FRR joins oil payments transparency initiative

France’s 28.8 billion ($41.7 billion) Fonds de Reserve Pour Les Retraites (FRR) has joined more than 80 institutional investors globally in becoming a signatory to an initiative aimed at strengthening transparency in the extractive industries sector through disclosure around company payments and government revenues from mining, oil and gas.

The FRR signed the Extractive Industries Transparency Initiative (EITI) and invited all companies belonging, directly or indirectly to the sector in its portfolio to take part in the initiative.

Pension fund signatories to EITI include ABP, CalPERS, CalSTRS, Forsta AP-fonden (AP1), Hospital of Ontario Pension Plan, New York State Common Retirement Fund, Ohio Public Employees Retirement System, Ontario Teachers’ Pension Plan, PGGM and Railpen.

“According to the EITI secretariat, 3.5 billion people live in countries rich in oil, gas and minerals,” the fund said.

“Through a transparent framework for managing financial transfers, the exploitation of these resources could generate large revenues fostering growth and reducing poverty. Conversely, the opacity of state-business relations may result in poverty, corruption and conflict.”

Sponsored Content

The fight against corruption and the promotion of good governance are part of FRR’s responsible investment strategy
adopted by the supervisory board in April 2008.

The strategy includes five “strategic pillars” around which the fund’s identity as a responsible investor will develop in the years to 2012.

These are: make further efforts to incorporate ESG considerations into investment portfolio management; improve
extra-financial risk prevention; continue to exercise proxy voting rights to improve corporate governance; analyse more precisely the impact of environmental issues on FRR’s investment strategy; and participate actively in
French and international research efforts in the area of responsible investment.

The investors’ statement on transparency in the extractives sector states:  “We are concerned that extractive companies are particularly exposed to the risks posed by operating in [corrupt operating] environments. Companies that make legitimate, but undisclosed, payments to governments may be accused of contributing to the conditions under which corruption can thrive”.

“This is a significant business risk, making companies vulnerable to accusations of complicity in corrupt behaviour,
impairing their local and global “licence to operate”, rendering them vulnerable to local conflict and insecurity, and possibly compromising their long-term commercial prospects in these markets.”

Leave a Comment

Sort content by

CalPERS sharpens risk, liability tools

After watching the simultaneous declines of its market value and funded status during the financial crisis, the $204.8 billion CalPERS will conduct a full review of the methodologies underpinning its asset liability management (ALM) process. mrec4inarticleinline Sponsored Content scnative1 scnative2 scnative3

Wilshire paints dire picture for state retirement systems

Wilshire Consulting’s annual report on US state retirement systems reveals near-universal underfunding, leavened only slightly by the 19.5 per cent rally in global equity markets in the eight months since its cut-off date. mrec4inarticleinline Sponsored Content scnative1 scnative2 scnative3

OMERS overwhelms with underperformance

OMERS Strategic Investments, the investment entity of the C$47 billion ($45 billion) Ontario Municipal Employees Retirement System (OMERS) focused on co-investment opportunities in private markets, has dramatically underperformed its benchmark for the year. mrec4inarticleinline Sponsored Content scnative1 scnative2 scnative3

Risk parity becomes bittersweet flavour of the month

A risk parity approach to asset allocation is flavour of the month, in spite, and because, of the leverage it requires. Amanda White explores the topic.

Institutions worldwide rethink passive exposures: Towers Watson

The number of bond mandates awarded by institutional funds shot up by more than 50 per cent in 2009 as credit markets provided attractive investment opportunities, while the amount of passive allocations made by institutions increased fourfold in the past two years, according to Towers Watson.   mrec4inarticleinline Sponsored Content scnative1 scnative2 scnative3

DC plans must look at governance and design

Towers Watson’s Roger Urwin and Gordon Clark from the University of Oxford are finalising their fourth collaboration on global best practice for defined contribution plans. Amanda White spoke with Roger Urwin about the inefficiencies in plan design. mrec4inarticleinline Sponsored Content scnative1 scnative2 scnative3

Previous