A U.K.-based coalition of institutional and private investors is urging Royal Dutch Shell to provide transparency regarding any risks associated with its Alberta oil sands projects.
More than 140 fund managers, mutual funds, pension funds and individual investors have co-filed a resolution led by social responsible investment campaign group FairPensions.
According to Financial Times, Shell has confirmed the validity of the resolution and says it will be addressed in its upcoming annual meeting in May.
This is not the first time an energy company has been pressured by investors on its oil sands operations. The Co-operative Asset Management group—a signatory to the resolution—previously wrote a letter to 19 oil sands companies to demand clarification over the high cost of oil sands developments.
“Given Shell’s level of commitment to oil sands there is a greater obligation to shareholders to reassure how it would cope under a number of scenarios,” says Niall O’Shea, head of responsible investing at the Co-operative Asset Management. “We acknowledge Shell has already done some work in this area but it does not go anywhere near far enough to allay our concerns.”
Catherine Howarth, chief executive of FairPensions, says that Shell’s decision from its annual meeting could prove a “watershed” moment in the history of corporate accountability.
“The coalition of shareholders which FairPensions has galvanized to file this resolution brings together both domestic and overseas shareholders, and the full spectrum of investors from major fund managers to small shareholders,” she said, in a statement. “All are united in registering concern with the risks involved in Canadian oil sands, and this reflects rising public concern not just with oil sands but with companies’ impact on climate change.”
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Public pensions push federal debt higher: report
Canada’s federal debt may climb a further $58 billion as Ottawa underestimates the cost of pensions owed to public workers, according to a report from the C.D. Howe Institute.
The study of fair value costs of pensions for government, military and Royal Canadian Mounted Police employees contends that the surpluses currently expected in federal pensions will actually result in deficits due to an understatement of pension payments.
“Federal pensions as currently configured are more costly than is commonly understood, and expose taxpayers—and potentially participants as well—to underappreciated risks,” says Bill Robson, the institute’s president. “Reducing or offsetting these costs and reducing these risks should be key elements of a program to restore federal finances to a sustainable position.”
To help close the funding gap, Robson said public employees must add 34% of their annual pay and RCMP and military personnel 41%.
The report states that the real value of the funds’ assets is not reflected because of the way liabilities are reported, using a combination of past and projected future prices. Liabilities are currently listed as discounted future payments, leading to cases of understatement and making pension obligations appear smaller.
Robson suggests that the government switch to fair-value accounting methods, which use current prices to calculate the value of assets and liabilities.
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Top resolutions for employers outlined
Human resources will continue to be a challenging area for employers in 2010, according to the Ordre des conseillers en ressources humaines agréés. To help your company stand out from the crowd, the Ordre suggests the following three resolutions:
Restore employee confidence
Workers are understandably anxious in the aftermath of the global financial crisis, and the number one action employers can take to counter this is to be as transparent as possible.
“By improving internal communications, employers will be better able to restore employee confidence and respond to the drop in motivation and commitment that could result from the crisis,” says Florent Francoeur, CHRP, Ordre president and CEO.
Make HR practices more effective
It is essential to review human resource management practices respecting wages and benefits, internal policies, work climate, occupational health and safety and employee motivation in order to recover or maintain an organization’s competitive capability. Employers should also not hesitate to ask employees’ opinion on these issues to make sure that this approach takes their needs into account.
Move quickly to institute pay equity
Recent changes to Quebec employment law will result in thousands of Quebec businesses taking action in the next year to achieve or maintain pay equity. The Ordre urges them to start the process as soon as possible to minimize costs; where required, wage adjustments are retroactive, and are subject to interest and, eventually, penalties.
The Ordre is the primary human resources organization in Quebec.
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FTSE, EDHEC-Risk Institute introduce risk efficient indices
FTSE Group and EDHEC-Risk Institute have launched an index series which uses a risk adjusted investment strategy to deliver investors with an optimal risk/return ratio.
The FTSE EDHEC-Risk Efficient Index Series can be used to capture equity market returns with improved risk/reward efficiency. According to FTSE, this is achieved by maximizing the Sharpe ratio and weighting the constituents of the indices accordingly.
“Increasingly, investors are looking to diversify their core passive funds across a range of benchmarks weighted by market cap and other weighting schemes,” says Mark Makepeace, chief executive with FTSE Group. “The weighting methodology developed by the EDHEC-Risk Institute provides a robust and transparent approach to constructing a benchmark seeking to achieve an efficient risk return.”