Global Policy Forum

By Terry Macalister

Eight top pension funds with £400bn under management have joined forces to highlight the risk to shareholders of companies operating in Burma. The radical approach by Jupiter Asset Management, Morley Fund Management and others will put intense pressure on companies in Burma such as Premier Oil and TotalFinaElf.

But the pension funds argue their concerns extend well beyond Burma and take in other developing countries with dubious human rights records such as Nigeria or Colombia where Shell, BP and other major British firms are active. "Companies operating in unstable political climates can be exposed to loss of shareholder confidence, negative press and publicity campaigns, safety risks and corruption. In the case of Burma, there is also the possibility of a democratically elected government returning to power and penalising companies that supported the military regime," says a joint statement from the companies.

The pension funds do not directly call for divestment from Burma but demand companies justify their continued presence there "in the light of the risks that such activity imposes on shareholders".

The institutional investors say companies should publish independently verified social impact assessments, establish effective policies for managing risks, promote human rights and combat corruption. They should also maximise the positive impact of their actions through collaboration with other companies or respected organisations.

Other fund managers in this initiative are Europe's second largest pension company, PGGM of Holland, Friends Ivory & Sime, the Universities Superannuation Scheme, Hen derson Global Investors, the Cooperative Insurance Society and Ethos Investment Foundation of Switzerland. Rob Lake, head of strategy and socially responsible investment at Henderson, says the move is not in any way politically inspired but purely commercially driven. "We can not be written off as lefty fund managers as we have £400bn of investment under our control. It is our responsibility to assess risk and to look after those investments wisely."

Premier Oil last night insisted the pension fund initiative would not change its commitment to Burma. Chief executive Charles Jamieson said: "They are not asking us to pull out, just have a strategy in place for properly managing risk, and we have that. We have been giving human rights training to the military, police and home affairs ministry. We are already at the forefront of corporate social responsibility."

It is understood to be the first time that a group of diverse managers have cooperated this way, and could pave the way for more initiatives in future. The Association of British Insurers issued guidelines on October 23 about how to handle risk from environmental and ethical issues.

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