Extractive Industries: Unleashing Economic Potentials
– Investors’ role in protecting human rights and the environment


B...
Risk and Responsibility

  Responding appropriately to SRI issues is a key element of
  ATP’s fiduciary responsibility on ...
Policy of Social Responsibility in Investments

  ATP does not purchase equities
  in companies that deliberately
  and re...
Integration into investment decisions
    The overall coordination of SRI initiatives is conducted by ATP’s
    Committee ...
Fact Finding - evaluating alleged breaches

  When investigating alleged breaches of ATP’s SRI policy we
  evaluate if
   ...
Engagement or divestment?

  ATP is only one among many investors in large international
  companies.
  From a reputationa...
ATP as an investor in Extractive Industries

  The extractive industries provides resources that are needed in
  modern so...
Engagement with Freeport McMoRan Copper and Gold

  ATP is currently in dialogue with Freeport McMoRan regarding ESG
  iss...
Engagement with companies engaged in Oil Sands

•   Even when ATP does not have direct investments we participate in
    j...
Investors role in protecting human rights and environment


  Divestment strategies seldom produces any positive outcomes....
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Bjarne Graven Larsen, Chief Investment Officer, ATP: Investors’ role in protecting human rights and the environment.

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Bjarne Graven Larsen, Chief Investment Officer, ATP: Investors’ role in protecting human rights and
the environment.

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  • Investorers ord ”SRI” er i virkeligheden bare ”CSR” set udefra.
  • Bjarne Graven Larsen, Chief Investment Officer, ATP: Investors’ role in protecting human rights and the environment.

    1. 1. Extractive Industries: Unleashing Economic Potentials – Investors’ role in protecting human rights and the environment Bjarne Graven Larsen, 23 October 2009
    2. 2. Risk and Responsibility Responding appropriately to SRI issues is a key element of ATP’s fiduciary responsibility on behalf of our members We integrate Environmental, Social and Corporate Governance (ESG) concerns in our investment decisions in order to protect and increase the value of our investments If a company ignores environmental or social liabilities related to their operations, it generates risks that threaten the value of our investment If a company strives to be best-in-class within environmental or social issues, it generates opportunities that may lead to increased value ATP’s commitment to social responsibility also aims to benefit employees, companies and local communities affected by the investments 2
    3. 3. Policy of Social Responsibility in Investments ATP does not purchase equities in companies that deliberately and repeatedly violate the rules laid down by the national authorities in the markets in which the company operates 1. We will incorporate ESG issues into investment analysis and decision-making processes. or by international organisations 2. We will be active owners and incorporate ESG endorsed by Denmark issues into our ownership policies and practices. 3. We will seek appropriate disclosure on ESG issues by the entities in which we invest. Nor does ATP purchase 4. We will promote acceptance and implementation equities in companies located or of the Principles within the investment industry. operating in countries being 5. We will work together to enhance our effectiveness in implementing the Principles. subjected to a trade embargo 6. We will each report on our activities and progress imposed by the UN or the EU towards implementing the Principles and endorsed by Denmark 3
    4. 4. Integration into investment decisions The overall coordination of SRI initiatives is conducted by ATP’s Committee for Social Responsibility in Investments, chaired by the CEO The day to day monitoring of breaches of ATP’s policy is handled by two full-time staff members in the Beta investment team – in close collaboration with portfolio managers The SRI team also performs fact-finding and research in connection with pre-investment due diligence as well as later engagement A range of sources is used for news and best practice, a few examples: Amnesty International FSC ICMM - International Council on Mining and Metals IUCN, the International Union for Conservation of Nature 4
    5. 5. Fact Finding - evaluating alleged breaches When investigating alleged breaches of ATP’s SRI policy we evaluate if the allegations are valid and verifiable the company has investigated and addressed the problems relevant mitigation has been initiated due compensation has been given and accepted procedures and systems are in place to prevent reoccurrence In first half of 2009, ATP evaluated 272 alleged breaches in 156 companies of ATP’s SRI policy 5
    6. 6. Engagement or divestment? ATP is only one among many investors in large international companies. From a reputational perspective, divestment is the easy way out, when ATP is confronted with companies in breach with ATP’s SRI policy But does divestment benefit employees, companies and local communities? Or does it just reduce pressure on companies to improve their policies and actions? ATP prefers engagement to divestment – as long as the dialogue and development shows positive results 6
    7. 7. ATP as an investor in Extractive Industries The extractive industries provides resources that are needed in modern society ATP does not ban industries or products that are not prohibited by law or international conventions… …but we do consider extractive industries a high risk sector and has paid special attention to alleged breaches of ATP’s policy on SRI by actors in the sector: ATP’s Committee on Social Responsibility has at several meetings discussed SRI in Extractive Industries – e.g. tried to identify best-in-class companies in the sector. More than 50 percent of the companies ATP since 2005 has decided to exclude from our investment universe due to breaches of our SRI Policy are directly involved in the extractive industry. We are at present involved in two engagement efforts with companies in the extractive industry 7
    8. 8. Engagement with Freeport McMoRan Copper and Gold ATP is currently in dialogue with Freeport McMoRan regarding ESG issues at the Grasberg mine in Indonesia These efforts are partly coordinated with other investors in order to enhance our influence. At the recent annual general meeting ATP voted for the appointment of a designated board member with environmental expertise Along with these efforts, ATP aim to influence the company not to use the present waste disposal method in new projects outside Grasberg BHP Billiton has left a similar mine in Papua New Guinea (OK Tedi) – mainly due to environmental concerns – with the result that mining activities has been taken over by the Papua New Guinean Government and a Singapore-based company – thereby reducing the international pressure to improve conditions ATP believes that the combined pressure from (even small) shareholders will benefit the local communities more than divestment 8
    9. 9. Engagement with companies engaged in Oil Sands • Even when ATP does not have direct investments we participate in joint engagement actions through UN PRI. • One example is a recent letter to 19 companies engaged in Oil Sands production in Canada. • It was signed by 43 investors with $ 3 trillion under management. • The letter called on the companies to improve the disclose of their handling of environmental, social and regulatory risks • We have started to receive answers from companies 9
    10. 10. Investors role in protecting human rights and environment Divestment strategies seldom produces any positive outcomes. Most of the time it reduces pressure on companies to improve policies and action Engagement strategies has a potential for producing positive outcomes – but both realism and patience are of uttermost importance Investors and NGO’s have common interests… NGO’s wants to influence investors Investors wants input from NGO’s on companies’ alleged breaches of SRI Guidelines … But Investors are not NGO’s Their interest in human rights and environment mainly stems from an interest in protecting and increasing the value of their investments Their dialogue with companies concerning these issues is of another nature and done in another form than NGO’s methods 1 0

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