BP is facing investor frustration over lack of disclosure on their risk management strategies
On the one-year anniversary of the Deepwater Horizon oil spill in the Gulf of Mexico, 6 April 2011, an international coalition of socially responsible investors recommended to vote against or abstain from the BP accounts and reports at the companys upcoming annual meeting. Investors were also advised to vote against or abstain from voting on members of BP’s Safety, Ethics and Environmental Assurance Committee (SEEAC). The campaign came as a result of BP’s annual report, which while identifying many risks and challenges, provided shareholders with an insufficient level of detail to determine how the company’s safety and risk management function has been strengthened according to campaigners. Campaigners, led in the US by Christian Brothers Investment Services Inc. and the MMA Praxis Mutual Funds, also felt the report lacked disclosure of the evaluation and management of the company’s safety and risk management function. Voting recommendations from major proxy voting agencies voiced similar concerns.
Kiln launches first carbon credit insurance product
Kiln, the international insurance and reinsurance underwriting group, has underwritten the first insurance product to cover carbon credit eligibility risk.The product, which was developed by Parhelion Underwriting Ltd and climate finance insurance specialist, was underwritten by Kiln for a major international bank last week.Carbon credits developed under the Kyoto Protocol, also known as Certified Emission Reductions or CERs, are financial assets that can be generated by companies when they remove harmful carbon dioxide emissions or greenhouse gases from the environment through adopting more environmental practices. However, there is a risk that credits may become ineligible as a result of decisions made by the EU, which can have a substantial impact on their value. This uncertainty is generally believed to have reduced willingless by investors to participate in this market. The carbon credit insurance will work towards protecting the value of carbon credits in these circumstances and therefore aim to increase participation in carbon trading.
Investors ask world’s largest companies to reduce their greenhouse gas emissions
Institutional investors called on the world’s largest companies to implement cost-effective greenhouse gas emissions reduction initiatives in April this year. The request was made through the Carbon Disclosure Project’s new Carbon Action initiative, launched in response to investor requirements to protect their investments and accelerate company action on carbon reduction activities.34 investors with assets totalling US$7.6 trillion made the request for company action in April which was sent to the world’s largest companies in the FTSE Global Equity Index Series. These included Aviva Investors, CCLA Investment Management and Scottish Widows Investment Partnership (SWIP). The efficient management of energy and lower carbon emissions not only helps investors to mitigate financial risk, but also has the potential to reduce costs for business. Companies will be encouraged by investors to make year-on-year emission reductions,identify and implement investment in greenhouse gas reduction initiatives and set and publicly disclose an emissions reduction target.
Decline in US Mutual Funds’ Support of Climate-Related Shareholder Resolutions in 2010
US mutual funds’ proxy voting patterns for climate-related shareholder resolutions are not keeping pace with the escalating risks associated with climate change. Mutual funds’ overall support of these resolutions dropped from 27% in 2009 to 24% in 2010, after rising steadily over the previous three years. The findings are reported in Ceres’s sixth annual analysis of US mutual fund votes by 46 leading mutual fund families collectively managing approximately $6 trillion in assets. The analysis was jointly conducted with Fund Votes, which has tracked US mutual fund voting since reporting was first required in 2004.. One possible explanation for the drop in US mutual funds’ support of climate-related shareholder resolutions could be a perceived reduction in regulatory risk due to the new political climate and collapse of comprehensive climate legislation, the survey says.
A resolution asking Coca-Cola to disclose its plans around continued use of bisphenol-A (BPA) in beverage can linings won support from 26% of the company’s shares this April. This indication that one out of every four Coke shareholders is now concerned about BPA is not a good message to send to investors according to As You Sow, the shareholder advocacy group. The high percentage of concerned stakeholders is a result of the companies resistance to address concerns about BPA or make progress in developing alternatives, acording to ISS, a proxy advisor supporting the resolution. The motion was first introduced in 2010 by As You Sow; socially responsible investment firms Domini Social Investments and Trillium Asset Management Corporation; and several religious institutional investors. BPA is known to mimic oestrogen in the body and numerous animal studies link BPA, even at very low doses, to potential changes in brain structure, immune system, male and female reproductive systems, as well as alterations in tissue associated with increased rates of breast cancer.
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