A majority of the UK’s largest pension schemes have no clear policies on the social and environmental impact of their investments, according to a report by Fair Pensions – an organisation launched by Amnesty, Oxfam and WWF in 2005. Fair Pensions found that members of pension schemes are “kept in the dark on the human rights and environmental behaviour of their schemes” and that only a small number of schemes have evidence of attempts to develop and disclose policies to tackle environmental, human rights and governance problems within their investments. It also highlights a lack of reporting and transparency and that some of the most “financially sophisticated companies” have the least transparent schemes – HSBC and Barclays both declined to make pension scheme documents available.
Alex van der Velden, executive director of FairPensions, said that supporters of Amnesty “may unwittingly be voting for business ventures in oppressive regimes, or supporters of Friends of the Earth may unknowingly be supporting an oil company’s climate-change denial policy”. The survey – UK Pension Scheme Transparency on Social, Environmental and Ethical Issues – looked at the UK’s 20 largest occupational pension schemes and found that only 12 publicly disclosed information on whether they take account of social, environmental and ethical issues – even though this is a statutory requirement. The pension schemes surveyed included BAE Systems, Royal Mail, Lloyds TSB, BBC, BP, British Airways and BT. Contact Fair Pensions 020 7403 7800 www.fairpensions.org.uk
Gates Foundation rejects ethical investment
The Bill & Melinda Gates Foundation announced on January 11 that it will not take environmental and social aspects into account when making investment decisions. The foundation was responding to recent articles in the Los Angeles Times, which highlighted possible contradictions between the philanthropic work of the organisation and the practices in which it invests. The chief executive of the Gates Foundation, Cheryl Scott, stated that the organisation does “not anticipate any change in our approach to investments”.
She added that the main focus is on grant-making as this is how they “have the greatest impact for the most people” and that Bill and Melinda Gates have chosen not to “get involved in ranking companies based on factors such as their lending policies or environmental record” as there are “dozens of factors that could be considered, almost all of which are outside the foundation’s areas of expertise”.
She explained that the issues involved were complex: “Many of the companies mentioned in the Los Angeles Times articles, such as Ford, Kraft, Fannie Mae, Nestlé, and General Electric, do a lot of work that some people like, as well as some work that some people do not like. Some activities might even be viewed positively by some people and negatively by others.”
The statement clarified that the foundation will not invest in tobacco stocks or in companies that represent a conflict of interest for Gates’, and that none of the investments were secret and that all details could be found on the foundation’s website. Contact Bill & Melinda Gates Foundation
001 206 709 3100 www.gatesfoundation.org
In brief
Australian bank ANZ has adopted the Equator Principles – a benchmark for the financial industry to manage social and environmental issues in project financing. ANZ is also developing policies with regard to social and environmental issues. These will be applied across all lending and investment decisions as well as project finance activities in developing countries. Contact ANZ 00 613 9683 999 www.anz.com
The Association of British Insurers has called on companies to take social, ethical and environmental risks seriously. ABI investment affairs director, Peter Montagnon, pointed out that these considerations should be incorporated into mainstream risk management and should not be an “add-on”. To reflect these views, the ABI is set to refresh its Guidelines on Socially Responsible Investment, previously published in 2001, early this year. Contact ABI 020 7600 3333 www.abi.org.uk
Sustainable Finance
Environmental finance
Banks that prioritise environmental assessments when lending money outperform financial institutions that view environmental concerns as a secondary concern, according to Innovest’s Banking Report 2006, published on November 27. The report also found that this performance can boost markets for carbon trading as well as investment in renewable energy. Contact Innovest 020 7073 0469 www.innovestgroup.com
How to be a sustainable bank
BankTrack, a coalition of non-governmental organisations that promote social and environmental responsibility in the financial sector, has published The Do’s and Don’ts of Sustainable Banking – a guide to best practice in sustainable banking. The booklet was launched on November 29 and outlines how banks can become sustainable by taking readers through a number of steps – that is, the commitments banks will have to make to be sustainable. These are sustainability, to ‘do no harm’, responsibility, accountability, transparency and a commitment to sustainable markets and governance. Contact Bank Track 00 31 30 233 4343 www.banktrack.org
China’s investment in Africa
The European Investment Bank has accused China of undermining loans made by development banks in Africa.
Philippe Maystadt, European Investment Bank president, said: “[Chinese banks] don’t bother about social or human rights conditions.” Speaking at a meeting of EU finance ministers in Brussels, he claimed that Chinese banks would offer to ignore labour standards and environmental protection when giving out loans, and through this undermine any offers the European Investment Bank had made on projects.
Maystadt fears that unless the international finance community imposes conditionality, project managers in Africa and Asia will turn to no-strings-attached sources of financing – such as those offered by some Chinese banks, according to the Financial Times. Contact European Investment Bank
00 352 43 793 122 www.eib.europa.eu; China Development Bank 00 86 10 6830 6688 www.cdb.com.cn/english
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