RI round-up March 27

RI’s bite-sized round-up of the week’s responsible investment news.

Fidelity mutual fund shareholders have voted not to support a resolution for genocide-free investing, although more than a quarter of votes were in favour. The votes, made on March 19, saw 27% of shareholders of Fidelity’s Capital and Income Fund support a resolution to ban investing in countries linked to genocide, while 28% of the shareholders of the Select Health Care Portfolio voted in favour. A further 10 Fidelity mutual funds did not achieve quorum for a vote. Campaigners at US pressure group, Investors Against Geneocide, said they would present similar resolutions at mutual fund companies including Barclays, Franklin Templeton, T. Rowe Price, and Vanguard in the coming months. Mia Farrow, actress, and UNICEF Goodwill Ambassador, is backing the genocide-free campaign.
Australia’s government investment funds have come under fire for investing almost 50 times more money in the fossil fuel and uranium industries than in renewable energy, according to a report by the Australian Conservation Foundation (ACF). The report said funds including the AUS$60bn Future Fund, established to meet the cost of public sector pensions liabilities, were investing in direct conflict with government plans to reduce greenhouse emissions. It also criticised them for not signing up to the United Nations Principles for Responsible Investment. Don Henry, executive director of the ACF, said: “With so much emphasis on climate change from federal, state and territory governments, many people would be shocked to discover government-controlled funds are still investing $47 in fossil fuels and uranium for every dollar they invest in renewable energy.”
The $235bn California Public Employees’ Retirement System (CalPERS), has placed five companies on its 2008 Focus List, which highlights financial andcorporate governance failings. The companies are: The Cheesecake Factory, a restaurant group, Hilb Rogal & Hobbs, an insurance-brokerage firm, Invacare, the health care equipment supplier, La-Z-Boy and Standard Pacific, both in the household durables and homebuilding sectors. Rob Feckner, CalPERS board president, said “We’re shining the light on lacklustre portfolio companies over serious governance and financial performance issues. Besides having sub-par stock performance, these companies refused to address corporate governance issues that have a bearing on how they perform in the market.” The fund said it had pending shareowner resolutions this year to eliminate staggered boards of directors at many of the companies.
Dutch pension funds including ABP and PFZW (formerly PGGM), have demanded that securities trading firm Van der Moolen (VDM) withdraw its increase from 1% to 3% of stock as the threshold at which shareholders can put issues on the company’s agenda. VEB, the Dutch shareholder rights group, said it had written to VDM to withdraw the adjustment, which was made following an extraordinary general meeting (EGM) on March 18.
Bram van Els, spokesman and communications head at PME, the €22bn Dutch industry-wide pension fund for the metal and electro industry, is to launch his own SRI and communications consultancy business, reports ipe.com. Van Els played a major role in shaping PME’s own social responsible investment policy and has been involved in numerous SRI working groups in the Netherlands.
Treasury officials from the US, Abu Dhabi and Singapore have agreed on basic principles of investment for their sovereign wealth funds (SWFs) and the
countries they invest in. An estimated $3 trillion is invested globally in sovereign funds. The joint statement said the funds should formally recognise that investment decisions should be based solely on “commercial grounds”, rather than political goals. It also called for strong disclosure and governance standards. The International Monetary Fund is working with SWFs on a code of practice.
Companies in the S&P 500 index spent an average of $2.2m on total compensation to their boards of directors in the year to August 31, 2007, according to a study of 3,085 U.S. corporations by The Corporate Library. The amount was more than double the average $1.08m on total board compensation amongst the rest of the companies surveyed. Total compensation includes cash payments, equity awards and changes in value of pensions and non-qualified deferred compensation amounts. Last year was the first time the US Securities & Exchange Commission required companies to disclose total compensation paid to directors.
The Falkirk and City of London pension funds have joined the UK Local Authority Pension Fund Forum, which promotes corporate governance and corporate social responsibility on investments worth around £80bn made by 48 funds.
The Chicago Climate Exchange, has signed license agreements with the Dow Jones Sustainability World Index (DJSI World) and Dow Jones Sustainability North America Index (DJSI North America) for listing exchange-traded futures contracts and related options based on the indexes. The contracts are expected to launch in the third quarter. The Dow Jones sustainability indices are based on an assessment process conducted by SAM, the Swiss SRI group.
The UK government is “actively discriminating” against ‘good’ employers who are providing defined benefit schemes, while failing to establish protection for the defined contribution schemes it encourages,according to Barnett Waddingham, the UK investment consultant, reports ipe.com. Adrian Waddingham, senior partner at the consultant, reportedly said: “The government will only encourage DC schemes yet there is no protection for them. More people have lost more pension in DC than DB as a result of poor investments and the rocketing cost of annuities.”
The UK’s Co-operative Insurance Society refused to invest in six major companies last year because of corporate governance issues and said it had reservations about three others over boardroom issues, reports UK newspaper, the Guardian. The Co-op runs £19bn under investment. Its exclusion list contains retailer French Connection, publisher Euro-money Institutional Investors, home shopping group N Brown, cruise line Carnival and technology company Amstrad. It said issues such as boardroom had led to serious discussions about investment decisions at banking groups HSBC, Royal Bank of Scotland, and Aberdeen Asset Management.
The Association of British Insurers (ABI) is reportedly considering backing calls by UK fund managers for Sir Stuart Rose, chief executive of Marks & Spencer, to stand for reelection to the company’s board this year after institutional investors complained about his recent appointment as chairman as well as chief executive, reports the Times. Investors said the dual appointment flouted the UK Combined Code of recommendations on good boardroom practice. Peter Montagnon, director of investment affairs at the ABI, reportedly said the appointment “raises some pretty fundamental concerns for our members”.
French investment bank, Société Générale and Orbeo, the Paris-based carbon research company have jointly launched the SGI-Orbeo Carbon Credit Index, offering index exposure to carbon permits under the EU Emission Trading Scheme and to Certificates of Emissions Reduction, carbon offsets generated under the Kyoto Protocol.