GLOBAL - A group of institutional investors with combined assets of US$8.3trn including Dutch giant PGGM and US fund CalPERS have redoubled their support for an inter-governmental effort to boost transparency standards in the oil, gas and mining sectors of developing countries.
The investors, co-ordinated by F&C Asset Management, include major pension funds like New York State and TIAA-Cref, as well as asset managers such as F&C, Fidelity, Merrill Lynch Investment Managers, JPMorgan Asset Management, Schroders, UBS, ING and HSBC.
The group of 60 are signatories to an investors’ statement on transparency in the Extractives Sector, which supports the Extractive Industries Transparency Initiative (EITI) launched by UK Prime Minister Tony Blair in Johannesburg in 2003.
F&C said the investors are concerned that legitimate payments by companies to governments – such as taxes, royalties and signature bonuses – can be open to misuse.
The firm was now turning its attention to smaller listed UK oil and mining companies to urge them to back the initiative. But he ruled out a policy of F&C selling holdings in companies that failed to support the EITI.
“The EITI is a means of lowering country risk,” said Howard Carter, chief executive of F&C. “Where a company operates is a far more meaningful indicator of investment risk than whether or not the company is a backer of this initiative.
“Faced with a choice between operating in countries with good governance and poor governance, companies will favour the former. Countries that embrace the EITI are fundamentally more attractive places to invest for the long-term.”
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