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

Investors must collaborate to innovate

Institutional investors are sheltered by competition, which in some instances can be beneficial, but it also means they are shielded from competitive forces that drive innovation. A new paper by Gordon Clark and Ashby Monk, looks at why the current model of either insourcing or outsourcing investment management doesn’t allow for innovation, and the models

Mercer’s plan for integrating ESG

How to implement ESG into portfolio construction and implementation is an ongoing challenge for asset owners. Mercer has come up with a number of strategies including the best way to use ESG ratings, active ownership, and tailored strategies that play to sustainability themes, including its own unlisted investment solution. Amanda White spoke to Jane Ambachtsheer,

PRI governance review to look at differential rights

The PRI has received many queries following the move by six Danish funds to abdicate as signatories over governance concerns. The association is holding a governance review that among other things will discuss the prospect of differential rights among signatories.   When six Danish funds, with a combined $300 billion, decided to leave the PRI

A trustee guide to factor investing

This research by academics at Tilburg University and the VU University Amsterdam, looks at the hurdles of implementing factor investing. It translates those into a checklist for implementing factor investing. The research, conducted for Robeco, finds that three approaches to factor investing are emerging and conducts case studies to examine how these approaches are implemented

Blackrock looks favourably on equities

Blackrock has a favourable view on equities, relative to bonds, but within fixed income it advocates an unconstrained approach. Amanda White spoke to chief investment strategist, Russ Koesterich.   Equities look cheap relative to bonds or cash, says chief investment strategist for Blackrock and iShares chief global investment strategist, Russ Koesterich, with the manager recommending

Howard Marks on alpha and making money

“It used to be easier to make money,” Oaktree Capital Management founder and chairman, Howard Marks muses as he discusses meeting the demands and goals of his clients in 2014. Marks is an avid communicator, and has been writing memos to clients for 24 years. The result is his book “The Most Important Thing”, which

Previous