IRELAND - The National Pension Reserve Fund (NPRF) has been actively engaging with companies on the issues around oil sands for several years, the fund claims. It highlighted its work after politicians and lobby groups called for the pension fund to back shareholder resolutions on the issue at the next annual meetings of BP and Shell.

The UK based FairPensions, and the British and Irish church-based investor coalition the Ecumenical Council for Corporate Responsibility (ECCR) are among those specifically lobbying the NPRF to back resolutions that raise concerns about potential long-term reputational and financial damage from the oil firms developing what some consider to be unsustainable assets.

Resolutions have been filed at the AGM of BP on 15 April, and at the AGM of Royal Dutch Shell on 18 May to ask the companies to commission and review reports explaining why they have proceeded with the oil sands projects, with particular reference to ESG factors, to be presented to investors in 2011.

Louise Rouse, director of investor engagement at FairPensions, said: "Given that the NPRF is intended to meet as much as possible of the costs of Ireland's social welfare and public pensions from 2025 onwards, every citizen has an interest in ensuring that the NPRF takes account of financial performance issues such as those highlighted in the BP and Shell resolutions."

Senator Dan Boyle, from the Green Party, echoed calls for the NPRF to join the resolution, as he claimed the extraction of oil from tar sands is a "particularly harmful, inefficient and greenhouse gas intensive method of producing fuel".

"Shell and BP and should be concentrating their efforts on the development of renewable energy and they should be encouraged to do so by shareholders such as the NPRF. The NPRF is a signatory to the UN Principles for Responsible Investment, which commits it to active ownership on environmental and social governance (ESG) issues and I call on it to exercise its shareholder rights and support the resolution on tar sands," he added.

However a spokesman for the €22.3bn pension fund said: "The NPRF is well aware of the issues around oil sands. Hermes Equity Ownership Services, which engages on the NPRF's behalf with companies on ESG issues across its global equity portfolio, has engaged with companies on this matter for several years and continues to do so".

In particular, the NPRF highlighted that the issue of oil sands was featured on the list of Hermes' engagement activities in the NPRF's 2008 annual report, and again in Hermes' Public Engagement Report for the first quarter of 2009.

The spokesman added: "The NPRF's voting decisions are taken in the context of the progress of engagement. Its proxy voting record is published quarterly in arrears on its website."

Lobbying of NPRF on the issue follows the recent launch of FairPensions', 'Tar Sands Counting the Cost' campaign, which aims to encourage individual pension fund members more engaged in the decisions made by the pension funds and managers on their behalf. (See earlier IPE article: Campaign targets members to drive pension fund voting)

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