Harris Associates, a multibillion-dollar money manager that has touted responsible investing, agreed to enact a series of investor-driven measures after it was disclosed that one of its top managers helped fund groups that question the consensus on climate change.
Brunel Pension Partnership, Bristol, England, one of Britain's largest retirement pools, said it looked into Harris' investment practices following a Feb. 14 report by Bloomberg regarding Deputy Chairman David Herro, one of Harris' two chief investment officers. Mr. Herro — in his personal capacity — directed hundreds of thousands of dollars to three think tanks in the U.K. and U.S., either as a fundraiser or through his own donations, according to U.S. tax filings.
Brunel, which is pushing financial firms to address climate change, said that while it concluded Mr. Herro's activities didn't affect how Harris invested, it asked the money manager to adopt a suite of new measures. They include hiring a "responsible investment professional" who reports directly to senior management, creating a climate-change policy and appointing a shareholder advisory firm to identify climate risks. Anne O'Reilly, a spokeswoman for Harris, which managed $120 billion at the end of last year, said the plan has "been approved by the board and will be enacted over the course of the year."
In the past, Mr. Herro has publicly questioned the underpinnings of global warming. He has also said his personal philanthropy has nothing to do with his firm. Brunel focused on Mr. Herro's role with the Global Warming Policy Foundation, the main U.K. think tank lobbying against greenhouse gas regulations. Mr. Herro served as treasurer of its U.S. fundraising arm and helped raise about $590,000 for the organization over a three-year period, tax filings show.
"We will hold Harris to account for the delivery of these changes in our monitoring and ongoing management, as we do for all our investment managers, and will continue to challenge them rigorously on their analysis and assessment of climate change-related risks within their investment practices and processes," said Brunel, which manages about £30 billion ($37 billion) for local U.K. governments.
Harris also agreed to join the Transition Pathway Initiative, a global program backed by money managers that assesses company preparedness for the transition to a low-carbon economy. Additionally, the Chicago-based money manager will appoint Institutional Shareholder Services to perform scenario analysis and help with reporting on carbon footprints, and build a new webpage dedicated to responsible investment.
