GLOBAL - The planned vote against the entire Walmart board by the California State Teachers' Retirement System (CalSTRS) is being echoed on this side of the Atlantic.

Earlier this week, CalSTRS announced it would vote down Walmart's nominations for its board at the company's annual shareholders' meeting on 1 June.

The statement follows allegations of bribery and a subsequent cover-up in the company's Mexican operation.

CalSTRS had already filed a lawsuit in early May against current and former executives and board members of Walmart, in relation to the alleged bribes, which were reportedly paid to help the company's expansion in Mexico.

Jack Ehnes, chief executive at the pension fund, said: "CalSTRS believes former and current Walmart executives and board members breached their fiduciary responsibilities.

"Based on these allegations, which indicate a breakdown of corporate governance and lack of oversight that should have averted this situation, CalSTRS does not have confidence the current board has the independence and leadership needed to address these difficult issues."

CalSTRS' holding in Walmart shares is worth $313.5m (€248m), about 0.14% of the company's market capitalisation of $216.7bn.

F&C will be voting against some of the Walmart board appointments, according to Karina Litvack, the asset manager's head of governance and sustainable investment.
"We will be voting against several people specifically, but, unlike CalSTRS, we won't be voting against the entire board," she said.
F&C will vote against Lee Scott and Mike Duke, the past and current chief executives, respectively; Chris Williams, chairman of the audit committee; the entire audit committee (Aida Alvarez, James Cash and Arne Sorenson); and the three members of the Walton family, including the chairman of the board.
F&C has been talking to fellow investors about how to engage with Walmart on the subject of corruption and governance generally.
"These discussions have also centred on what to do about broader questions related to corporate lobbying in the US to roll back the Foreign Corrupt Practices Act, where Walmart has been actively pressing for change," Litvack said.

"Furthermore, I would observe that Walmart has a very big board with a large number of directors who are affiliated with the company, such as the Walton family and former executives.

"Yet there is only one board committee that handles nominations, compensation, corporate governance and corporate social responsibility.

"That's three directors out of 16 board members who do all this critical work for a company with 2.2m employees. So there is room for board reform."

Litvack said F&C had had a number of calls from institutional clients concerned about the corruption allegations, particularly clients in the Netherlands, where the company attracts a great deal of interest due to its track record on trade unions.

F&C's ethically screened funds do not invest in Walmart. The asset manager does, however, maintain holdings in the retailer through its range of unconstrained funds, dominated by pension fund and insurance company clients.
These funds have a policy of active ownership, and Litvack said she expected F&C to continue its policy of engagement with Walmart to encourage more robust risk controls, in areas including anti-corruption and also labour practices.

Meanwhile, the Ethical Council - a collaboration between the four Swedish buffer funds - will also maintain its engagement with Walmart, according to Ulrika Danielson, the council's chair.

As at 31 December 2011, AP1 held SEK217m (€24m) worth of Walmart shares; AP3, SEK99m worth; and AP4 SEK 338m worth. AP2 has no holdings in Walmart at present.
The Ethical Council engages with investee companies on ethical and environmental issues, while governance issues are dealt with by the funds individually.
It is up to individual funds as to how they vote at annual company meetings, but voting intentions are not disclosed in advance.
"We have been engaging with Walmart for four or five years, particularly in the area of systematic violation of workers' rights, which is contrary to the ILO core convention on labour standards," Danielson said.

"We have tried to make Walmart strengthen its policies and guidelines so they are aligned with international guidelines."
She added: "At the Ethical Council, we think engagement is the right way to go, using our shareholdings to influence companies and make progress when it comes to the goals we set for each dialogue. Our engagement with Walmart will continue."

In contrast, a number of European pension funds have divested from the US retailer, including the Dutch funds ABP and PNO Media, and the Norwegian Government Pension Fund.