A group of European financial institutions including the £21bn (e30bn) UK Universities Superannuation Scheme (USS) and e48bn Dutch superfund PGGM have formed an action group to raise concerns about investment in Myanmar – formerly known as Burma.
Collectively, the Group, which represents almost e650bn in funds under management and includes the Co-operative Insurance Society, Switzerland’s Ethos Investment Foundation, Friends Ivory & Sime, Henderson Global Investors, Jupiter Asset Management, and Morley Fund Management, have issued a statement entitled ‘Business Involvement in Myanmar (Burma) – A statement from institutional investors.’
The statement outlines the concerns raised by the presence of a military dictatorship in Burma and highlights the risks to shareholders in investing in companies that have interests in the country. The group suggests that 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. While the statement does not call for divestment, it urges companies to be aware of the risks and to establish effective policies and procedures for managing them.
It is consistent with the Socially Responsible Investment Guidelines recently issued by the Association of British Insurers calling upon companies to adopt responsible business practices so as not to contribute to, or perpetuate, human rights abuses committed in the country.
Elsewhere, Claudia Kruse, corporate responsibility analyst at SRI specialist firm, Global Risk Management Services (GRMS) has told an EU conference that it is the quality of socially responsible investments (SRI) research that needs to be standardised, not the methodology.
Speaking at the conference on corporate social responsibility, Kruse said that there was enough variety of SRI products that it was easy for research companies to take a diverse and flexible approach to SRI.
Furthermore, she added that until a definition of ‘sustainability’ had been universally established, it remained impossible to judge what constitutes a sustainable company.
Kruse noted: “It worries us that a number of SRI research organisations rely too heavily on mailing questionnaires to the companies being investigated, taking the response at face value without direct engagement to verify the answers. Also, the reality of a company is too complex to be captured by questionnaires and requires more in-depth research.