NETHERLANDS - Dutch pension fund giant PGGM may divest from Chinese oil firm Petrochina over its state-owned parent company's Sudan operations, following public pressure over Sudan-linked investments.
A spokesman for the fund confirmed the fund has been engaging with officials Petrochina since August over environmental and human rights issues linked to its activities in Sudan, where there is currently a crisis in its western Darfur region.
The €88bn pension fund, the second-largest in the Netherlands, is also in talks with the Indian Oil and Natural Gas (ONGC) company, according to a statement released on PGGM's website.
The fund's approach is to first engage in a dialogue with companies when it comes to issues of human rights, or environmental, social and governance, as well as climate change, healthcare and medicine issues. Only if there is a link to weapons of mass destruction does PGGM divest immediately.
However, the fund said it would withdraw its investments if Petrochina and ONGC do not change their conduct.
Holland's largest fund, ABP, which has no direct investments in Sudan, says it has recently sent a letter to the two firms. "In the letter we refer to the 'Sudan-question' in Dutch politics and that we, as shareholder, would like to have more information about their Sudan policy," a spokesman for the fund said.
"In this light, it should be noted Dutch government currently does not discourage economic activities of Dutch companies in Sudan and has also not asked pension funds to review their investment policies in relation to Sudan," the spokesman explained.
Both funds have increased their governance efforts, after there was much public scrutiny earlier this year concerning investments into companies which produce cluster bombs and land mines.
These efforts saw ABP naming Paul Frentrop, director of the Dutch branch of the European corporate governance agency Deminor, as its new head of corporate governance for its investment management arm last week.
PGGM said in 2008 it will continue to focus globally on the best practices as laid out by the International Corporate Governance Network (ICGN), but, like ABP, it will mainly look at company strategies and risk management of Dutch companies in which the fund invests.
These two Dutch funds are not the first to put pressure on Pretrochina for its widely-criticised dealings in Sudan.
In June, IPE reported the €44bn UK Universities Superannuation Scheme (USS) also faced pressure from campaigners to divest its shareholding in Petrochina over its state-owned parent company's Sudan operations.
At the time, USS equities manager Jason Fletcher ruled out screening Petrochina - or any other company - from the fund, arguing "our policy is has one of engagement, not exclusion".
If you have any comments you would like to add to this or any other story, contact Carolyn Bandel on +44 (0)20 7261 4622 or email carolyn.bandel@ipe.com
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