A group of institutional investors, including money managers and corporate governance officials at U.K and Swedish pension funds, is calling on Canadian regulators to increase public disclosure by Canadian energy and mining firms and to create a consistent global standard for all significant tax and royalty payments made by those companies across their global operations.
Such disclosure was mandated in the European Union's transparency and accounting directives in June, and Canadian Prime Minister Stephen Harper announced plans at the G-8 Summit that month to follow suit with similar regulations for Canadian-listed mining and energy companies, according to a news release from F&C Asset Management, which co-wrote a letter to Natural Resources Canada, the agency overseeing natural resources policy in Canada.
The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act included similar provisions, although a July ruling by the U.S. District Court in Washington stopped the implementation of that part of the law. The group has also written to the Securities and Exchange Commission seeking to adopt a global standard.
The letters were sponsored by F&C Asset Management, Aviva Investors and SNS Asset Management, and were signed by 32 institutions with a combined $5.8 trillion in assets.
“This move by Canada is critical for achieving a consistent global transparency standard,” concluded Arne Loow, senior manager and head of corporate governance at the 240.9 billion Swedish kronor ($37 billion) AP4, Stockholm in the F&C news release. “As one of the world's top listing venues for mining stocks, it needs to take its rightful place at the top table by setting a meaningful standard in line with the U.S. and EU. We don't want companies evading tough standards by shopping around for the weakest forum and picking Canada. The fact is that Canada's own mining industry leaders have broken the mold by calling for this: They are the first to recognize the value to the industry of transparent business practice, and we agree.”
“From an investor perspective, the key is reducing risk,” Frank Curtiss, head of corporate governance at RPMI, which oversees the £18 billion ($27.9 billion) Railways Pension Scheme, London, said in the F&C release. “The less mystery there is behind these resource deals, the fewer unpleasant surprises we can expect.”