PGGM disinvests from Vedanta Resources

PGGM has decided to exclude mining company Vedanta Resources from its investment portfolio. PGGM’s intensive efforts to urge the company to devote greater attention to the environment and human rights have not had the desired effect. PGGM therefore decided on 1 June 2010 to add the Indian company to its exclusions list. Three subsidiaries of Vedanta have also been removed from the investment portfolio.

Criticism of mining in Orissa
Vedanta has drawn criticism both locally and internationally due to the social conditions and environmental practices involved in the company’s mining activities in the Indian state of Orissa. Various international organisations, including Amnesty International and Survival International, have published critical reports on the company.

Discussing, corresponding and inviting
PGGM has conducted an increasingly intensive dialogue with Vedanta over the past two years with regard to its mining activities in Orissa. In addition to an extensive exchange of correspondence with Vedanta, various discussions have taken place with the company’s management and non-executive directors. Co-operation was also sought with other international investors in order to increase the pressure further. In addition to these usual methods, this group of investors took the initiative to organise a round table meeting with various experts in order to discuss possible solutions to the problems in Orissa.
Vedanta did not accept the invitation to participate in this roundtable.

No progress, so exclusion
Vedanta has made insufficient improvements with regard to human rights and the environment. The company is therefore burdened with growing reputation risk, which may also translate into financial risks. Due to the lack of improvement and Vedanta’s insufficient cooperative attitude, PGGM decided on 1 June 2010 to add the company to its exclusions list. The subsidiaries Sterlite Industries, Hindustan Zinc and Sesa Goa have also been excluded. All positions, all part of the PGGM Global Equity Fund and amounting to a total of over €13 million at the end of May, have now been fully liquidated.

About PGGM’s engagement policy
PGGM Investments conducts an active engagement programme on behalf of its clients. Combined with the active exercise of voting rights at shareholder meetings, this programme is an important instrument in the field of active share ownership, whereby PGGM fulfils its role as a responsible investor. As part of the engagement programme, PGGM actively approaches companies in order to engage in a direct dialogue in which it urges them to practise more responsible business management. If all other means fail, companies may ultimately be excluded from the investment portfolio.