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Government»As BP crisis hits UK pension fund values, FairPensions points to concerns about BP and pension funds’ role.

»Tuesday, June 8,2010

As BP’s efforts to stem the Gulf of Mexico oil leak continue to be frustrated and the US government attitude to the company hardens, BP’s share price has plummeted.  Concerns are therefore now mounting in the UK over the effect on UK pension funds, whose portfolios typically include large holdings in BP.

Against this background, FairPensions has raised further evidence of concerns about BP’s long-term risk management, gaps in investor scrutiny, and low-cost solutions.

During BP’s AGM debate on a FairPensions-coordinated resolution on the risks associated with the company’s planned Canadian “tar sands” projects, BP chairman,  Carl-Henric Svanberg, responding to investor doubts about the company’s future oil demand assumptions, cited the International Energy Agency’s ‘reference scenario’ as evidence for expected oil demand growth to 2030.

However, the IEA points out that this scenario “assumes no change in government policies”, would have "profound implications for environmental protection, energy security and economic development”. And “would entail an eventual global average temperature increase of up to 6°C.” [1]

FairPensions has long advocated that investors should act as responsible owners, monitoring and managing environmental, social and corporate governance risks that have the capacity to create long-term financial problems. The need for responsible ownership has been underlined by the financial crisis and by the latest in a list of avoidable BP crises [2].

However, FairPensions’ research on pension funds and fund managers consistently shows that recognition of the financial risks of “extra-financial issues” is usually not matched by practice on the part of pension funds and their fund managers. [3]

FairPensions’ Director of Campaigns, Duncan Exley, said “From oil leaks to irresponsible lending, environmental, social and corporate governance issues have a history of precipitating crises which damage our economy and our investments. We urge investors – or the government if necessary - to put in place measures to ensure that these issues are monitored and managed so that the next crisis is less likely to affect us all”

FairPensions is available for comment: Contacts for media enquiries/interviews:

Duncan Exley, FairPensions:  020 7403 7806 / 07847 006 253 duncan.exley@fairpensions.org.uk

Juliette Daigre, FairPensions: 020 7403 7800
juliette.daigre@fairpensions.org.uk

About FairPensions

FairPensions campaigns for UK pension funds and fund managers to adopt responsible investment practices, managing environmental, social and governance (ESG) issues which have the potential to be financially relevant.

FairPensions is supported by a number of leading charities and trade unions, including ActionAid, BECTU, CAFOD, Community, CWU, ECCR, EIRiS, GMB, NUJ, Occupational Pensioners’ Alliance, Oxfam, Traidcraft, Unison, Unite and WWF, as well as thousands of individuals.
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