Pension funds fail to direct proxy votes: SHARE

Proxy voting is a key component of shareholder advocacy and an important responsible investing strategy. Every year, the Shareholder Association for Research and Education (SHARE) surveys the proxy voting practices of the country’s investment managers. The results of the ninth annual survey are generally positive and slightly better than last year, SHARE says, with one notable exception.

The study indicates that 71% of investment managers vote most of their pension fund clients’ proxies at their own discretion, without instructions or guidance. That’s up from 63% last year and reverses a downward trend in place since 2004.

“This suggests that more institutional investors, including pension funds, let their money manager decide how their proxies should be voted,” says Laura O’Neill, SHARE’s director of law and policy. “The lack of direction is cause for concern.”

“Pension funds, and other institutional investors, should give their proxy voting agents guidance on how their proxies should be voted, ideally by adopting a set of proxy-voting guidelines,” O’Neill adds. “This is important because pension fund trustees have a fiduciary duty to oversee how the proxies attached to their funds’ stocks are voted.”

On the positive side, the survey found that 40% of firms disclose their proxy voting guidelines to the public (an increase of 11% over 2008) and 49% consult with their clients about proxy voting guidelines (up from 39% in 2008). In addition, votes cast by participating firms were more likely to match SHARE’s votes than in 2008.

Thirty-five firms responded to the survey, a response rate of 56%, also an increase from previous years. SHARE says that indicates “greater fund manager willingness to be transparent and accountable about the exercise of proxy voting rights on behalf of clients.”

Download the full survey.

Barrick Gold removed from Norwegian pension fund

Citing environmental concerns, Norway has expelled Canadian miner Barrick Gold from its $400 billion government pension fund.

The fund stated today that it had sold Barrick shares worth about $222 million due to reports of environmental damage at the Porgera mine in Papua New Guinea. Barrick, the world’s largest gold producer, has a 95% stake in the project.

Norway created a Council of Ethics in 2004 to monitor the pension fund’s holdings.

“In its assessment, the Council on Ethics concluded that Barrick Gold Corporation is causing severe environmental damages as a direct result of its operations. I have therefore decided to follow the Council on Ethics’ recommendation on exclusion of Barrick Gold Corporation from the investment universe of the Fund," Norway’s Minister of Finance Kristin Halvorsen said in a statement.

Norway limited its investigation to the Porgera mine, but was also critical of what the minister called a lack of openness and transparency in the company’s environmental reporting.

Barrick has not released a public statement on the expulsion. However, spokesperson Vince Borg told Bloomberg that the company disagrees with Norway’s allegations that the Porgera mine operation is damaging the environment.

Barrick is “managing and mitigating the risks,” Borg said. “We’ve made steady progress in improving the Porgera mine in any respect from providing sustainable economic development to protecting the environment.”

The CPP Investment Board, the investment arm of the Canada Pension Plan, held Barrick shares worth an estimated $519 million dollars, as of March 31, 2008.

(All figures in Canadian dollars)