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home » what's new archive » february 16 - february 27, 2005 What's New: February 16 - February 27, 2005 [Jump to: United States :: World] Canada
In his first conference call as president of the CPP Investment Board, David Denison, discussed the reserve fund's third-quarter results, the board's plans for the future and restated the CPP's message of stability. After making benefit payments of $1.9 billion, in the third-quarter ending December 31, 2004, fund assets grew by $2 billion to $77.2 billion. Investment earnings for the period were $3.9 billion. That rate of return exceeds the CPP board's target of 4.5% returns above inflation. According to the chief actuary of Canada, the CPPIB needs to generate 4% returns above inflation annually to sustain the plan over the long term. In the coming months, the board plans to continue work on developing the reserve fund's real estate and infrastructure holdings, which consist of 1% real estate and 0.1% infrastructure. The infrastructure strategy is intended to hedge CPP assets against inflation. Denison says the fund is looking for investments in distribution networks for electricity and water, and gas and toll roads, because of the returns the companies generate and because of their relative insensitivity to changes in consumer demand or changes in technology. Most recently, the fund invested $470 million in the Macquarie European Infrastructure Fund and the Wales & West gas distribution network, bringing the CPPIB's total infrastructure commitments to approximately $670 million. Visit Benefits Canada for more information
Manitoba pension legislation is on the edge of a major renovation; Canadian pension plan sponsors with Manitoba members will soon face some major changes to their plans. With Bill 10 expected to pass into law when the Manitoba legislature reconvenes this spring, sponsors may wish to begin evaluating the impact on their plans. Many changes, such as the move to a minimum 60% surviving spouse’s pension, are intended to bring the province in line with other jurisdictions, and are consistent with the Canadian Association of Pension Supervisory Authorities (CAPSA) proposed model pension law principles. Sponsors will need to deal with new and modified pension standards that will require amendments to their plans. Key areas of impact include:
Equally, each plan will be required to establish a pension committee to oversee plan management, unless it qualifies as a small, simplified or a multi-employer plan and is specifically excluded. Provisions that have an immediate impact on administration systems and processes should be addressed early, to allow time for implementation once the new law’s effective date is announced. Visit Eckler Partners Ltd. website for more information
The CPP Investment Board announced it will commit US$50 million to Celtic House Venture Partners Fund III, taking its total Canadian venture capital investments to $590 million. The fund has a target of US$200 million, focusing investments in early-stage high technology companies in the semiconductors, optics and software sectors. The Board previously committed US$13.5 million to Celtic House Venture Partners IIA. Celtic House Venture Partners is the venture capital firm founded by Terrence Matthews who helped create Canadian technology firms as Newbridge Networks and Mitel Networks. The CPPIB's Canadian private equity fund committments total $1.5 billion with this latest investment. Visit Benefits Canada for more information
CFM Corporation announced that it has signed a definitive transaction agreement for the acquisition of all of the common shares of the Company by Teachers’ Private Capital, the private equity arm of Ontario Teachers’ Pension Plan. CFM Corporation is a leading integrated manufacturer of home products and related accessories in North America and the United Kingdom. CFM designs, develops, manufactures and distributes a line of hearth and space heating products, barbecue and outdoor products and water and air purification products. CFM maintains an ongoing program of research and development aimed at continually improving the quality, design, features and efficiency of its products. Under the terms of the agreement, which has been unanimously approved by the CFM board of directors, shareholders will receive Cdn.$1.50 in cash for each CFM common share held at the time of the acquisition of CMF Corp by Teachers’ Private Capital. Completion of the acquisition is subject to the satisfaction of certain conditions set out in the transaction agreement. As part of the transaction, Teachers’ Private Capital has agreed to provide the Company with a U.S.$25 million interim financing facility to assist the Company in meeting its working capital needs until the closing of the transaction. CFM’s shareholders will be entitled to receive an additional Cdn.$0.10 per share in cash on closing if the Company does not utilize more than U.S.$10 million of the facility or if it does so while continuing to meet a specified current asset coverage threshold. Teachers’ Private Capital is the private equity arm of the Cdn.$80 billion Ontario Teachers’ Pension Plan, which invests on behalf of 250,000 active and retired teachers in Ontario, Canada. With assets of more than Cdn.$7 billion, Teachers’ Private Capital is one of Canada’s largest private investors and is currently working with more than 100 companies and funds around the world to create value by providing long-term flexible capital.
The Ontario Municipal Employees Retirement System (OMERS) has reported a total fund return of 12.1 % for 2004 on net investment income of $3.7 billion, but warned a funding shortfall could hit $2.5 billion by the end of the year. Fair market value of net assets grew $3.6 billion, or 11 %, to $35.7 billion, and actuarial value grew to $36.8 billion, up from $36 billion in 2003. The plan did warn, however, of a $963 million deficit recorded at the end of last year as a result of market losses suffered in 2001 and 2002, but amortized over five years. The plan reported a $509 million surplus at the end of 2003. OMERS provides retirement benefits to about 350,000 active and retired members on behalf of 900 local-government employers across the province. Up to 40 % of the fund will eventually be invested in private-market assets such as real estate, infrastructure and private equity, which the plan expects to "outperform traditional stocks and bonds over the long term." Read the complete article in the Toronto Star
The end of the cap on foreign content has the mutual fund industry looking for some answers. In his federal budget, Finance Minister Ralph Goodale scrapped the 30% t foreign content ownership limit on registered retirement savings plans and pension plans. The Investment Funds Institute of Canada (IFIC) wants some clarity from the Canadian Securities Administrators on how the change will affect RRSPs and investment funds. The end of the foreign cap raises a series of regulatory issues, including investment fund objectives and the approval of amended fund prospectuses, IFIC said. Read the complete article in The Globe and Mail United States
According to a new study released today by Oracle Corporation and the Economist Intelligence Unit, 85 % of executives and investors rank corporate responsibility as a central consideration in investment decisions. The study, "The Importance of Corporate Responsibility," surveyed 136 executives across numerous industries and 65 investors to examine the influence of corporate responsibility in the global business community. One quarter of all Global Fortune 500 companies now produce some type of report that charts their environmental, social or sustainability efforts. The increased presence of corporate responsibility in daily business operations is driven by a variety of factors, such as the erosion of trust in large corporations, the globalization of business, the corporate-governance movement, the rise in importance of socially responsible funds and sheer competitive pressures. Three critical aspects of corporate responsibility for executives surveyed were: ethical behaviour of staff, good corporate governance, and transparency of corporate dealings. For institutional investors, transparency of corporate dealings was even more important. A total of 68 % said it was one of the three most important aspects to corporate responsibility, followed by high standards of corporate governance (62 %) and ethical behaviour of staff (46 %). Additionally, 84 % of executives and investors surveyed felt corporate responsibility practices could positively impact a company's bottom line.
Starbucks fourth annual Corporate Social Responsibility Report describes the social, environmental and economic impacts on the communities in which Starbucks does business. Throughout their 2004 report Starbucks communicates its policies and performance in key areas and explain the measures taken to achieve a balance between fiscal, social and environmental responsibility.
Sometimes an appendix speaks louder than the report to which it is annexed. Such is the case on both counts for two related reports on corporate political contributions released by the Centre for Political Accountability (CPA) and Common Cause. The third appendix to the CPA’s report presents a table rating companies' political contribution transparency in three areas: disclosure of political contributions, of executives who made the decisions, and of business rationales for donations. All three boxes next to all but two of the 120 large capitalization companies are stark blank--almost none of the companies disclose anything about their political contributions voluntarily, and the law does not require them to. The second table appended to the Common Cause report lists how the ten largest fund families' biggest domestic large-cap mutual funds voted in 2004 on a shareowner resolution asking some 25 companies to disclose their political contributions, decision-makers, and business rationales. Again, the silence is deafening: the "voted for the resolution" column is completely empty. The Common Cause report advances a new trend to assess how mutual funds vote on shareowner resolutions, now that the US Securities and Exchange Commission ( SEC) requires disclosure of such votes to allow fund investors to determine if fund votes align with shareowner interests. And both reports argue persuasively that corporate political contribution secrecy is decidedly not in shareowners' best interest--on the contrary, it puts shareowner value at risk. Read the whole article in Social Funds
Rob Feckner, the recently elected president of the $183-billion California Public Employees' Retirement System (CalPERS), launched a discussion on voting to oppose Gov. Arnold Schwarzenegger's campaign to overhaul the state's pension system for state and local workers. Feckner’s discourse contrasted with the histrionics that at times marked Sean Harrigan’s times, whose ouster in December sparked a debate over the future of the nation's largest public pension fund and the motivations of its leadership. Feckner in his first remarks as president said he would employ "a quieter, less flashy style" during his one-year term as head of the 13-person board. He promised to be long on substance. "I want to be known not as someone who is out all over America and beyond with my fingers in every pot," said Feckner in a not-so-veiled reference to Harrigan, a Southern California supermarket union official who enjoyed speaking to shareholder groups and appearing on talk shows during junkets around the country and overseas. Feckner said that although the board's approach to corporate governance would "become more laser-focused and less scattershot" under his leadership, he wanted to make it "abundantly clear to corporate wrongdoers who are hurting shareholder value that we will not retreat from our fiduciary duty to protect our shareholder interests when called for." He vowed to continue initiatives to limit excessive executive pay, control soaring healthcare costs and, above all, oppose efforts by Gov. Schwarzenegger and his Republican allies in the Legislature and business to dramatically change how public pensions are paid. "Our biggest challenge today relates to the very survival of CalPERS," Feckner said. The board and Feckner voted 9 to 3 to oppose the Schwarzenegger pension plan; the dissent came from the governor's three direct and indirect appointees. For her part, state Republican Party spokeswoman Karen Hanretty said she saw little difference between the high-profile Harrigan and low-key Feckner when it came to pushing a pro-labour-union agenda. "One's quiet, and one's not," she said, "but they have the same agenda."
CalPERS’ board voted to increase pressure on carmakers to adopt stricter emissions standards. The move comes after auto industry leaders backed out of a scheduled meeting with the pension fund. The board is vowing to make environmentalism a top investment priority and says it will support shareholder proposals at Ford and General Motors. A group of automakers said that the state is overstepping its bounds in trying to regulate fuel use in cars, sued California in December in an attempt to block the standards from taking effect. California is the first state to pass regulations limiting the emission of greenhouse gas. State controller and CalPERS board member Steve Westly says the campaign will explore global warming and the potential risks faced by companies whose stocks are held by CalPERS’ $182 billion pension fund. As part of the new campaign CalPERS is threatening to put two automakers on its "focus list" of companies with poor economic performance, excessive executive compensation and poor corporate governance practices. Although CalPERS has not named those being considered for the list, some speculate Ford and GM are the most likely candidates. [Jump to: Canada :: United States] World
Gap, the clothing retailer, and the International Finance Corporation, the private enterprise arm of the World Bank, have signed an agreement to provide management training to 650 Cambodian garment factory supervisors to improve labour relations and productivity. The $80,000 yearlong programme, a joint project with, is scheduled to begin in March at seven Cambodian factories. The programme was announced in Phnom Penh, where World Bank president James Wolfensohn met with former EU trade commissioner Pascal Lamy, members of the International Labour Organization and activist group Global Fairness Initiative to discuss Cambodia’s economic future. The Gap- IFC programme will teach supervisors how to handle workers’ complaints and resolve conflicts between workers and employers. Bank officials say a similar programme in Indonesia has led to less absenteeism, fewer strikes and better quality standards, benefiting both mangers and workers. The garment industry, the backbone of Cambodia’s economy, is facing an uncertain future with the expiration on January 1 of an international trading system that gave preferential tariffs to garments from developing countries. Cambodia’s more than 200 garment factories employ approximately 270,000 mostly female workers. And an estimated 1.5 million Cambodians rely upon wages from the industry for their subsistence.
At the end of 2004 the Pakistan Tobacco Company (PTC) published Pakistan’s first ever Social Report. PTC, became the first multinational company in Pakistan to report on its corporate social responsibility. The question is if this is a real effort on the part of the tobacco industry to improve its social performance or a public relations campaign aimed at glossing over the fact that the products made by this industry cause serious public health problems and in many cases death. CSR argues that even though PTC says that it will engage with the government, civil society and others in a mutually beneficial arrangement contributing to the success and prosperity of Pakistan, this is highly unlikely to occur given that parts of the NGO sector do not agree with PTC discourses. Indeed, the Tobacco Free Initiative Pakistan, a WHO funded NGO, has consistently been uncompromising and accuses the company of being cynical. The approach of PTC ends up being one of ensuring that children do not smoke and that smoking should be only for adults who fully understand the risks associated with smoking. In addition, the company has a bold project on reforestation, planting four million trees per year, amounting to 35 million since the programme began. The company also pointed out that it was the largest taxpayer in Pakistan, from its sales of almost US$350 million. The problem that the tobacco industry in Asia (and elsewhere for that matter) faces is one associated with integrity and trust. While anti-smoking lobbies in America and Europe have helped to lower cigarette sales, it is said that the multinational cigarette conglomerates are simply now flooding increasingly affluent markets in Asia with advertisements, cut-price brands, promotional products and other marketing hype designed to encourage new smokers. In Pakistan, there has been an increase in smoking. The Pakistan Medical Health Council suggests that slightly over 50% of men and 20% of women use some sort of tobacco on a regular basis. Research by the Pakistan Pediatrics Association has suggested that 1000 school children take up smoking every day.
In El Alto, Bolivia, people are protesting about water. Protesters say a foreign-owned company contracted to manage the city’s water system has failed to get enough water to El Alto’s poor. When protesters shut down a major road, Bolivia’s president, Carlos Mesa, dismissed the state contract with the company, which is part owned by the gigantic French water corporation Suez. It's not the first time Bolivian protesters have dismiss a multinational firm. In 1997, the World Bank encouraged Bolivia to privatize its water system as a loan contingent. In 2000, residents of the city Cochabamba took to the streets when connection fees rose steeply after a subsidiary of California-based construction giant Bechtel took over. The Bolivian government violently suppressed the protests, and the events were extensively documented. In the end, Bechtel pulled out and sued the Bolivian government for $25 million under a bilateral investment treaty. The case is now pending. Water privatization has hit bumps in Argentina, too, where President Nestor Kirchner has been sparring with Aguas Argentinas, a subsidiary of Suez, over claims that the company has not lived up to its infrastructure investment promises.
The difficulty of children who work in mines and quarries that are often dangerous, dirty and can post a grave risk to their health and safety will be the focus of the fourth World Day Against Child Labour, scheduled for 12 June 2005, the International Labour Organization (ILO) said today. The ILO estimates that around one million children work in small scale mining and quarrying around the world. What's more, ILO studies show that these children work in some of the worst conditions imaginable, where they face serious risk of dying on the job or sustaining injuries and health problems that will affect them throughout their lives. The experience of the ILO International Programme on the Elimination of Child Labour (IPEC) - which has conducted pilot projects in Mongolia, Tanzania, Niger and the Andean countries of South America - demonstrates that it is feasible to eliminate child labour in dangerous conditions by helping the mining and quarrying communities acquire legal rights, organize cooperatives or other productive units, improve the health and safety and productivity of adult workers, and secure essential services - such as schools, clean water and sanitation systems - in these often remote regions. |
