, 93% of UK funds responding exercised voting rights in the US, 88% did so in Europe, 69% voted in Japan and 57% voted emerging markets shares. David Paterson, head of corporate governance at the NAPF, said: “Our survey demonstrates that pension funds are increasing their focus on engagement policies. They have an inherent interest in the companies in which they invest being run well given their long-term objective of being able to meet the pension promises of their members.” However, he said there was “more work to be done to ensure that pension funds improve the effectiveness of their oversight of both their investment managers and the companies in which they invest.”
ECOFACT, the Swiss ESG and risk data consultancy has signed a marketing and research partnership in Asia with Responsible Research, the independent Asia ESG research provider.
Greentech Capital Advisors, an advisory boutique dedicated to the clean tech sector has been launched by Jeff McDermott, former co-head of banking at UBS. The firm, which says it already has two clients, employs 13 staff including Robert Schultz, a former managing director at Morgan Stanley Fund Services.
ClimateWise, the insurance industry’s international initiative on climate change, has signed up three new insurers: Santam, Southern Africa’s largest short-term insurer, TrygVesta, the Nordic region’s second largest general insurer, and Fireman’s Fund Insurance Company, a US provider of property and casualty insurance and subsidiary of Germany’s Allianz.
Raj Thamotheram has started a new part-time role as senior adviser, responsible investment at Axa Investment Managers, stepping back from his former role as director of responsible investment. In turn, Axa has promoted Melissa McDonald to the position of global head of responsible investment. McDonald recently returned from Asia where she was head of business development for AXA IM. Thamotheram, a former senior adviser for RI at the Universities Superannuation Scheme, is a well known figure in RI circles, having helped launch the Institutional Investor Group for Climate Change, Pharma Futures, the Enhanced Analytics Initiative and the UN Principles for Responsible Investment. Thamotheram said: “Melissa’s appointment allows me to shift my role to an advisory one, focusing on internal and external thought leadership work, a shift that I am very excited about given the opportunities for change created by the financial crisis.”
UNEP FI has launched a green paper on “Financing a Global Deal on Climate Change”. The paper outlines six concrete proposals by the financial services industry on what elements the next global deal on climate change should include to effectively mobilise lenders, investors and insurers.
Link to green paper*European governments that are shareholders* in large nationalised banks have a powerful opportunity to show leadership and promote sustainability, according to a report called “Sustainable Banks: Trust and Leadership – The Role of the State within Private Banks”, launched by groups including Eurosif, TBLI Consulting Group, and the European Platform on Financing Eco-innovation. The reports says governments have either directly invested or guaranteed over US$4 trillion to bolster the banking and finance sector. As a result, the report says state-owned banks should lead the financial sector in their management of Environmental, Social & Governance (ESG) issues and that the EU should adopt sustainable banking guidelines. The report was presented to the Belgian Minister of Finance ahead of the country’s EU Presidency in 2010.
Link to report
Environmental groups have launched a lawsuit against the UK Treasury to force it to ensure that taxpayers’ money invested in the Royal Bank of Scotland (RBS) supports only projects that satisfy minimum green and human rights standards. The World Development Movement, Platform and People & Planet have lodged the case at the High Court. RBS is 70% owned by the UK government.
Private investors in Fortis are in talks with foreign pension funds to launch a US class action style complaint against the Dutch state over losses incurred after the company was nationalised in September 2008, reports Global Pensions. FortisEffect, a foundation set up to fight the case, alleges that the Dutch state and, in particular, finance minister Wouter Bos, misrepresented Fortis’ financial situation as safe in the week following the massive cash injection by the Dutch, Belgian and Luxembourg governments on September 28. They say this led a number of investors to buy Fortis stocks, which became virtually worthless after the full nationalisation which took place in October.