campaigners guide to financial markets

The Campaigners’ Guide to Financial Markets

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THE CAMPTHE CAMPTHE CAMPTHE CAMPTHE CAMPAIGNERS’AIGNERS’AIGNERS’AIGNERS’AIGNERS’GUIDEGUIDEGUIDEGUIDEGUIDE

TTTTTOOOOOFINFINFINFINFINANCIAL MARKETSANCIAL MARKETSANCIAL MARKETSANCIAL MARKETSANCIAL MARKETS

EfEfEfEfEffffffectiectiectiectiectivvvvve Lobe Lobe Lobe Lobe Lobbbbbbying ofying ofying ofying ofying of Companies Companies Companies Companies Companiesand Financial Institutionsand Financial Institutionsand Financial Institutionsand Financial Institutionsand Financial Institutions

Nicholas HildyardMark Mansley


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ContentsContentsContentsContentsContentsPreface – 7Preface – 7Preface – 7Preface – 7Preface – 7Acknowledgements – 9Acknowledgements – 9Acknowledgements – 9Acknowledgements – 9Acknowledgements – 9

1 .1 .1 .1 .1 . FFFFFINININININANCIALANCIALANCIALANCIALANCIAL M M M M MARKETSARKETSARKETSARKETSARKETS - - - - - A NA NA NA NA NEWEWEWEWEW P P P P POLITICALOLITICALOLITICALOLITICALOLITICAL S S S S SPPPPPAAAAACECECECECE – 11 – 11 – 11 – 11 – 11

A wA wA wA wA wororororor ld trld trld trld trld transfansfansfansfansfororororormed – 12med – 12med – 12med – 12med – 12The impacts of globalisation – 14The impacts of globalisation – 14The impacts of globalisation – 14The impacts of globalisation – 14The impacts of globalisation – 14The growing power of the private sector – 16The growing power of the private sector – 16The growing power of the private sector – 16The growing power of the private sector – 16The growing power of the private sector – 16The shifting space for change – 17The shifting space for change – 17The shifting space for change – 17The shifting space for change – 17The shifting space for change – 17LobLobLobLobLobbbbbbying the marying the marying the marying the marying the markkkkkets – 18ets – 18ets – 18ets – 18ets – 18TTTTThe pohe pohe pohe pohe powwwwwer ofer ofer ofer ofer of the mar the mar the mar the mar the mar kkkkket – Maret – Maret – Maret – Maret – Mar kkkkkets as “neutrets as “neutrets as “neutrets as “neutrets as “neutral gal gal gal gal grrrrround”ound”ound”ound”ound” – NGO str – NGO str – NGO str – NGO str – NGO strengths:engths:engths:engths:engths: mar mar mar mar mar kkkkket wet wet wet wet weaknesses –eaknesses –eaknesses –eaknesses –eaknesses –IncrIncrIncrIncrIncreasing consumer aeasing consumer aeasing consumer aeasing consumer aeasing consumer awwwwwararararareness – Globalisaeness – Globalisaeness – Globalisaeness – Globalisaeness – Globalisation and incrtion and incrtion and incrtion and incrtion and increased coreased coreased coreased coreased corporporporporporaaaaate vulnerte vulnerte vulnerte vulnerte vulner aaaaability – bil ity – bil ity – bil ity – bil ity – TTTTThe rise ofhe rise ofhe rise ofhe rise ofhe rise ofethical sharethical sharethical sharethical sharethical shareholding – Changing institutional cultureholding – Changing institutional cultureholding – Changing institutional cultureholding – Changing institutional cultureholding – Changing institutional cultures – Nees – Nees – Nees – Nees – New rw rw rw rw reeeeegulagulagulagulagulatortortortortor y measury measury measury measury measures – es – es – es – es – A will ingness toA will ingness toA will ingness toA will ingness toA will ingness tochange?change?change?change?change?

TTTTThe limits ofhe limits ofhe limits ofhe limits ofhe limits of mar mar mar mar markkkkket actiet actiet actiet actiet activism – 33vism – 33vism – 33vism – 33vism – 33Is a financial campaign appropriate? – 33Is a financial campaign appropriate? – 33Is a financial campaign appropriate? – 33Is a financial campaign appropriate? – 33Is a financial campaign appropriate? – 33Boxes

The increasing economic power of the private sector – 13The increasing economic power of the private sector – 13The increasing economic power of the private sector – 13The increasing economic power of the private sector – 13The increasing economic power of the private sector – 13WWWWWhahahahahat art art art art are financial mare financial mare financial mare financial mare financial markkkkkets? – 14ets? – 14ets? – 14ets? – 14ets? – 14Changing the frChanging the frChanging the frChanging the frChanging the frameameameameamewwwwwororororork:k:k:k:k: F F F F Frrrrrom Seaom Seaom Seaom Seaom Seattle to Prttle to Prttle to Prttle to Prttle to Praaaaague – 18gue – 18gue – 18gue – 18gue – 18Project finance – 20Project finance – 20Project finance – 20Project finance – 20Project finance – 20Consumer and shareholder activism – 23Consumer and shareholder activism – 23Consumer and shareholder activism – 23Consumer and shareholder activism – 23Consumer and shareholder activism – 23A bank besieA bank besieA bank besieA bank besieA bank besieggggged:ed:ed:ed:ed: Consumer po Consumer po Consumer po Consumer po Consumer powwwwwer aer aer aer aer agggggainst bigainst bigainst bigainst bigainst bigotrotrotrotrotry – 25y – 25y – 25y – 25y – 25Huntingdon Life Sciences: Naming and shaming – 27Huntingdon Life Sciences: Naming and shaming – 27Huntingdon Life Sciences: Naming and shaming – 27Huntingdon Life Sciences: Naming and shaming – 27Huntingdon Life Sciences: Naming and shaming – 27FirFirFirFirFirst do no harst do no harst do no harst do no harst do no harm – 30m – 30m – 30m – 30m – 30The impact of shareholder activism – the US experience (The impact of shareholder activism – the US experience (The impact of shareholder activism – the US experience (The impact of shareholder activism – the US experience (The impact of shareholder activism – the US experience (by Michelle Chan-Fishelby Michelle Chan-Fishelby Michelle Chan-Fishelby Michelle Chan-Fishelby Michelle Chan-Fishel) – 33) – 33) – 33) – 33) – 33Put your own house in order – 34Put your own house in order – 34Put your own house in order – 34Put your own house in order – 34Put your own house in order – 34InterInterInterInterInternal rnal rnal rnal rnal reeeeevievievievieview – 33w – 33w – 33w – 33w – 33

2 .2 .2 .2 .2 . UUUUUNDERSTNDERSTNDERSTNDERSTNDERSTANDINGANDINGANDINGANDINGANDING THETHETHETHETHE M M M M MARKETSARKETSARKETSARKETSARKETS – P – P – P – P – PSYSYSYSYSYCHOLCHOLCHOLCHOLCHOLOGYOGYOGYOGYOGY,,,,, AAAAARRRRRGUMENTSGUMENTSGUMENTSGUMENTSGUMENTS ANDANDANDANDAND O O O O OPENINGSPENINGSPENINGSPENINGSPENINGS – 37 – 37 – 37 – 37 – 37Using the mentality ofUsing the mentality ofUsing the mentality ofUsing the mentality ofUsing the mentality of the mar the mar the mar the mar the markkkkket to yet to yet to yet to yet to your adour adour adour adour advvvvvantaantaantaantaantaggggge – 38e – 38e – 38e – 38e – 38Exposing the risks – 39Exposing the risks – 39Exposing the risks – 39Exposing the risks – 39Exposing the risks – 39Key pressure points and how to use them – 41Key pressure points and how to use them – 41Key pressure points and how to use them – 41Key pressure points and how to use them – 41Key pressure points and how to use them – 41Management quality – Business strategy – Financial risk: company analysis / project analysis –Management quality – Business strategy – Financial risk: company analysis / project analysis –Management quality – Business strategy – Financial risk: company analysis / project analysis –Management quality – Business strategy – Financial risk: company analysis / project analysis –Management quality – Business strategy – Financial risk: company analysis / project analysis –

Non–financial risks – Political risks – Legal risks – Environmental risks – Reputational risksNon–financial risks – Political risks – Legal risks – Environmental risks – Reputational risksNon–financial risks – Political risks – Legal risks – Environmental risks – Reputational risksNon–financial risks – Political risks – Legal risks – Environmental risks – Reputational risksNon–financial risks – Political risks – Legal risks – Environmental risks – Reputational risks

Matching the pressure points to the financial player – 54Matching the pressure points to the financial player – 54Matching the pressure points to the financial player – 54Matching the pressure points to the financial player – 54Matching the pressure points to the financial player – 54

BoxesReading the balance sheet – 40Reading the balance sheet – 40Reading the balance sheet – 40Reading the balance sheet – 40Reading the balance sheet – 40ABB – Moving out of dams – 43ABB – Moving out of dams – 43ABB – Moving out of dams – 43ABB – Moving out of dams – 43ABB – Moving out of dams – 43Three Gorges: Bond issues challenged – 47Three Gorges: Bond issues challenged – 47Three Gorges: Bond issues challenged – 47Three Gorges: Bond issues challenged – 47Three Gorges: Bond issues challenged – 47

3 .3 .3 .3 .3 . CCCCCAMPAMPAMPAMPAMPAIGNINGAIGNINGAIGNINGAIGNINGAIGNING INININININ THETHETHETHETHE M M M M MARKETARKETARKETARKETARKET::::: S S S S STRATRATRATRATRATEGIESTEGIESTEGIESTEGIESTEGIES,,,,, TTTTTAAAAACTICSCTICSCTICSCTICSCTICS ANDANDANDANDAND TTTTTIMINGIMINGIMINGIMINGIMING – 57 – 57 – 57 – 57 – 57StrStrStrStrStraaaaatetetetetegiesgiesgiesgiesgies,,,,, TTTTTactics and actics and actics and actics and actics and Timing – 58Timing – 58Timing – 58Timing – 58Timing – 58

IndustrIndustrIndustrIndustrIndustr y-wide campaigns – 59y-wide campaigns – 59y-wide campaigns – 59y-wide campaigns – 59y-wide campaigns – 59Changing company practices – 59Changing company practices – 59Changing company practices – 59Changing company practices – 59Changing company practices – 59


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InfrInfrInfrInfrInfrastrastrastrastrastructuructuructuructuructure pre pre pre pre projects – 61ojects – 61ojects – 61ojects – 61ojects – 61Financial marFinancial marFinancial marFinancial marFinancial markkkkket pret pret pret pret practice – 62actice – 62actice – 62actice – 62actice – 62

TTTTThe main options fhe main options fhe main options fhe main options fhe main options for interor interor interor interor inter vvvvvention – 63ention – 63ention – 63ention – 63ention – 63Analysis and revaluation – 63Analysis and revaluation – 63Analysis and revaluation – 63Analysis and revaluation – 63Analysis and revaluation – 63Engagement and reducing “bad practice” – 64Engagement and reducing “bad practice” – 64Engagement and reducing “bad practice” – 64Engagement and reducing “bad practice” – 64Engagement and reducing “bad practice” – 64DirDirDirDirDirect campaigning and morect campaigning and morect campaigning and morect campaigning and morect campaigning and moral peral peral peral peral persuasion – 68suasion – 68suasion – 68suasion – 68suasion – 68

Timing – 70Timing – 70Timing – 70Timing – 70Timing – 70KKKKKeeeeey intery intery intery intery inter vvvvvention points – 71ention points – 71ention points – 71ention points – 71ention points – 71

Initial public offerings –71Initial public offerings –71Initial public offerings –71Initial public offerings –71Initial public offerings –71AGMs and shareholder resolutions – 71AGMs and shareholder resolutions – 71AGMs and shareholder resolutions – 71AGMs and shareholder resolutions – 71AGMs and shareholder resolutions – 71

Creating political space – 74Creating political space – 74Creating political space – 74Creating political space – 74Creating political space – 74Boxes

Genetic slump – 60Genetic slump – 60Genetic slump – 60Genetic slump – 60Genetic slump – 60Specimen letterSpecimen letterSpecimen letterSpecimen letterSpecimen letters – 65,s – 65,s – 65,s – 65,s – 65, 66, 66, 66, 66, 66, 70 70 70 70 70WWWWWororororording yding yding yding yding your rour rour rour rour resolution – 68esolution – 68esolution – 68esolution – 68esolution – 68Potential and limitations of shareholder activism –Potential and limitations of shareholder activism –Potential and limitations of shareholder activism –Potential and limitations of shareholder activism –Potential and limitations of shareholder activism –Insights from the US (Insights from the US (Insights from the US (Insights from the US (Insights from the US (by Michelle Chan Fishelby Michelle Chan Fishelby Michelle Chan Fishelby Michelle Chan Fishelby Michelle Chan Fishel) – 69) – 69) – 69) – 69) – 69Pull out ofPull out ofPull out ofPull out ofPull out of Bur Bur Bur Bur Burma:ma:ma:ma:ma: Pr Pr Pr Pr Protestsotestsotestsotestsotests,,,,, bo bo bo bo boyyyyycotts and sharcotts and sharcotts and sharcotts and sharcotts and shareholder action – 72eholder action – 72eholder action – 72eholder action – 72eholder action – 72BP:BP:BP:BP:BP: Mobilising in Mobilising in Mobilising in Mobilising in Mobilising invvvvvestorestorestorestorestors fs fs fs fs for cor cor cor cor changhanghanghanghange – 75e – 75e – 75e – 75e – 75

4 .4 .4 .4 .4 . PPPPPLALALALALAYERSYERSYERSYERSYERS INININININ THETHETHETHETHE M M M M MARKETARKETARKETARKETARKET – 77 – 77 – 77 – 77 – 77UnderUnderUnderUnderUnderstanding ystanding ystanding ystanding ystanding your audience – 78our audience – 78our audience – 78our audience – 78our audience – 78Analysts – 80Analysts – 80Analysts – 80Analysts – 80Analysts – 80

TTTTTypes ofypes ofypes ofypes ofypes of anal anal anal anal analyst – 80yst – 80yst – 80yst – 80yst – 80WWWWWhahahahahat sort sort sort sort sor t oft oft oft oft of people ar people ar people ar people ar people are anale anale anale anale analysts? – 82ysts? – 82ysts? – 82ysts? – 82ysts? – 82WWWWWhahahahahat art art art art are their success fe their success fe their success fe their success fe their success factoractoractoractoractors? – 83s? – 83s? – 83s? – 83s? – 83What are their outputs? – 83What are their outputs? – 83What are their outputs? – 83What are their outputs? – 83What are their outputs? – 83WWWWWhahahahahat inft inft inft inft infororororormamamamamation do analtion do analtion do analtion do analtion do analysts use? – 84ysts use? – 84ysts use? – 84ysts use? – 84ysts use? – 84When do they do their research? – 84When do they do their research? – 84When do they do their research? – 84When do they do their research? – 84When do they do their research? – 84What time frame do analysts have? 84What time frame do analysts have? 84What time frame do analysts have? 84What time frame do analysts have? 84What time frame do analysts have? 84Engaging analysts – 84Engaging analysts – 84Engaging analysts – 84Engaging analysts – 84Engaging analysts – 84Presenting your research – 85Presenting your research – 85Presenting your research – 85Presenting your research – 85Presenting your research – 85The need for preparation – 85The need for preparation – 85The need for preparation – 85The need for preparation – 85The need for preparation – 85Timing yTiming yTiming yTiming yTiming your interour interour interour interour inter vvvvvention – 85ention – 85ention – 85ention – 85ention – 85

Institutional inInstitutional inInstitutional inInstitutional inInstitutional invvvvvestorestorestorestorestors – 86s – 86s – 86s – 86s – 86TTTTTypes ofypes ofypes ofypes ofypes of institutional in institutional in institutional in institutional in institutional invvvvvestorestorestorestorestors – 86s – 86s – 86s – 86s – 86Investment institutions – 87Investment institutions – 87Investment institutions – 87Investment institutions – 87Investment institutions – 87Who’s who in the institutions? – 90Who’s who in the institutions? – 90Who’s who in the institutions? – 90Who’s who in the institutions? – 90Who’s who in the institutions? – 90WWWWWhahahahahat art art art art are their success fe their success fe their success fe their success fe their success factoractoractoractoractors? – 95s? – 95s? – 95s? – 95s? – 95

Fund manaFund manaFund manaFund manaFund managggggererererers – 97s – 97s – 97s – 97s – 97Who are they? – 98Who are they? – 98Who are they? – 98Who are they? – 98Who are they? – 98WWWWWhahahahahat art art art art are their success fe their success fe their success fe their success fe their success factoractoractoractoractors? – 98s? – 98s? – 98s? – 98s? – 98Competition – 99Competition – 99Competition – 99Competition – 99Competition – 99InfInfInfInfInfororororormamamamamation otion otion otion otion ovvvvvererererer load – 99load – 99load – 99load – 99load – 99Style ofStyle ofStyle ofStyle ofStyle of fund mana fund mana fund mana fund mana fund managggggererererers – 102s – 102s – 102s – 102s – 102MerMerMerMerMergggggererererers and cs and cs and cs and cs and changhanghanghanghange – 103e – 103e – 103e – 103e – 103EngEngEngEngEngaaaaaging fund managing fund managing fund managing fund managing fund managggggererererers and ins and ins and ins and ins and invvvvvestorestorestorestorestors – 103s – 103s – 103s – 103s – 103Approaching fund manager – 104Approaching fund manager – 104Approaching fund manager – 104Approaching fund manager – 104Approaching fund manager – 104


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Campaigns tarCampaigns tarCampaigns tarCampaigns tarCampaigns targggggeting fund manaeting fund manaeting fund manaeting fund manaeting fund managggggererererers – 105s – 105s – 105s – 105s – 105PrPrPrPrPracticalities ofacticalities ofacticalities ofacticalities ofacticalities of r r r r running a fund manaunning a fund manaunning a fund manaunning a fund manaunning a fund managggggement campaign – 106ement campaign – 106ement campaign – 106ement campaign – 106ement campaign – 106

The ethical investment sector – 107The ethical investment sector – 107The ethical investment sector – 107The ethical investment sector – 107The ethical investment sector – 107The ethical niche – 107The ethical niche – 107The ethical niche – 107The ethical niche – 107The ethical niche – 107TTTTTypes ofypes ofypes ofypes ofypes of or or or or orggggganisaanisaanisaanisaanisation – 107tion – 107tion – 107tion – 107tion – 107WWWWWho who who who who worororororks in ethical inks in ethical inks in ethical inks in ethical inks in ethical invvvvvestment orestment orestment orestment orestment orggggganisaanisaanisaanisaanisations? – 109tions? – 109tions? – 109tions? – 109tions? – 109WWWWWhahahahahat art art art art are their success fe their success fe their success fe their success fe their success factoractoractoractoractors? – 111s? – 111s? – 111s? – 111s? – 111HoHoHoHoHow can ethical inw can ethical inw can ethical inw can ethical inw can ethical invvvvvestorestorestorestorestors help? – 111s help? – 111s help? – 111s help? – 111s help? – 111WWWWWorororororking with ethical inking with ethical inking with ethical inking with ethical inking with ethical invvvvvestorestorestorestorestors – 112s – 112s – 112s – 112s – 112Conclusions – 112Conclusions – 112Conclusions – 112Conclusions – 112Conclusions – 112

Banks and project finance – 113Banks and project finance – 113Banks and project finance – 113Banks and project finance – 113Banks and project finance – 113Banking Banking Banking Banking Banking – Risk and reputation – 113 Risk and reputation – 113 Risk and reputation – 113 Risk and reputation – 113 Risk and reputation – 113Getting access to senior management – 114Getting access to senior management – 114Getting access to senior management – 114Getting access to senior management – 114Getting access to senior management – 114UnderUnderUnderUnderUnderstanding prstanding prstanding prstanding prstanding project financieroject financieroject financieroject financieroject financiers – 115s – 115s – 115s – 115s – 115Stages of project finance – 116Stages of project finance – 116Stages of project finance – 116Stages of project finance – 116Stages of project finance – 116

BoxesThe Bakun campaign – Lobbying the analysts – 81The Bakun campaign – Lobbying the analysts – 81The Bakun campaign – Lobbying the analysts – 81The Bakun campaign – Lobbying the analysts – 81The Bakun campaign – Lobbying the analysts – 81TTTTThe he he he he WWWWWororororor ld Bank bonds campaign – 82ld Bank bonds campaign – 82ld Bank bonds campaign – 82ld Bank bonds campaign – 82ld Bank bonds campaign – 82Organising a shareholder resolution: The Balfour BeattyOrganising a shareholder resolution: The Balfour BeattyOrganising a shareholder resolution: The Balfour BeattyOrganising a shareholder resolution: The Balfour BeattyOrganising a shareholder resolution: The Balfour Beattycampaign (campaign (campaign (campaign (campaign (bbbbby Ky Ky Ky Ky Kaaaaate Gearte Gearte Gearte Gearte Geary and Hannah Grify and Hannah Grify and Hannah Grify and Hannah Grify and Hannah Griffithsfithsfithsfithsfiths) – 91) – 91) – 91) – 91) – 91Questions to fund manaQuestions to fund manaQuestions to fund manaQuestions to fund manaQuestions to fund managggggererererers – 96s – 96s – 96s – 96s – 96TTTTThe “Ethics fhe “Ethics fhe “Ethics fhe “Ethics fhe “Ethics for USS”or USS”or USS”or USS”or USS” campaign ( campaign ( campaign ( campaign ( campaign (bbbbby Jy Jy Jy Jy Jess ess ess ess ess WWWWWororororor th and Kth and Kth and Kth and Kth and Kaaaaate Gearte Gearte Gearte Gearte Gearyyyyy) – 100) – 100) – 100) – 100) – 100Ethical inEthical inEthical inEthical inEthical invvvvvestment orestment orestment orestment orestment orggggganisaanisaanisaanisaanisations outside Eurtions outside Eurtions outside Eurtions outside Eurtions outside Europe and Norope and Norope and Norope and Norope and Nor th th th th th America – 108America – 108America – 108America – 108America – 108TTTTTaaaaabbbbble 1:le 1:le 1:le 1:le 1: Sociall Sociall Sociall Sociall Socially Ry Ry Ry Ry Responsibesponsibesponsibesponsibesponsible Inle Inle Inle Inle Invvvvvestment netwestment netwestment netwestment netwestment networororororks and rks and rks and rks and rks and researesearesearesearesearccccchhhhhorganisations – 110organisations – 110organisations – 110organisations – 110organisations – 110

5 .5 .5 .5 .5 . GGGGGETTINGETTINGETTINGETTINGETTING I I I I INFORMANFORMANFORMANFORMANFORMATIONTIONTIONTIONTION FORFORFORFORFOR AAAAA F F F F FINININININANCIALANCIALANCIALANCIALANCIAL L L L L LOBBYINGOBBYINGOBBYINGOBBYINGOBBYING C C C C CAMPAMPAMPAMPAMPAIGNAIGNAIGNAIGNAIGN – 119 – 119 – 119 – 119 – 119StrStrStrStrStructuring yucturing yucturing yucturing yucturing your rour rour rour rour researesearesearesearesearccccch – 120h – 120h – 120h – 120h – 120Where do I find . . . ?Where do I find . . . ?Where do I find . . . ?Where do I find . . . ?Where do I find . . . ?

CompanCompanCompanCompanCompany anny anny anny anny annual rual rual rual rual reeeeeporporporporpor ts – 126ts – 126ts – 126ts – 126ts – 126Company websites – 128Company websites – 128Company websites – 128Company websites – 128Company websites – 128OvOvOvOvOvererererer vievievievieview ofw ofw ofw ofw of the compan the compan the compan the compan the company – 128y – 128y – 128y – 128y – 128The company’s record – 128The company’s record – 128The company’s record – 128The company’s record – 128The company’s record – 128Environmental policies – 134Environmental policies – 134Environmental policies – 134Environmental policies – 134Environmental policies – 134Subsidiaries and parents – 135Subsidiaries and parents – 135Subsidiaries and parents – 135Subsidiaries and parents – 135Subsidiaries and parents – 135The products a company manufactures – 136The products a company manufactures – 136The products a company manufactures – 136The products a company manufactures – 136The products a company manufactures – 136Names ofNames ofNames ofNames ofNames of the shar the shar the shar the shar the shareholdereholdereholdereholdereholders – 137s – 137s – 137s – 137s – 137Help in launching a shareholder action – 139Help in launching a shareholder action – 139Help in launching a shareholder action – 139Help in launching a shareholder action – 139Help in launching a shareholder action – 139What companies a financial institution is investing in – 139What companies a financial institution is investing in – 139What companies a financial institution is investing in – 139What companies a financial institution is investing in – 139What companies a financial institution is investing in – 139HoHoHoHoHow ww ww ww ww well a companell a companell a companell a companell a company is perfy is perfy is perfy is perfy is perforororororming – 140ming – 140ming – 140ming – 140ming – 140AnalAnalAnalAnalAnalysts’ysts’ysts’ysts’ysts’ r r r r reeeeeporporporporpor ts – 141ts – 141ts – 141ts – 141ts – 141WWWWWho’ho’ho’ho’ho’s financing a pris financing a pris financing a pris financing a pris financing a privvvvvaaaaate-sector infrte-sector infrte-sector infrte-sector infrte-sector infrastrastrastrastrastructuructuructuructuructure pre pre pre pre project – 141oject – 141oject – 141oject – 141oject – 141What public money is backing a project – 142What public money is backing a project – 142What public money is backing a project – 142What public money is backing a project – 142What public money is backing a project – 142Names of company analysts – 143Names of company analysts – 143Names of company analysts – 143Names of company analysts – 143Names of company analysts – 143Names ofNames ofNames ofNames ofNames of fund mana fund mana fund mana fund mana fund managggggererererers – 144s – 144s – 144s – 144s – 144Names ofNames ofNames ofNames ofNames of compan compan compan compan company ady ady ady ady advisorvisorvisorvisorvisors – 145s – 145s – 145s – 145s – 145Names ofNames ofNames ofNames ofNames of compan compan compan compan company diry diry diry diry directorectorectorectorectors – 145s – 145s – 145s – 145s – 145WWWWWho’ho’ho’ho’ho’s impors impors impors impors impor ting and eting and eting and eting and eting and exporxporxporxporxpor ting wting wting wting wting whahahahahat – 148t – 148t – 148t – 148t – 148What research a company is funding – 148What research a company is funding – 148What research a company is funding – 148What research a company is funding – 148What research a company is funding – 148

Boxes and tablesTTTTTaaaaabbbbble 2:le 2:le 2:le 2:le 2: K K K K Keeeeey diry diry diry diry directories fectories fectories fectories fectories for coror coror coror coror corporporporporporaaaaate rte rte rte rte researesearesearesearesearccccch – 124h – 124h – 124h – 124h – 124TTTTTaaaaabbbbble 3:le 3:le 3:le 3:le 3: Compan Compan Compan Compan Company ry ry ry ry reeeeeporporporporpor ts on the ts on the ts on the ts on the ts on the WWWWWeeeeeb – 127b – 127b – 127b – 127b – 127


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TTTTTaaaaabbbbble 4:le 4:le 4:le 4:le 4: TTTTTop corop corop corop corop corporporporporporaaaaate rte rte rte rte researesearesearesearesearccccch wh wh wh wh weeeeeb sites – 129b sites – 129b sites – 129b sites – 129b sites – 129TTTTTaaaaabbbbble 5:le 5:le 5:le 5:le 5: WWWWWeeeeeb sites with ab sites with ab sites with ab sites with ab sites with attitude – 135ttitude – 135ttitude – 135ttitude – 135ttitude – 135TTTTTaaaaabbbbble 6:le 6:le 6:le 6:le 6: Dir Dir Dir Dir Directories detailing corectories detailing corectories detailing corectories detailing corectories detailing corporporporporporaaaaate ote ote ote ote ownerwnerwnerwnerwnership – 137ship – 137ship – 137ship – 137ship – 137Spotting kSpotting kSpotting kSpotting kSpotting keeeeey iny iny iny iny invvvvvestorestorestorestorestors – 138s – 138s – 138s – 138s – 138TTTTTaaaaabbbbble 7:le 7:le 7:le 7:le 7: Infr Infr Infr Infr Infrastrastrastrastrastructuructuructuructuructure pre pre pre pre project daoject daoject daoject daoject datatatatatabases on the bases on the bases on the bases on the bases on the WWWWWeeeeeb – 142b – 142b – 142b – 142b – 142TTTTTaaaaabbbbble 8:le 8:le 8:le 8:le 8: P P P P Pension fund dirension fund dirension fund dirension fund dirension fund directories – 143ectories – 143ectories – 143ectories – 143ectories – 143TTTTTaaaaabbbbble 9:le 9:le 9:le 9:le 9: Dir Dir Dir Dir Directories with details ofectories with details ofectories with details ofectories with details ofectories with details of k k k k keeeeey company company company company company ofy ofy ofy ofy officials – 145ficials – 145ficials – 145ficials – 145ficials – 145TTTTTaaaaabbbbble 10:le 10:le 10:le 10:le 10: Impor Impor Impor Impor Impor terterterterters and es and es and es and es and exporxporxporxporxpor terterterterters – Dirs – Dirs – Dirs – Dirs – Directories and wectories and wectories and wectories and wectories and weeeeeb sites – 147b sites – 147b sites – 147b sites – 147b sites – 147

6 .6 .6 .6 .6 . FFFFFURTHERURTHERURTHERURTHERURTHER R R R R RESEARCHESEARCHESEARCHESEARCHESEARCH – SSSSSKILLSKILLSKILLSKILLSKILLS ANDANDANDANDAND RESOURCESRESOURCESRESOURCESRESOURCESRESOURCES –149 –149 –149 –149 –149WWWWWherherherherhere to ge to ge to ge to ge to go fo fo fo fo for infor infor infor infor infororororormamamamamation – 150tion – 150tion – 150tion – 150tion – 150

Libraries – 151Libraries – 151Libraries – 151Libraries – 151Libraries – 151Uses ofUses ofUses ofUses ofUses of libr libr libr libr libraries – Choosing yaries – Choosing yaries – Choosing yaries – Choosing yaries – Choosing your librour librour librour librour librararararary – Hoy – Hoy – Hoy – Hoy – How to use librw to use librw to use librw to use librw to use librariesariesariesariesaries

TTTTThe he he he he WWWWWeeeeeb – 154b – 154b – 154b – 154b – 154TTTTThe danghe danghe danghe danghe dangererererer s – Sears – Sears – Sears – Sears – Searccccch engines – h engines – h engines – h engines – h engines – TTTTTypes ofypes ofypes ofypes ofypes of sear sear sear sear searccccch – Engh – Engh – Engh – Engh – English isnlish isnlish isnlish isnlish isn’’’’’ t the onlt the onlt the onlt the onlt the onlyyyyylanguage – Filtering software – Other techniques – Free trialslanguage – Filtering software – Other techniques – Free trialslanguage – Filtering software – Other techniques – Free trialslanguage – Filtering software – Other techniques – Free trialslanguage – Filtering software – Other techniques – Free trials

The Media – 157The Media – 157The Media – 157The Media – 157The Media – 157Media on the Media on the Media on the Media on the Media on the WWWWWeeeeeb – CD-Rb – CD-Rb – CD-Rb – CD-Rb – CD-Roms – Indeoms – Indeoms – Indeoms – Indeoms – Indexxxxxes – Finding tres – Finding tres – Finding tres – Finding tres – Finding trade jourade jourade jourade jourade journals –nals –nals –nals –nals –AlterAlterAlterAlterAlter nananananatit it it it i vvvvve media – Pre media – Pre media – Pre media – Pre media – Press daess daess daess daess datatatatatabasesbasesbasesbasesbases

CompanCompanCompanCompanCompany and industry and industry and industry and industry and industr y soury soury soury soury sources – 162ces – 162ces – 162ces – 162ces – 162TTTTTrrrrrade associaade associaade associaade associaade associa tions – Prtions – Prtions – Prtions – Prtions – Profofofofofessional associaessional associaessional associaessional associaessional associations – tions – tions – tions – tions – TTTTTrrrrrade jourade jourade jourade jourade jour nals – Marnals – Marnals – Marnals – Marnals – Mar kkkkketetetetetresearchresearchresearchresearchresearch

GoGoGoGoGovvvvvererererernment sournment sournment sournment sournment sources – 165ces – 165ces – 165ces – 165ces – 165Using companUsing companUsing companUsing companUsing company ry ry ry ry reeeeegistrgistrgistrgistrgistrararararar s – Finding ys – Finding ys – Finding ys – Finding ys – Finding you wou wou wou wou waaaaay ry ry ry ry round gound gound gound gound gooooovvvvvererererer nment-nment-nment-nment-nment-RRRRReeeeegulagulagulagulagulatortortortortor y ay ay ay ay agggggencies – Goencies – Goencies – Goencies – Goencies – Govvvvvererererer nment denment denment denment denment deparparparparpar tments and quangtments and quangtments and quangtments and quangtments and quangososososos

PPPPPararararar liaments – 171liaments – 171liaments – 171liaments – 171liaments – 171Statistical sources – 173Statistical sources – 173Statistical sources – 173Statistical sources – 173Statistical sources – 173VVVVVerbal sourerbal sourerbal sourerbal sourerbal sources – 173ces – 173ces – 173ces – 173ces – 173ConfConfConfConfConferererererences – Neences – Neences – Neences – Neences – News confws confws confws confws conferererererences – Interences – Interences – Interences – Interences – Inter vievievievieviewswswswswsFinancia l Instut ionsFinancia l Instut ionsFinancia l Instut ionsFinancia l Instut ionsFinancia l Instut ions – 175 – 175 – 175 – 175 – 175Ethical inEthical inEthical inEthical inEthical invvvvvestorestorestorestorestorsssss

BoxesBasic skills and techniques – 152Basic skills and techniques – 152Basic skills and techniques – 152Basic skills and techniques – 152Basic skills and techniques – 152TTTTTaaaaabbbbble 11:le 11:le 11:le 11:le 11: UK b UK b UK b UK b UK business and copusiness and copusiness and copusiness and copusiness and copyright libryright libryright libryright libryright libraries – 153aries – 153aries – 153aries – 153aries – 153TTTTTaaaaabbbbble 12:le 12:le 12:le 12:le 12: TTTTTried and tested engines – 155ried and tested engines – 155ried and tested engines – 155ried and tested engines – 155ried and tested engines – 155TTTTTaaaaabbbbble 13:le 13:le 13:le 13:le 13: Guides and por Guides and por Guides and por Guides and por Guides and por tals – 157tals – 157tals – 157tals – 157tals – 157TTTTTaaaaabbbbble 14:le 14:le 14:le 14:le 14: TTTTTrrrrrade jourade jourade jourade jourade journal pubnal pubnal pubnal pubnal publisherlisherlisherlisherlishers – 159s – 159s – 159s – 159s – 159TTTTTaaaaabbbbble 15:le 15:le 15:le 15:le 15: Pr Pr Pr Pr Press daess daess daess daess datatatatatabases on the bases on the bases on the bases on the bases on the WWWWWeeeeeb – 160b – 160b – 160b – 160b – 160TTTTTaaaaabbbbble 16:le 16:le 16:le 16:le 16: TTTTTrrrrrade associaade associaade associaade associaade associations – 163tions – 163tions – 163tions – 163tions – 163Using EDGAR to challenge companies – 167Using EDGAR to challenge companies – 167Using EDGAR to challenge companies – 167Using EDGAR to challenge companies – 167Using EDGAR to challenge companies – 167TTTTTaaaaabbbbble 17:le 17:le 17:le 17:le 17: R R R R Reeeeegulagulagulagulagulatortortortortory ay ay ay ay agggggencies on the encies on the encies on the encies on the encies on the WWWWWeeeeeb – 168b – 168b – 168b – 168b – 168TTTTTaaaaabbbbble 18:le 18:le 18:le 18:le 18: Sta Sta Sta Sta Statistical sourtistical sourtistical sourtistical sourtistical sources on the ces on the ces on the ces on the ces on the WWWWWeeeeeb – 172b – 172b – 172b – 172b – 172TTTTTaaaaabbbbble 19:le 19:le 19:le 19:le 19: Ethical in Ethical in Ethical in Ethical in Ethical invvvvvestorestorestorestorestors – 175s – 175s – 175s – 175s – 175

7 .7 .7 .7 .7 . RRRRRESEARCHINGESEARCHINGESEARCHINGESEARCHINGESEARCHING S S S S SECTORSECTORSECTORSECTORSECTORS – 177 – 177 – 177 – 177 – 177Agribusiness and biotechnology –178Agribusiness and biotechnology –178Agribusiness and biotechnology –178Agribusiness and biotechnology –178Agribusiness and biotechnology –178Oil and gas – 182Oil and gas – 182Oil and gas – 182Oil and gas – 182Oil and gas – 182Mining – 185Mining – 185Mining – 185Mining – 185Mining – 185Dams – 187Dams – 187Dams – 187Dams – 187Dams – 187PulpPulpPulpPulpPulpwwwwwood plantaood plantaood plantaood plantaood plantations and the pations and the pations and the pations and the pations and the paper industrper industrper industrper industrper industry – 189y – 189y – 189y – 189y – 189Carbon trading – 192Carbon trading – 192Carbon trading – 192Carbon trading – 192Carbon trading – 192

References References References References References – 197197197197197GlossarGlossarGlossarGlossarGlossary y y y y – 201201201201201


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T his Guide arises out of theinternational campaign in the

mid-1990s by environment andhuman rights’ groups in Malaysia andelsewhere to stop construction of the Bakunhydroelectric dam in Sarawak, Malaysia.The dam, which would have caused theinvoluntary relocation of some 10,000indigenous people and the flooding of70,000 hectares of land, would have beenbuilt and operated by a private sectorconsortium, headed by the BakunHydroelectric Corporation.

The campaign halted the project (althoughthere is now talk of reviving the dam, albeitin a scaled-down form). Key to thecampaign’s success was the lobbying ofpotential investors in the dam – and of thefinancial analysts who advised theseinvestors.

Since the Bakun campaign, both authorshave worked on other campaigns wherelobbying investors has proved a major toolto exert pressure so as to stopenvironmentally-damaging and socially-inequitable projects – or at least to lessentheir impact.


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A key lesson from such campaigns isthat their effectiveness is greatlyenhanced when activists understand theculture and psychology of the financialinstitutions that they are seeking toinfluence. This Guide focuses on thefinancial institutions that dominate theUK markets. It summarises thearguments that are most likely to makean impact on these institutions; theapproaches to campaigning that haveproved most effective; and the areas inwhich a campaign is likely to have themost political purchase. It is alsointended to provide campaigners withsome of the “nuts-and-bolts” practical-ities of financial market campaigning –where they can find the information theyneed, how they can identify keypersonnel to lobby, and so on.

The UK focus reflects both theimportance of the City of London as aninternational financial centre and ourown history of campaigning. Much ofwhat is in the Guide will apply in otherfinancial markets: the culture of USfinancial institutions, for example, isbroadly similar to that in the UK. Butthe Guide comes with an importantcaveat: what “works” as a lobbyingtactic in London may backfiredisastrously if transposed, unadapted,to, say, Kuala Lumpur or Tokyo.Financial institutions do not have asingle culture: their reach may beglobal but their modes of operation areoften defiantly local. Moreover, theirculture – like any culture – is not fixed:it is constantly evolving, not least inresponse to the successes and failuresof campaigns aimed at pushing it in newdirections. Although the tactics andstrategies discussed in the Guideundoubtedly have application outsidethe UK, readers from other countriesshould bear in mind the need to tailorthem to their own local circumstances.

A guide to the A guide to the A guide to the A guide to the A guide to the GuideGuideGuideGuideGuide

The Guide begins by outlining some of

the recent changes in the political andeconomic landscape, both in thedeveloped world and in the developingcountries, that have made lobbyingfinancial markets a fruitful area forpublic interest groups seeking tochallenge unsustainable patterns ofinvestment and development. It looks athow globalisation has curtailed manyavenues that campaigners previouslyused to seek change, for examplethrough lobbying governments – and athow consumer and shareholder activismis carving out potentially fruitful newpolitical space for campaigners withinthe financial markets. It concludes witha brief summary of the pros and cons offinancial market campaigning for publicinterest groups.

Part Two explores the keypsychological features of financialmarkets, the pressure points that emergefrom them and the best ways of matchingthese pressure points to the concerns ofspecific market players. In particular, itstresses how speculation frames thementality of financial markets, givingrise to two prime motivators: greed andfear. The resulting preoccupation withweighing up financial risks provides aseries of leverage points thatcampaigners can use to their advantage.The section outlines key risks –financial, political, legal and non-financial – that campaigners shouldaccentuate, along with ways thatenvironmental and human rightsconcerns can be “translated” intoarguments that can exert pressure oninvestors.

Part Three considers the main areas inwhich financial market campaigning islikely to bear fruit. These include:targeting individual companies andprivate sector-financed infrastructureprojects; reducing the flow ofinvestments to particular sectors ofindustry (and redirecting it to moresustainable sectors); and pressing forfinancial institutions to adopt new rules


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that would place sustainability at theheart of their investment decisions.Three main strategies for interventionare discussed, and specimen letters andother campaign tools provided.

Knowing one’s audience is critical toeffective campaigning, whether infinancial markets or elsewhere. PartFour provides an insight into how someof the key players in the market think.Who are they? What motivates them?How do they judge success? Whatinformation is most valued by them?How best to engage with them? Thesection looks specifically at: analysts;institutional investors, such as pensionfunds; fund managers; ethical investmentfunds; commercial and investment banks;and public finance institutions, such asexport credit agencies.

Finally, Parts Five, Six and Sevenprovide some practical information for

campaigners who are unfamiliar withfinancial market campaigning. Howdoes one research a company? Howdoes one find out the names ofshareholders? What are the most usefulsources of information? And where canone find them?We hope that the Guide encouragespublic interest groups to consider thepossibilities of using financial marketsto press for change. Although financialmarket campaigning is only one of anumber of options open to campaigners(other tactics are often moreappropriate) and leaves many issuesunaddressed, it provides opportunitiesthat can enhance the effectiveness andreach of most campaigns. We hope thatthe Guide will empower campaigners toseize these opportunities where they areavailable and appropriate.

Nicholas HildyardMark Mansley

AcknowledgmentsAcknowledgmentsAcknowledgmentsAcknowledgmentsAcknowledgmentsThe authors would like to thank Greg Muttit for bringing coherence to Parts Five, Six andSeven of the report and for sharing his encyclopaedic knowledge of researching companiesand industrial sectors; Monique Baker for researching key sources of business informationavailable in libraries and on the web; Kate Geary, Hannah Griffiths, Jess Worth and MichelleChan-Fishel for the case studies and other boxes they contributed; Larry Lohmann for theresearch sections on pulpwood plantations and on carbon trading; Sarah Sexton and LarryLohmann for their invaluable work during the final editing of the manuscript; and MelissaDann of Wallace Global Fund for her encouragement throughout the project.Many colleagues in the socially reponsible investment community and the non-governmental community offered invaluable comments on the drafts: their insights,criticisms and encouragement were greatly appreciated. In particular, we would like tothank the folowing for their substantive comments: Peter Bosshard, Tess Tennant, MarkCampanale, Margie Law, Greg Muttit, Kate Geary, Michelle Chan-Fishel, Julie Tanner, DorisShen, Hannah Griffiths, Rebecca Spencer, Simon McCrae and Robert Rosen. The final text -and any errors in it - is of course the responsibility of the authors.Finally we would like to thank Wallace Global Fund (WGF) for supporting the projectfinancially.


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FinancialFinancialFinancialFinancialFinancialmarmarmarmarmarkkkkkets –ets –ets –ets –ets –A neA neA neA neA newwwwwpoliticalpoliticalpoliticalpoliticalpoliticalspacespacespacespacespace


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I n February 1999, the New YorkTimes ran an article on theeconomic crisis that 18 months

earlier had led to the collapse of theThai currency, before rippling throughAsia and Russia and threatening Braziland Latin America.1 The South-EastAsian economic collapse had not onlybrought hardship in the South, thearticle pointed out, but had alsocaused thousands of small investors inthe North to lose their hard-earnedsavings.

The article cited the example of MaryJo Paoni, a secretary from Cantrall,Illinois. Like many others, Mrs Paonihad no reason to suspect that herpension, which she had thought wassafely invested in a secure US-basedinvestment fund, would be affected bythe collapse of the Thai economy. Shecould not have been more wrong.Quite unbeknown to her, Mrs Paoni’sfuture security rested in large part onthe success or failure of a housingdevelopment in Bangkok of which,thanks to an investment decision takenby her pension fund manager, she hadbecome part owner.

A WORLDA WORLDA WORLDA WORLDA WORLDTRANSFORMEDTRANSFORMEDTRANSFORMEDTRANSFORMEDTRANSFORMED


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Mrs Paoni’s pension fund had boughtshares in two Thai investment funds –the Thai International Fund and the ThaiEuro Fund – which between them hadbought more than one million shares inBangkok Land, the company that haddeveloped the Muang Thong Thanihousing development site and which hadgone bankrupt in the wake of the Thaicurrency collapse.

Not that Mrs. Paoni knew any of this; noone had told her. Had they done so, shemight have expressed strong disapprovalof the “giddy investment sprees”undertaken in Asia and elsewhere withher money. “When things are rough”,she told the New York Times, “you don’tstart spending like a drunken sailor.There are some people who take risks,but not us.”

For the New York Times, Mary JoPaoni’s story illustrated the way inwhich globalisation now gives “justabout everybody some tiny financialstake in everybody else.”

Exaggerated and US-centric though thisclaim may be – only a tiny minority inthe developing world (and relativelyfew in the Northern industrialisedcountries) have the private pensions andinvestments that would give them such astake – it nonetheless highlights how thegrowing inter-connectedness of worldfinancial markets has transformed thenature of investment and the risks andimpacts associated with it.

That growing interconnectedness reflectsprofound structural changes that haveoccurred within the global economyover the past two decades. Combinedwith the impacts of new technologies,such changes have recast previouspatterns of power, changing therelationship between governments,communities and corporations andchallenging social and environmentalcampaigners to operate in new ways ifthey are to be effective.

For example:

NeNeNeNeNew trw trw trw trw trading rading rading rading rading rulesulesulesulesulesNew international and regional tradeagreements – from the Uruguay Round ofthe General Agreement on Tariffs andTrade (GATT) to Latin America’s SouthernCone Common Market (MERCOSUR)agreement and the European Union’s SingleMarket treaty – have led to the dismantlingor lowering of tariff barriers, reducing manyprevious restrictions on the movement ofgoods and services.As a result, cross-border trade has expandedmassively as companies have moved toexploit the new markets and businessopportunities that have been opened up.World trade, which has grown 12-fold sincethe Second World War, is now worth some$4,000 billion a year – and is expected torise by 6% a year over the next ten years.

DeregulationDeregulationDeregulationDeregulationDeregulationThe accompanying deregulation of financialmarkets – often a condition imposed onindebted developing nations by theInternational Monetary Fund in return fornew loans – has lifted or eased restrictionson the movement of capital in and out ofcountries.Until 1985, equity investment – that is, the

The combined assets of the world’s 50 largestbanks and financial companies account for 60% ofthe world’s global capital.

In 1970, there were approximately 7,000corporations operating internationally: todaythere are more than 50,000.The top ten UK supermarket companies have anannual turnover equal to the income of thepoorest 35 developing countries.The top UK supermarkets make profits ofbetween £1 million and £2 million a day.It would take a fruit farm worker in South Africa,earning the current daily rate of pay, 15 centuriesto earn the annual £1.2 million salary of a majorUK supermarket chain’s chief executive.

Global reachGlobal reachGlobal reachGlobal reachGlobal reachThe increasing economic powerThe increasing economic powerThe increasing economic powerThe increasing economic powerThe increasing economic power

of the private sectorof the private sectorof the private sectorof the private sectorof the private sector


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purchase of shares in a company – waslargely domestic: by 1994, however, crossborder equity capital flows were running atmore than 1% of total world stock marketcapitalisation. “Twelve years ago,”comments the Financial Times, “just 2 percent of US pension fund portfolios wereinvested in non-domestic equities. By1998, the percentage was 12 per cent.”2 Inthe UK, investments abroad account for

50% of the earnings of thecompanies listed on the StockExchange’s FTSE index.3

Private sector flowsPrivate sector flowsPrivate sector flowsPrivate sector flowsPrivate sector flowsAlthough the bulk of cross-border flows are between therich industrialised countries,the privatisation of stateassets and the (oftenenforced) withdrawal of thestate from infrastructureinvestment in developing

countries and the former Soviet bloc hasencouraged a surge of private investment tothe most profitable sectors of the“emerging markets” in Asia, Latin Americaand Eastern Europe. (Africa has largelybeen sidetracked.)

In the past decade, nearly $2 trillion inprivate capital – as opposed to officialdevelopment aid – has flowed from richerNorthern countries to favoured developingand transition countries in the form ofequity, bond investments and commercialloans.4

PrivatisationPrivatisationPrivatisationPrivatisationPrivatisationPrivatisation – again often a pre-conditionfor further loans to indebted countries –has further fuelled the cross-border flow ofcapital, as previously state-run serviceshave been snapped up by US and WesternEuropean companies seeking to establish apresence in newly-opened markets.5

Increasing interdependenceIncreasing interdependenceIncreasing interdependenceIncreasing interdependenceIncreasing interdependenceGlobal markets have become furtherintertwined by cross-border mergers andacquisitions, which have accelerated ascompanies have sought either to buy uptheir rivals in other countries or to enterinto strategic alliances that will give them astrong global presence in all three ofthe world’s major trading blocks: Asia, the

Americas and Europe.Between 1996 and 1998, more than 20,000new alliances were brokered by companiesworldwide, many of them betweencompetitors.6 Sectoral boundaries havebecome as blurred as the national origins ofmany businesses have been obliterated. In1999, mergers and acquisitions pushed theUK into the lead as the world’s biggestoverseas investor, beating even the US.Total global cross-border investment in1999 was up 25% on 1998’s figure, whichin turn was up 41% on 1997’s.7

New technologyNew technologyNew technologyNew technologyNew technologyAlthough financial markets have a longhistory of cross-border money flows, capitalnow moves around the globe at lightningspeed 24 hours a day.New computer technologies enable almostinstantaneous transfers of money from onemarket to another (and out again) at thetouch of a few keys. Not only has the costof trading plummeted but the new electronicnetworks make it possible to trade aroundthe clock.

TTTTThe social andhe social andhe social andhe social andhe social andenenenenenvirvirvirvirvironmental impactsonmental impactsonmental impactsonmental impactsonmental impactsof globalisationof globalisationof globalisationof globalisationof globalisation

Such economic changes have broughthigh rewards – and risks – for investors:they have also had profound social,environmental and developmentalimpacts.

In both North and South, many hard-wonenvironmental and social legislativegains have fallen foul of new tradeagreements or have been swept away asnational and local governments havecompeted with each other to attractforeign direct investment. Theincreasing mobility of capital has alsoenabled companies to relocateproduction from one country to another(or threaten to do so) in order to exploitlower environmental and labour

Rapid privatisationprogrammes haveoften led to a“fire sale” in whichthe public interesthas lost out.


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Financial markets are wherethose who want moneylink up with those who

have money and who areprepared to make it available –for a future profit.Intervention in this process byseeking to persuade lendersand investors to place theirmoney in one company ratherthan another, or to attachconditions to theirinvestments, is the central aimof most financial marketactivism.Companies are the marketplayers who seek money. Theirprimary funding comes fromtheir “share capital”, also called“equity” or “common stock”(US). The shareholders whobuy the shares own thecompany, elect the directorsand receive a share of theprofits in the form ofdividends.The shares of companies formthe basic raw material of muchof the financial markets. Themost important owners ofshares are the investmentinstitutions, such as pensionfunds and life insurancecompanies (see p.86). Theseinstitutions buy shares forlong-term investmentpurposes, and collectively owna large proportion of theshares of most companies. Thespecific decisions about whichshares to own, and when tobuy and sell them are made byfund managers (see p.97) –organisations and individualsspecialising in equity marketinvestment.Different financial institutionsdeal in company shares.Closest to the stock exchangeare the stock brokers andinvestment banks. Theirsecurities departments tradecompany shares on a short-term basis, helping toestablish the price of theshares. Their analysts researchcompanies, providingcommentary for otherinvestors. Their corporatefinance arms are heavilyinvolved when a company

WWWWWhahahahahat art art art art are financial mare financial mare financial mare financial mare financial markkkkkets?ets?ets?ets?ets?

offers shares for sale to thepublic, or places extra sharesfor sale, or is involved in amerger or acquisition. Thisinvolvement includes:“sponsoring” companies whenthey are first listed on the stockexchange (for example, bybacking their application);marketing the company toinvestors; advising on financingstrategy; and buying shares withthe intention of selling them on.

Public companiesPublic companiesPublic companiesPublic companiesPublic companiesMost large companies are“publicly listed” or “quoted” ona stock exchange. This meansthat:

Their shares can be boughtand sold by the general public(thus they are sometimes called“public companies” – this doesnot mean that they are stateowned).

The price at which theirshares can be bought and soldis changing constantly. In theshort term, the price willdepend on supply and demandfor their shares – if morepeople are buying than selling,then the price will go up, andvice versa. These prices arepublished in newspapers andare posted on the Web.

The companies have toabide by the rules of the stockmarket. Typically this meansthat companies must discloseany information that couldaffect their value so thateveryone can see theinformation at the same timeand no one gets an unfairadvantage.

Companies have to producea detailed annual report andaccounts, as well as interimreports every three or sixmonths.

The company must hold anAnnual General Meeting (AGM)open to shareholders, at whichdirectors are elected, andreports and accounts put to avote. This meeting can be usedas a forum to question the

management of the company.The company can raise

extra finance by issuing extrashares – and can also buy backits shares if it wishes to. While publicly-listed

companies will obtain theircore capital in the form ofshares, they can also raisemoney by borrowing from thebanks, or by issuing bonds (atradable form of a loanwhereby the company agreesto give the buyer of the bonda certain amount of interestevery year, and then repaysthe bond after a specifiednumber of years). These waysof raising capital – known asdebt finance – may createsome additional opportunitiesfor campaigners, butshareholders still have themain power and influence overcompanies.

The publicly-listedcompany is vulnerable totakeovers – if anothercompany or organisation canacquire more than 50% of thecompany’s shares, then it willhave effective control. Again,various stock market rulesgovern this process.

A key time for the company iswhen it is first listed on thestock market – its IPO or InitialPublic Offering (see p.71). Thecompany must obtain approvalfrom the stock exchange tolist its shares and, to do so, itmust publish a full descriptionof the company and itsactivities.

PriPriPriPriPrivvvvvaaaaate companieste companieste companieste companieste companiesNote that most smallcompanies, but also somelarge ones, are privatecompanies – that is, they arenot listed on the stockexchange and their sharescannot be bought and sold bythe general public. This makesit harder to bring influence tobear on them via the market.A number of disreputablelogging companies come intothis category.


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standards and thus boost profitability. Inmany cases, this has led to increased

environmentaldegradation andviolations of humanrights.

Similarly, the rapidprivatisation ofstate entities hasoften led to a “firesale” in which thepublic interest haslost out: in manyinstances, the sell-offs have fuelled

corruption or left poorer peopleexcluded from essential publicservices. The privatisation of naturalresource industries, such as forestry,has often resulted in widespreadenvironmental destruction, not leastbecause privatisation has frequentlybeen accompanied by the dismantling ofstate agencies responsible foroverseeing environmental protection.

The developmental impacts ofincreased trade have also been deeplyuneven. As the United Nations’Development Programme (UNDP)notes in its 1999 Human DevelopmentReport, “The top fifth of the world’speople in the richest countries enjoy82% of the expanding export tradeand 68% of foreign direct investment –the bottom fifth, barely 1%.”8

For 59 countries in sub-Saharan Africaand the ex-Soviet bloc, averageincomes have contracted, whilst thosein Latin America have risen by just 6%during the years of market liberalisation– as against 75% in the 1960s and1970s when the region’s economieswere relatively closed.9 UNDP’sconclusion is stark:

“Economic integration is dividingdeveloping and transition economiesinto those that are benefiting fromglobal opportunities and those that arenot.”10

TTTTThe ghe ghe ghe ghe grrrrrooooowing powing powing powing powing powwwwwer ofer ofer ofer ofer ofthe prithe prithe prithe prithe privvvvvaaaaate sectorte sectorte sectorte sectorte sectorAmong the chief political beneficiariesof globalisation is the private sector.Indeed, the international businesscommunity now enjoys more economicpower than it has done for half a century.Mergers, acquisitions and corporatealliances have led to the emergence ofmega-corporations, many of which haverevenues far in excess of those of manycountries – General Motor’s annualincome, for example, is larger than thatof Denmark and Thailand combined,whilst the sales of the world’s 10biggest companies exceed the combinedGross National Product (GNP) of theworld’s 100 least developed countries –including all countries in Africa.11

Moreover, with the state withdrawing(often under duress and with littleinstitutional ability to stand up for thepublic interest) from infrastructuredevelopment and the provision of manyessential services, the private sectornow plays an increasingly dominant rolein development. In the past,infrastructure projects were largelyplanned and commissioned by publicauthorities and paid for with publicmoney, often in the form of loans fromMultilateral Development Banks(MDBs), such as the World Bank, andother public bodies. Increasingly,however, the MDBs are moving to theprivate sector, with governments actingas facilitators rather than financiers.Instead of funding projects throughstates, the MDBs are now fundingprivate companies directly or providingguarantees on their investments.The change is reflected in the growth ofprivate capital flows to the developingand transition countries. As recently as1992, public financial flows weregreater than private capital flows: by1996, private flows were more than five

With the statewithdrawing frominfrastructuredevelopment, theprivate sector nowplays an increasinglydominant role indevelopment.


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times larger.12 In the mid-1990s, theprivate sector financed about 10-15% ofinfrastructure investments in the ThirdWorld, with the World Bank predictingthat private investors could soon beproviding as much as 70% ofinfrastructure investment. Already,private money funds industrial facilities,mines, dams, ports, toll roads, coal-firedpower plants, nuclear facilities,plantations and dams (see Box, “Projectfinance”, p.20). Many of these projectshave considerable adverse social andenvironmental impacts. Exerting pressureto direct investment towardsenvironmentally-sustainableopportunities, such as mass transport andclean power, is a major challenge facingcampaigners.The growing power of the corporatesector, however, has not been matched byregulatory controls over theirenvironmental and social practices: onthe contrary, in many countries, theprocesses and policies associated withglobalisation and free market reformhave weakened the regulatory capacitiesof state institutions. Similarly, variousattempts to influence the practices oftransnational corporations (TNCs)through UN-instituted Codes of Conducthave been abandoned,13 often underpressure from industry. Indeed,concerned politicians, like manycampaigners, often lack an understandingof how to control and manage the privatesector in a “free market”. They too face achallenge of having to learn new ways ofdefending the public interest.

TTTTThe shifting space fhe shifting space fhe shifting space fhe shifting space fhe shifting space forororororccccchanghanghanghanghangeeeeeIn this respect, GATT and other “freetrade” agreements have dramaticallysqueezed the political space open topublic interest groups pressing forprogressive social and economicinvestment policies. As the free market

agenda has come to dominategovernment policies worldwide, sodemands for interventionist policies (inwhich the government takes action todirect economic activity) areincreasingly rebuffed with the argumentthat stricter controls onindustry would underminethe competitiveness ofcompanies. Many of thetraditional avenues forachieving social andenvironmental reform –namely throughgovernments – have thusbecome less effective, ifnot (temporarily) closedoff entirely. Indeed, manyof the rules agreed underfree trade agreementsprevent states unilaterallyadopting progressivesocial, economic orenvironmental legislation.

The move to the private sector,particularly in infrastructuredevelopment, has also meant thatseveral avenues developed by publicinterest groups to influence the outcomeof projects are less effective than theyused to be. Because the World Bank andother public development agencies areno longer so directly involved ininfrastructure projects, for example, thelinks developed between Southerngroups and Northern non-governmentalgroups (NGOs) to pressure projectdevelopers by lobbying MDBrepresentatives have, in many instances,lost some of their political purchase.

Ordinary people seeking to pressureproject developers to abandondestructive projects or to limit theirnegative impacts are at a furtherdisadvantage since, unlike the MDBs,14

the private sector generally lacks anybinding standards requiring them to takeaccount of the social and environmentalimpacts of investments. Few companiesmonitor such impacts and most lack

“There is no denyingthat multinationals have

contributed to labour,environmental and

human-rights abuses asthey pursue profit

around the globe . . .The global economy isstill pretty much in the

robber-baron age.”Business Business Business Business Business WWWWWeekeekeekeekeek,,,,,

November 2000November 2000November 2000November 2000November 2000


1 81 81 81 81 8

rudimentary environmental “duediligence” procedures.15 (Due diligencerefers to the background research that aprudent investor, lender or companyexecutive might be expected to carryout before making a business decision.)Moreover, even where environmentalrisks are considered, the focus istypically on the risks that theenvironment poses to the investment –rather than the risks that the investmentposes to the environment. The lack ofinternational rules binding companies toact in a socially responsible manner notonly reduces the leverage available toconcerned citizens seeking to exert

pressure on private sector projectdevelopers, it also increases thecompetitive pressures on companies todisregard the impacts of their activities.

LobLobLobLobLobbbbbbying the marying the marying the marying the marying the markkkkkets:ets:ets:ets:ets:A neA neA neA neA new political spacew political spacew political spacew political spacew political spaceOne response to concerns aboutglobalisation has been the flowering ofinternational campaigns to challenge thenew trade rules and to change theframework in which markets operate(see Box, “From Seattle to Prague”,

With the coming intoforce of the 1994GATT agreement and

the establishment in 1995 ofthe World Trade Organisation(WTO), many social move-ments have emerged to pressfor major changes in the“financial architecture” ofworld trade and investment.Spurred by industry andgovernment attempts toliberalise capital flows stillfurther, a broad global allianceof trade unions, developmentgroups, environmentalists,consumer groups and anti-poverty groups are nowdemanding changes to WTOrules that would ensure theright of states to regulateinvestments within their ownborders. In particular,campaigners are seeking newrules that would disallow anytakeovers, mergers,amalgamations or strategicalliances deemed detrimentalto the public interest throughthe increased concentration ofeconomic power in fewer andfewer hands.There is also deepeningsupport for measures to taxspeculative capital flows(short-term, easily withdrawninvestments which entail nocommitment to the hostcountry) and to limit theeconomic power of

Changing the frChanging the frChanging the frChanging the frChanging the frameameameameamewwwwwororororork - Fk - Fk - Fk - Fk - Frrrrrom Seaom Seaom Seaom Seaom Seattle to Prttle to Prttle to Prttle to Prttle to Praaaaagueguegueguegue

transnational corporations. As afirst step to controllingfootloose money, for example,governments are being pressedto adopt the so-called TobinTax (named after Nobel prize-winning economist James Tobinwho first proposed it in 1972),which would tax internationalcapital transactions, raisingconsiderable funds which couldbe invested in a new UN-administered globaldevelopment fund.Regulations are also demandedfor TNCs, a starting point forany new regulatory frameworkbeing the Code of Conduct forTNCs developed under theauspices of the United Nationsin the 1970s – although itshould be stressed that suchCodes of Conduct are notsubstitutes for wider measuresto address the disproportionatepower that TNCs exert in theglobal economy. In addition,activists are pressing for anti-trust legislation (laws intendedto prevent companiesestablishing monopolies) to beintroduced at an internationallevel to prevent the abuse ofcorporate power.

More controversially, at leastfrom the point of view of manySouthern groups andgovernments, which areconcerned that the measures

will be used to close markets tothe South, there are demandsfor a social clause to beincorporated into the WTOwhich would mandate certaindefined labour standards.Infraction of the social clause bya country, according to currentproposals, would lead to tradesanctions against that country,authorised by a joint body ofthe WTO and the InternationalLabour Organisation.At the international level,campaigns by Non-governmental organisationshave successfully highlightedmany adverse social andenvironmental impacts ofglobalisation. Indeed, in thewake of the protests against theWTO in Seattle in 1999 and theIMF and World Bank in Prague in2000, criticisms of globalisationthat were once considered theprovince of radical groups haveentered the mainstream. AsBusiness Week put it shortlyafter the demonstrations inPrague, “There is no denyingthat multinationals havecontributed to labour,environmental and human-rightsabuses as they pursue profitaround the globe . . . Theglobal economy is still prettymuch still in the robber-baronage. If global capitalism’s flawsaren’t addressed, the backlashcould grow more severe.”


1 91 91 91 91 9

p.18). Human rights, environment anddevelopment groups have also beenquick to develop new strategies in orderto influence the social and environmentaloutcomes of private sector developmentprojects and investment, both North andSouth.

One arena where NGOs are provingincreasingly effective at pressing forchange is, ironically, the market itself.Using a variety of tactics – fromconsumer boycotts to shareholderactions – public interest groups havesuccessfully used their power within the

retailmarketand thefinancialmarket tochallengea numberofdamagingprivatesector

projects, or have forced companies totake steps to address issues ranging fromenvironmental degradation to gay rights,from child labour to workers’ rights.Consumer activism within the retailmarket has a long history: boycotts onsugar, for example, were a key feature ofanti-slavery campaigns in the 19thcentury. By contrast, activism withinfinancial markets dates back to the1970s and 1980s, when the anti-apartheid movement developedshareholder campaigns to push forcompanies to disinvest from SouthAfrica. Campaigners have been quick tolearn, however, notching up notablesuccesses. Campaigns directed at majorinstitutional investors – for example,pension funds – have also provedproductive in encouraging somecompanies to move out ofenvironmentally-destructive sectors(such as large-scale hydroelectric dams)or in undermining investor confidence inareas such as genetic engineering (see

Box, “Genetic slump”, p.60).Underpinning such successes are anumber of factors that make the lobbyingof investors and other players in thefinancial markets an increasingly fruitfularena for campaigning. These areconsidered below.

1.1.1.1.1. TTTTThe pohe pohe pohe pohe powwwwwer ofer ofer ofer ofer of the mar the mar the mar the mar the markkkkketetetetetOne reason why campaigners haveturned to the financial markets lies in theimmense power exercised by thefinancial community – from banks toinstitutional investors – over the privatebusiness sector.Financial institutions own most listedcompanies (that is, companies whoseshares are publicly traded on a StockExchange). They can collectivelyappoint the company directors and caneven instruct companies what to do,including requiring them to instituterules that would screen outenvironmentally-destructive projects.They also provide new money, withoutwhich projects and company expansionwould not happen or would be seriouslydelayed.In addition, financial markets (see Box,“What are financial markets?”, p.14)value and price economic activity – forexample, through share prices andinterest rates – effectively determining acompany’s viability. Such pricingsignals also influence and constrain theactions of governments: exchange rates,for example, send a strong signal to agovernment on the merit of its keyeconomic policies, such as publicspending.

Bringing pressure to bear on financialinstitutions and markets can thus have amajor influence over corporatebehaviour, the direction of infrastructuredevelopment, and the environmental andsocial outcome of investments.

2.2.2.2.2. Mar Mar Mar Mar Markkkkkets as “neutrets as “neutrets as “neutrets as “neutrets as “neutral gal gal gal gal grrrrround”ound”ound”ound”ound”There is a widely-held perception

Bonds, securities andderivative options nowmove across the globe atlightning speed, 24 hoursa day.


2 02 02 02 02 0

Project financeProject financeProject financeProject financeProject finance

In the past, infrastructureprojects, particularly in theSouth, were predominantly

financed by governments,with the government taking allthe risks of the project. Inrecent years, the privatesector has increasingly taken amajor role in developing,building, operating andfinancing large infrastructureprojects.Raising the money for privatesector infrastructure projectsis known as “project finance”.Although a relativelyspecialised part of the wholefinancial markets, it can be aparticularly significant part forcampaigners because largeinfrastructure projects can beparticularly controversial andobjectionable.To secure so much borrowing,the value of the project’sassets and the strength of itsrevenue contracts are veryimportant. Generally, these

borrowings are financed on a“non-recourse” basis – thebanks and other investors haveno “recourse” to the sponsor’sassets if the project fails.Common structures of projectownership are “Build-Own-Operate” schemes, under whichthe project developers retainownership of the project, or“Build-Own-Operate-Transfer”schemes, under which the hostgovernment takes over theproject after a specifiednumber of years. Projectsgenerally have a long life span –typically 15-30 years, withreasonably predictable cashflows – the revenues are usuallybacked by strong, long-termcontracts (for example, to buythe electricity generated).Usually a company is especiallycreated to own and manage theproject. This company raisesthe finance as both equity (thatis, shares in the project whichinvestors buy) and through debt

(it borrows money). Equityinvestment can come from thevarious parties involved in thedeal, or from investorsspecialising in project finance,or both.

Investors look for areasonable return on theirinvestment, which reflects therisks of the project (typicallyaround 12-20% per annum).But a notable feature ofproject finance is that asubstantial proportion of thetotal finance is in the form ofloans borrowed from banksand others – between 50% and90% of the total cost.

For further information on projectfinance, we recommend the HarvardBusiness School’s “Project FinancePortal” – it has many usefulbackground documents and links toother useful sites. The portal can beaccessed at www.hbs.edu/www.hbs.edu/www.hbs.edu/www.hbs.edu/www.hbs.edu/projfinportalprojfinportalprojfinportalprojfinportalprojfinportal .

amongst many commentators andpoliticians that markets are politicallyneutral. This can bring addedcredibility to campaigns.When it comes to weighing up the prosand cons of a project or a commercialsector, number crunching, as opposed topolitical ideology or vested interests, isassumed to determine investmentdecisions. By contrast, campaigners areviewed as having axes to grind thatdevalues their objectivity. Theseperceptions are demonstrably false:investors, particularly institutionalinvestors, have as many political biasesas any other interest group, reflected notleast in the information they chose to actupon – but they are nonetheless biasesthat campaigners can use to theiradvantage.

Whereas pickets and protests can beshrugged off by opponents as

politically-motivated theatre, thepuncturing of investor confidence in aproject or sector gives a campaign acredibility in many quarters that mightotherwise be denied. Politicians inparticular find it hard to argue withmarkets: to do so suggests a disregardfor “sound” financial policies andreveals their own biases in a light thatcampaigners can more easily expose,often forcing them onto ground thatNGOs are better equipped to exploit.The rejection of nuclear power by thefinancial markets is a case in point:investors were scared off by the largelyunknown financial liabilities of nuclearaccidents and nuclear waste disposal.

3.3.3.3.3. NGO str NGO str NGO str NGO str NGO strengthsengthsengthsengthsengths,,,,, mar mar mar mar markkkkketetetetetweaknessesweaknessesweaknessesweaknessesweaknesses

NGOs are often strongest in areas wherefinancial institutions are at their weakest


2 12 12 12 12 1

and most vulnerable.

The power of public interest groups liesprimarily in their ability to reflect andinfluence public opinion. Not only dothey have better links to the public thanmany financial institutions, but theirorganisations are also specificallygeared to channelling public opinion inways that will bring maximum pressureto bear on an issue. The Internet andother new technologies havedramatically increased their ability toorganise internationally and to buildcross-sectoral alliances.

Such powers give NGOs several majoradvantages over many financialinstitutions. First, unlike NGOs,financial institutions – particularlyinvestment banks and pension funds –are relatively insulated from publicopinion (except as expressed through thecomputer print-outs that trace sharedealing) and frequently lack the politicalinfrastructure to anticipate and assessconsumer boycotts and otherinterventions that NGOs are well-placedto organise. To date, such boycotts havelargely been aimed at denying markets toretail companies by puncturing demandfor branded products. The recentrejection by consumers in Europe andelsewhere of genetically-engineeredfoods, however, has demonstrated theability of boycott campaigns to influenceinvestments in whole sectors of themarket, not just specific companies orproduct lines. Moreover, as NGOsthemselves have discovered, the sametactics can successfully be brought tobear directly on financial institutions –particularly those, such as commercialbanks and pension funds, which dependfor their business on maintaining theirreputation as a strong and trusted“brand”. The campaign by gay rightsgroups against the Bank of Scotland is acase in point (see Box, “A bankbesieged”, p.25).

Second, the close collaborative links

that NGOs often enjoy with communitygroups, both North and South, grantNGOs a privileged insight into localconditions that is not available to mostfinancial institutions: where localcommunities choose to use NGOcolleagues as a conduit for relayingconcerns to companies and investors,that privileged local knowledgeprovides campaigners with a powerfultool for leveraging companies andinvestors alike. A company’s reputation,for example, is of major concern toinvestors: revelations that a company isinvolved in human rights abuses orcomplicit in degrading the environmentcan knock many millions off the value ofits shares. Yet financial analysts –whose job it is to alert institutionalclients to such threats to share values –generally lack the institutional capacityto undertake detailed research into theday-to-day, on-the-ground operations ofthe companies and projects in whichthey invest, relying instead oninformation garnered almost exclusivelyfrom within the financial sector itself.Companies are often in a similarposition, relying on assurances fromplant managers or suppliers thatpollution permits are being observed orthat working conditions are not inbreach of corporate commitments ornational or international law; they arethus vulnerable to well-documentedcase studies that bring the concerns ofaffected communities to the attention ofanalysts and the general public. As aspokeswoman for Heals, the UKfurniture store, remarked whenconfronted by Greenpeace researchtracing timber sold by Heals to illegallogging operations in the Amazon, “I’mshocked. We don’t want to be involvedin this. Perhaps our due diligence isrubbish.”16 In addition to enablingcampaigners to place direct pressure oncompanies – not least by revealingdeficiencies in their corporategovernance – the passing on of localknowledge to analysts (assuming that


2 22 22 22 22 2

this meets with the approval of partnersin affected communities) can also bringpotential allies within the investmentcommunity, leading to a two-wayexchange of information that can benefitboth parties.

4. Increasing consumer awareness4. Increasing consumer awareness4. Increasing consumer awareness4. Increasing consumer awareness4. Increasing consumer awareness

Consumers are more aware ofenvironmental and social issues – andare increasingly prepared to demand

that they are taken intoaccount in commerce andinvestment.

The free trade agendamay have broughtcompanies and investorsnew markets, but it hasalso spawned a moreactive consumerism.With the governmentincreasingly unwilling to

regulate, says Sheila McKechnie,17

director of the UK Consumers’Association, consumers areincreasingly using their purchasingpower to control corporate behaviourvia the market – a trend also noted bythe Henley Centre, a prestigiousmanagement think-tank.18

According to research conducted by theaccountants PriceWaterhouseCooper,four out of ten people around the worldhad boycotted a company for ethicalreasons during 1999.19 In the UK, thefigure was lower – 3 out of 10 – but asthe Financial Times notes that still“equates to about 12 millionconsumers acting on their concerns”.20

In addition, whilst a majority of thosepolled thought that companies workingin countries with poor human rightsshould use their influence to campaignfor improvement, one in five believedthat the companies should simply refuseto work in such countries.Although such polls should be readwith caution – making a decision topurchase ethically may amount to no

more than, “Mmmm, I’ll give that fairtrade coffee a try to see what all the fussis about” – they point to potential newpolitical space on which to buildcampaigns. Where the actions ofindividual consumers are coordinated –and with the Internet, they increasinglyare – consumers have provedthemselves highly effective atexpressing their opposition to corporatepractices that harm the environment orpeople. It is rare, however, forconsumer action alone – for example,through boycotts – to shift corporatebehaviour. Invariably, other tactics havealso to be brought into play.

Fast food chains, clothes stores, oil, car,agribusiness and constructioncompanies, banks and medical researchlaboratories have all been targeted withconsiderable success. In Europe,concerns over food safety, tropicaldeforestation, child labour and climatechange have prompted consumerboycotts which, combined with otherlobbying efforts, have helped pave theway for bans, policy changes and newlegislation.

Companies which fail to take account ofthis shift towards increasing consumeractivism can find their marketsevaporate and their share pricenosedive. “What we fear most,” a Shellexecutive told a meeting of the Prince ofWales business and environment groupin 1998, “is not new legislation butconsumer revolt.”21

The consumer backlash againstgenetically-engineered foods, forexample, contributed to Monsanto’sshare price plummeting by 11% fromMarch to August 1999: other importantfactors included market fears that thecompany had overstretched itselffinancially through a massive spendingspree buying up competitors.22

“Monsanto massively misconceivedwhat sustainability is all about,” JohnElkington, director of Sustainability, an

Companies are alsofearful of smallinvestors acting as aherd - selling theirshares in a companyall at once because ofadverse publicity .


2 32 32 32 32 3

TTTTTararararargggggetetetetet

Consumer and shareholder activismConsumer and shareholder activismConsumer and shareholder activismConsumer and shareholder activismConsumer and shareholder activism

IssueIssueIssueIssueIssue TTTTTacticsacticsacticsacticsactics ImpactImpactImpactImpactImpact

£402 millionknocked off thebank’s share value.

OutcomeOutcomeOutcomeOutcomeOutcome

Bank announces itwill pull out ofdealBank’s reputationfor taking strongethical positions isseverely dentedBank accepts itwill have to workhard to win backpublic support

Bank entered intodeal with right-wing TV evangelistPat Robertson, avociferousopponent ofwomen’s and gayrights.

Bank ofBank ofBank ofBank ofBank ofScotlandScotlandScotlandScotlandScotland

Pickets at bank’sheadquarters.Protests fromchurches.Consumer boycottof Bank ofScotland.

Unions recognisedin return for anend to theEuropeancampaign againstthe company

Non-recognitionof union rights incompany’s CostaRican fruitplantations.

HuntingdonHuntingdonHuntingdonHuntingdonHuntingdonLife SciencesLife SciencesLife SciencesLife SciencesLife Sciences

Del MonteDel MonteDel MonteDel MonteDel Monte Consumerprotests, includingdumping ofbananas outsideUK headquarters.

Publicembarrassment.

B PB PB PB PB P Proposed drillingoperations inAlaskan naturereserve.

AGM resolutioncalling for end toAlaskan operationand move awayfrom oilproduction toalternatives.

Resolution wonsupport of 13% ofshareholders.

Major “wake-upcall” to financialinstitutions:power ofenvironmentallymotivatedresolutionsdemonstrated

Europe’s largestcontract medicalresearch company.

Accusations ofanimal cruelty.

Protests outsidelaboratory.Picketing ofhouses of majorshareholders andcompany analysts.

Shares plummetedwhen fundmanagers Phillips& Drew sold its11% stake.Trading in sharessuspended in1998.

Company CEOadmits campaign“almost succeededin company’sdestruction”

LehmanLehmanLehmanLehmanLehmanBrothersBrothersBrothersBrothersBrothersMorganMorganMorganMorganMorganStanley DeanStanley DeanStanley DeanStanley DeanStanley DeanWitterWitterWitterWitterWitterJ.P. MorganJ.P. MorganJ.P. MorganJ.P. MorganJ.P. MorganBankAmericaBankAmericaBankAmericaBankAmericaBankAmericaSmith BarneySmith BarneySmith BarneySmith BarneySmith BarneyCredit SuisseCredit SuisseCredit SuisseCredit SuisseCredit SuisseFirst BostonFirst BostonFirst BostonFirst BostonFirst Boston

Three Gorges Damin China. The damwill forceresettlement of1.2-1.9 millionpeople and causemajorenvironmentaldamage.All five banks hadsponsored bondsthat would havesupported thedam.

Letter writing bymajor USenvironmentalgroups.Shareholder lobbyagainst banks.Boycott of DeanWitter’s “Discover”credit card.

Campaigncontinues

Premier OilPremier OilPremier OilPremier OilPremier Oil Oil operations inBurma. Accused ofbenefiting fromslave labour.

Protests andshareholderlobbying atPremier’s AGM.

Some of thebanks havebecome morecautious aboutrisking theirreputation on theproject

Executivesforced to defendtheir position atAGM.

Companycriticised publiclyby UKgovernment


2 42 42 42 42 4

environmental consultancy, recentlytold Green Futures. “Corporations andfinancial institutions are now havingto learn fast. And it’s this which hasthe potential to profoundly reshapemarkets.” 23

5. Globalisation and increased5. Globalisation and increased5. Globalisation and increased5. Globalisation and increased5. Globalisation and increasedcorcorcorcorcorporporporporporaaaaate vulnerte vulnerte vulnerte vulnerte vulneraaaaabilitybilitybilitybilitybility

Globalisation and new technologieshave made companiesmore vulnerable toorganised consumerprotest.

With the growth of theInternet, business isfinding it harder tohide its failings froma public that isincreasingly willingto act againstcompanies that

violate ethical standards or threaten theenvironment. Moreover, the very globalinter-connectedness of companiesmeans that a consumer backlash in onepart of the world can be difficult tocontain. Lean production strategieshave also made companies morevulnerable: the more global companiesare in their operations, the more localoutsourcing operations there are to “gowrong”, sparking possible consumerrevolts in local markets globally.

“If there’s a problem in a company’sglobal supply chain, all it takes is onemodem in Indonesia to alert the worldabout it”, says Aron Cramer, vicepresident of San Francisco’s Businessfor Social Responsibility, whichadvises Gap, General Motors and othercompanies on their practices abroad.“People’s expectations of the socialand environmental role of businesseshave absolutely changed in the pastfive years.” 24

That view is echoed by Rushworth

Kidder, president of the US-basedInstitute for Global Ethics:“Increasingly there is no place to hide.What I see happening, especially in theUS, is that every company that has anykind of international activity hasattracted around its periphery a bunchof web sites devoted to exposingeverything this company does.” 25

According to a survey undertaken by theUK’s Ashridge Centre for Business andSociety, a sizeable number of companieshave already responded to suchpressures in their investment decisions.The survey found that 36% of theworld’s 500 biggest companies hadabandoned a proposed investment out ofconcern for human rights issues, whilst19% had disinvested from a country onhuman rights grounds.26

6. The rise of ethical6. The rise of ethical6. The rise of ethical6. The rise of ethical6. The rise of ethicalshareholdingshareholdingshareholdingshareholdingshareholdingNew patterns of share ownership arebringing new ethical concerns to themarket.

Consumer-driven pressure for change oncompanies is mirrored within theinvestment community, as changingpatterns of share ownership giveconcerned investors a more prominentplace in the markets. Although thecontrol of some assets – for example,stocks and bonds – remain concentratedin relatively few hands, an increasingnumber of people in industrialisedcountries own shares. In the US, nearlyhalf of all households own sharesdirectly or indirectly, through mutualfunds or pension plans, a greaterproportion than at any time in history:the percentage of families with somestake in the market rose from 31.6% in1989 to 48.8% in 1998.27

Small investors acting alone may carrylittle clout in the boardroom. Bycontrast, the big institutional investors,such as pension funds, in which manyindividuals have a stake as pension

In the UK, according torecent polls, three-quarters of occupationalpension holders wantedpension funds to use theirinfluence to encouragesocially responsiblebehaviour by companies.


2 52 52 52 52 5

It seemed a deal made inheaven. Scotland’s biggestbank, the Bank of Scotland,

wanted to establish itself inthe US. To do so, it teamedup in 1999 with US televisionevangelist Pat Robertson toform an on-line bankingoperation that would bepromoted via Robertson’s 1.8million-strong ChristianCoalition network. For thebank, the deal seemed tooffer the opportunity toestablish a market at virtuallyno cost.Bank of Scotland customers,however, were shocked at thedeal. Robertson is known forhis extreme right-wing, anti-women and anti-gay views.“Many of those peopleinvolved with Hitler weresatanists”, he has said. “Manyof them were homosexuals.The two things seem to gotogether.” Women have alsocome in for abuse: “ThatNational Organisation forWomen is saying that, in orderto be a woman, you have tobe a lesbian.” “The feministagenda”, Robertson wrote in1992, “is a socialist, anti-family, political movementthat encourages women toleave their husbands, kill theirchildren, practice witchcraft,destroy capitalism andbecome lesbians.”Gay rights groups respondedby urging a boycott of thebank. Students and tradeunions also rallied against the

deal: Edinburgh UniversityStudents’ Association, whoseannual turnover is some £7million, anounced that it wasconsidering withdrawing itsaccount from the bank, whilethe Scottish Trade UnionCongress threatened towithdraw the business of100,000 members who held aBank of Scotland affinity card.The ecumenical “Action forChurches Together in Scotland”also said it was consideringwithdrawal, stating thatRobertson stood for everythingits member churches wereagainst.Others who did not holdaccounts with the bank alsofound ways to bring pressure tobear. Edinburgh City Councilwrote to the bank, deploring itsactions: “People do not wantthe name of a major Scottishinstitution associated with thepolitics of bigotry”, said Councilleader Keith Geddes. Across theborder, Duncan Lustig-Prean, aLondon-based property firm,informed legal firms that thecompany would refuse to assigncertificates of consent totransfer where a Bank ofScotland mortgage wasinvolved.Ethical investors, charities withcredit card ties with the bankand ordinary Bank of Scotlandcustomers joined the campaign,selling shares, withdrawinginvestments and closing savingaccounts. The Edinburgh-basedEthical Investment Co-Operative

A bank besieA bank besieA bank besieA bank besieA bank besieggggged - Consumer poed - Consumer poed - Consumer poed - Consumer poed - Consumer powwwwwer aer aer aer aer agggggainst bigainst bigainst bigainst bigainst bigotrotrotrotrotryyyyy

sold its shares in the bank,which had previously enjoyeda favourable rating amongstsocially-responsible investors,while stockbrokers Rathboneannounced that they wouldsell their holdings if the bankresponded to its concernswith “purely commercialjustifications”.As the boycott began to bite,the bank’s share price rapidlytumbled, falling 10 per cent.The crunch came whenRobertson himself respondedto critics by lambastingScotland for “tolerating”homosexuals.The ensuing outcry intensifiedthe campaign, forcing thebank to announce that it wasscuppering the deal. By thetime of the withdrawal, over500 customers had movedtheir accounts.The bank’s board survived aheated Annual GeneralMeeting, held just weeks afterthe announcement of thewithdrawal. But the company’sreputation was severelydented by the proposed deal.Many analysts argue thatrestoring that reputation willtake intense effort.SourcesSourcesSourcesSourcesSourcesMarshall, A. and Collier, A., “OneHell of a Deal”, The Independent,14 April 1999; Levene, T., “Revoltspreads over TV preacher”, TheGuardian, 27 March 1999; Braid, M.,“Gay Jibe may lead to bankboycott”, The Independent, 3 June1999.

holders, yield a stick hefty enough tochange company policy. When united,small investors may also yield aninfluence that is disproportionate to theirnumbers: a case in point is the “GasGreed” campaign, organised byProfessor Jo Lamb from Glasgow,which mobilised a substantial number ofsmall shareholders to support aresolution challenging pay awards to theexecutives of British Gas in the mid-1990s.Companies are also fearful of small

investors acting as a herd – disinvestingrapidly from one sector because ofadverse publicity or a sudden volatilityin the market.Unsurprisingly, the major financialinstitutions are increasingly preoccupiedwith the state of mind, behaviour andeven the identity of the average US retailinvestor. One consistent finding ofresearch aimed at gauging the behaviourof today’s investors is a concern for theenvironmental impacts of theirinvestments.


2 62 62 62 62 6

In the UK, for example, a NationalOpinion Poll survey conducted inAugust 2000 revealed that three-quarters of occupational pensionholders want pension funds to use theirinfluence to encourage sociallyresponsible behaviour by companies.28

One-third of those interviewed wereprepared to accept such investmentseven if they damaged their pension’sfinancial performance.

Although such findings have yet to worktheir way into mainstream investmentpractice amongst pension fundmanagers – and are resisted by many –they provide strong evidence of ademand for socially responsibleinvestment. Indeed, the value of theUK’s 44 ethical investments haveexploded from almost nothing in 1980to more than £2.8 billion in 2000.29

This compares with only £370 millionin 1992 – and represents a rise of 35%over 1999, according to the Co-Operative Insurance Society.30 Studiesby Bank Sarasin, an investmentmanagement company, conclude thatreturns from such investments are “atleast comparable with those of moretraditional equity investment”.31 Manyanalysts confidently predict ethicalinvestments to triple again by 2005.

Shareholder actions demandingcorporate responsibility are also on therise. In the US, shareholder resolutionscalling for companies to address socialand environmental criteria doubled inthe early 1990s, reaching 300 by1996.32 The value of the investmentscontrolled by investors who have filedsuch resolutions (or supported them)has also grown – from $473 billion in1995 to $736 billion in 1997.

Although covering only a minusculefraction of the investments madeglobally every year – and just 1% oftotal unit trust investment in the UK –such trends suggest fertile ground onwhich campaigners can work to press

pension funds and other institutionalinvestors (such as insurance companiesand unit trusts) to change theirinvestment policies.

7. Changing institutional cultures7. Changing institutional cultures7. Changing institutional cultures7. Changing institutional cultures7. Changing institutional cultures

The institutional culture within financialmarkets is changing and there is morewillingness to embrace environmentaland social concerns.

The business of financial institutions isto make money. Nonetheless, the majorplayers in the financial markets are wellaware that the business of making moneyhas its social and political limits: stretchthose limits too far and the institutions ofmoney-making become vulnerable to apublic backlash that can threaten theirvery existence. When popular uneaseover particular institutional practicesbecomes sufficiently vocal andwidespread, financial institutions havehistorically shown themselves willing tochange in order to survive.

Having long ignored environmental andsocial considerations in theirinvestments, there are signs thatcompanies and institutional investorsare beginning to respond to growingpublic concern over environmentallydamaging and socially oppressiveinvestment. The protests against theWorld Trade Organisation (WTO) inSeattle in 1999 – when demonstratorsseverely disrupted negotiations for anew round of trade liberalisation – mayhave been “perplexing” to the businesscommunity but nonetheless promptedmany business executives to reworktheir approach to globalisation.

Discussions of the backlash againstglobalisation are no longer confined towhispered coffee-break conversationsin business seminars: whole sessionsare now devoted to the implications of“Seattle” for future business strategy. AsBusiness Week recently commented:“Many of the radicals leading the


2 72 72 72 72 7

In February 2000, shares inHuntingdon Life Sciences(HLS), Europe’s largest

contract medical researchlaboratory, plummeted afterinstitutional investors weretargeted by animal rights’campaigners angered by thecompany’s cruelty to animals.The collapse began when fundmanagers Phillips and Drew,the company’s biggestinstitutional investor, decidedto sell its 11% stake in thecompany. Other investorsquickly followed, halving HLS’sshare price in just one day.Subsequently, the Royal Bankof Scotland announced that itwas pulling the plug on HLS’bank overdraft. Germany’sbanking group, WestLBPanmure, also severed its tieswith the company, resigning asHLS’s broker in June 2000.

PPPPPererererersuasion orsuasion orsuasion orsuasion orsuasion orintimidation?intimidation?intimidation?intimidation?intimidation?

As a campaign, the HLS actionachieved its aim of deterringinvestors – at least in theshort-term. But the tacticsused by the campaign havecaused considerablecontroversy, not least amongstother pressure groups.A key feature of the campaignwas the direct targeting ofindividual shareholders andfund managers by directactivists. In most instances, thistook the form of peacefulprotest: the British Union forthe Abolition of VivisectionReform Group, for example,wrote to 1,700 investors inHLS, letting them know thatunless they sold their shareswithin a week, they would bevisited by demonstrators.Several hundred investors soldup: many of them had beenunaware of HLS’s use ofanimals in research and wereshocked to learn of itsactivities.

Huntingdon Life SciencesHuntingdon Life SciencesHuntingdon Life SciencesHuntingdon Life SciencesHuntingdon Life Sciences

“Naming and shaming” on dangerous new ground“Naming and shaming” on dangerous new ground“Naming and shaming” on dangerous new ground“Naming and shaming” on dangerous new ground“Naming and shaming” on dangerous new ground

But the HLS campaign has alsobeen accused of trying tointimidate shareholders intoselling their shares. Fundmanagers at Phillips and Drewand their clients, whose homeaddresses and telephonenumbers had been published byStop Huntingdon Animal Cruelty(SHAC), received abusivetelephone calls, including deaththreats. The Phillips and Drewbuilding had to be evacuatedfollowing hoax bomb calls.SHAC denied that the calls hadbeen made by its members, butdid not condemn the practice.“We condemn terrorism. But abomb hoax is not terrorism.”

Naming and shamingNaming and shamingNaming and shamingNaming and shamingNaming and shaming

As John Vidal, environmentaleditor of The Guardian, notes, itwas probably inevitable thatfund managers would sooner orlater be targeted personally bydirect action groups. Not onlydo they constitute “one weaklink in the chain betweencompanies and unethicalbehaviour” but, equallyimportant, “there are very fewpeople involved” – just 30individual fund managerscontrol hundreds of billions ofpounds worth of investment.“Naming and shaming” is acampaign tactic that has a longand effective history: indeed, itis generally an essentialprerequisite of most successfulcampaigns. Without naming thecompanies involved in, say, adestructive project, there islittle prospect of putting publicpressure on them to withdrawfrom the project or to changeits direction. Likewise, withoutthe names of institutionalinvestors that are backing suchcompanies, would-be ethicalinvestors are denied theinformation that would enablethem to act on theirinvestments.There is a strong case, too, forcampaign tactics that make

private investors – anddirectors of companies –personally aware of theimpacts of their investments.As John Vidal reports, “In theUS, the head of a largeJapanese corporation whichwas responsible for muchdeforestation in the Far Eastwas reportedly so shockedabout the scale of what hiscompany was doing that heimmediately changed thepolicy.”

Dangerous groundDangerous groundDangerous groundDangerous groundDangerous ground

But in crossing the linebetween “public” and“private”, the “naming andshaming” of individuals ratherthan institutions courts adangerous politics. Instead ofprotest being a means ofengaged persuasion, it canrapidly descend into theintimidatory intolerance ofthe lynch mob. A letter to oneHLS employee, for example,read: “Do you want a petrolbomb shoved through yourletter box? Do you want tohave the living shit kicked outof you? If the answer to thesequestions is ‘no’, you hadbetter quit HLS.”Such intimidation “works”precisely because it affectsnot only the targetedindividuals but others in theirimmediate circle: children,neighbours, relatives are allimpacted – even though theyhave no involvement in theactivities being challenged. Inthe process, opportunities fordebate and reasoning areclosed down. Fear becomesthe basis for action – anddemocracy loses out.Focusing on individuals ratherthan institutions also runs therisk of trivialising the issue.HLS does not abuse animalsbecause its directors aredepraved: it abuses animalsbecause there are noinstitutional rules to prevent it


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protests may be on the political fringe.But they have helped to kick-start aprofound rethinking aboutglobalisation amongst governments,mainstream economists andcorporations that, until recently, wascarried on mostly in obscure thinktanks and academic seminars. Thisassessment is badly overdue.”33

Internally, too, companies and financialinstitutions are facing pressures to takeon board environmental and socialissues in their investments. No one likesto be employed by a company that isviewed by the public as a pariah.

“The desire to be part of the solutionrather than part of the problem is apowerful incentive for change”, saysone business executive in a majormining corporation. “One is used totaking flak from activists. It is adifferent matter when one’s ownchildren start badgering you overbreakfast, lunch and dinner.”34

from doing so, manyconditions that justify makingmoney out of the practice,and a wider culture that tacitlyapproves. Bringing in newrules that would change theframework in whichcompanies and investorsoperate requires campaignsthat seek to change not onlypersonal behaviour but alsonational laws and theinstitutional culture offinancial and otherinstitutions. Tactics that leadto socially responsibleinvestment being identifiedwith extremism are, at best,unhelpful to such efforts, atworst, counter-productive.Not only do they scare offpotential allies within financialinstitutions; they also justifyresistance by the old financialguard.

UnderUnderUnderUnderUndermining othermining othermining othermining othermining othercampaignscampaignscampaignscampaignscampaignsNon-violent direct action,which uses the theatre of

dissent in innovative ways toattract attention to a cause anddraw in support, has longproved its effectiveness as atool for change.But where direct actionencourages violence – or iseffective only because it isviolent – it is invariably sociallyregressive, not least because itinvites repressive responseswhich close down the space forpeaceful democratic protest. Inthe wake of the HLS campaign,for example, thepharmaceutical industry calledfor new legislation to clampdown on what it called“economic terrorism”. HLS itselfhas written to Prime MinisterTony Blair urging him to bring“extremist animal rights groups”within the remit of terroristlegislation. Company law mayalso be changed to make itmuch harder to obtaininformation about shareholdersand directors, which wouldaffect all shareholdercampaigns.There is also a real possibility

that, as a result of thecampaign, Huntingdon willrelocate overseas or goprivate in order to hide itsactivities more easily frompublic scrutiny. Alternatively,overseas or private investorsmay pick up Huntingdon’sbusiness, leaving animals nobetter off, and, indeed,possibly in the hands of evenworse companies.The lesson from HLS may notbe that direct action achieveswhat “moderates” have failedto achieve through lessconfrontational means, butthat violence usually tends inthe end to support the statusquo.SourcesSourcesSourcesSourcesSourcesVidal, J., “Cents and Sensibility”,The Guardian, 15 February 2000:Vidal, J., “This time it’s personal”,The Guardian, 12 April 2000: Ward,A., “Institutional investorscriticised for caving in to animalrights group”, Financial Times, 14February 2000: Ward, A., “Howanimal rights group hit company inthe pocket”, Financial Times, 14February 2000

Moreover, for a younger generation ofmiddle managers, environmentalconcerns (albeit of a “light green”variety) are increasingly accepted aspart of everyday culture. Whereas adecade ago, ethical investment staffwere seen by City institutions as “lowlycheap staff to stick in a back room outof the way”35 – and raising questionsabout the environmental and socialimpacts of an investment spelled exilefrom the fast track – today, ethicalinvesting is no longer the barrier that itonce was to career prospects, and mayeven enhance them.Such internal cultural change has yet totranslate into significant change on thetrading floor: with the exception of thesmall but fast-growing “sociallyresponsible” investment market, globalinvestors still reward unsustainabledevelopment.36 As one shareholder inTotal-Fina, a major oil company,reportedly shouted to protesters at thecompany’s AGM in Paris, “We don’t


2 92 92 92 92 9

give a damn about human rights inBurma, we’re shareholders.” Butinternal dissent within the investmentcommunity does provide a platform uponwhich sympathetic insiders can build.51

Some progress is already apparent:although the vast majority of Cityanalysts (see p.80) still show a machodisdain for environmental and humanrights concerns, recent MORI researchindicates that even this may be changing.A 1997 poll, for example, revealed thatone in three analysts and institutionalinvestors now believe that a company’scontribution to society and thecommunities in which it operates affectsits financial performance.37 Almost halfof the institutional investors polled – and38% of analysts – also stated thatknowing about a company’s contributionto society and the community affectedtheir opinion of it.

As for the companies themselves, asurvey commissioned by Control Risks,the London-based international businessrisk consultancy, found that 71% ofbusinesses believe social and ethicalfactors have become a more importantpart of their agenda over the past fiveyears. At the same time, 77% say theybelieve that such factors will be even moreimportant over the next five years.38

8.8.8.8.8. Ne Ne Ne Ne New rw rw rw rw reeeeegulagulagulagulagulatortortortortory measury measury measury measury measureseseseses

New regulatory measures havestrengthened the hand of NGOs inpushing for environmental and socialconsiderations to be taken into accountin investment decisions.

In the UK, new regulations introduced aspart of package of reforms to regulatepension funds substantially redefine theframework in which investors willoperate in the future. The regulationsreflect growing concern amongst pensionholders as to how their pensions arebeing invested.

As Stephen Timms, the then PensionsMinister, told Pensions Week in July1999: “The issues that (the sociallyresponsible investment movement)raise cannot be ignored in a world inwhich ordinary people, many of whomwill be members of occupationalpension schemes, are becomingincreasingly concerned about theconduct of companies and the ways inwhich investments are made on theirbehalf. People want to know how theirsavings are applied, and I think theyare right to do so.”39

From July 2000, pension funds havebeen legally required to state:

“The extent (if at all) to which social,environmental or ethical considerationsare taken into account in the selection,retention and realisation of investments;and their policy (if any) directing theexercise of rights (including votingrights) attaching to investments.” 40

The new measures do not oblige pensionfunds to operate an ethical investmentpolicy, but they do place fund managersunder increased pressure to do so.Comments Matthew Harragin, theethical investment director atstockbrokers Rathbones:

“The ethical dimension now has to bediscussed, and once it is officially onthe agenda, it is far harder to ignore.Pension trustees who go hell for leatherfor companies causing pollution orselling arms to all and sundry may havesome explaining to do.” 41

Given that pension funds together withinsurance companies currently ownmore than half of all UK shares in termsof value, the potential implications forsocially responsible investment (SRI)are profound. As Green Futures, abusiness and environment magazine,notes pension funds and insurancecompanies have:

“a key role in making environmentalissues a mainstream investmentconsideration. Both have liabilities thatare very long-term in nature, so theyshould have a strong interest in long-


3 03 03 03 03 0

Many financial marketcampaigns arise out oflocal community

opposition to specific projectsor out of the experiences ofoppressed groups, such aswomen and minorities.Where groups opt to lobbyinvestors, it is important thatthe campaign remains firmlyrooted in the concerns andpolitical realities of those it isintended to support. Becausefinancial market campaignsinvolve institutions that are farremoved from the localcommunity, the risk ofmetropolitan NGOssubstituting their own agendaand voice for that of affectedcommunities is particularlyacute. Conflicting agendas canquickly emerge that can doconsiderable damage tomovement building at boththe local and global levels.One area of potential conflictlies in the pressure thatfinancial market campaignsgenerate to “engage” withcompanies. Indeed, forcing acompany to negotiate is oftena prime aim of campaigns.Certainly, institutionalinvestors are unlikely tosupport you unless they havediscussed the issue with thecompany and satisfiedthemselves that the companyhas a case to answer. Localcommunities, however, maybe actively opposed to“dialogue” – either becausethey have already tried thisavenue without success orbecause engagement does notfit their political strategy.In such circumstances, a keymaxim for campaigners is:“First, do no harm”. It is criticalthat conflicting agendas arefully discussed prior tolaunching a financial marketcampaign. Where a resolutionacceptable to local activists isimpossible, a financial marketcampaign should be rejected.Past campaigns suggest otherimportant lessons that NGOs

FirFirFirFirFirst,st,st,st,st, do no har do no har do no har do no har do no harm!m!m!m!m!ConfConfConfConfConf licting alicting alicting alicting alicting agggggendas and financial marendas and financial marendas and financial marendas and financial marendas and financial markkkkket campaignset campaignset campaignset campaignset campaigns

embarking on financial marketcampaigns should take intoaccount:

Ensure that affected peoplemaintain the initiative.Although cultural traditions ofadvocacy and support workvary widely around the globe,ensuring a democratic andmutually accountablerelationship between NGOs andaffected groups is vital tomaintaining trust and goodcommunications.

Maintain a long-termengagement.Staff turnover in NGOs is highand the focus of their work isoften driven by donor fashions.Many projects which localcommunities seek help inopposing, however, requirelong-term campaign work.

Campaigning techniquesCampaigning techniquesCampaigning techniquesCampaigning techniquesCampaigning techniquesAs well as ensuring that yourcampaign does not undermineyour partners’ campaignstrategy, bear in mind that thepolitical space that is openingup within financial Institutionsthemselves is often fragile. Abadly-constructed campaignmay not only achieve little inthe way of tangible results foryourself but may also damagethe potential for others tocampaign within the markets.Aggressive and intimidatorycampaign tactics can becounterproductive. You mayachieve some headlines but youcould also inhibit broaderchange. Not only are you likelyto confirm the financial world’sworst image of campaigners,but you could also legitimisethe introduction of legislationthat makes future actionharder, not easier.

WWWWWho to tarho to tarho to tarho to tarho to targggggetetetetetWhile it can sometimes bejustified to target moreprogressive companies andfinancial institutions, this needs

to be handled with care. Ifcompanies that are relativelyprogressive are targeted, thenpoorer performers will feellittle incentive to change – andmay even feel a strategy ofdenial is more appropriate.Just to argue that a relativelyprogressive company is likelyto respond is not a goodenough reason for targetingthem. A campaign agendadriven by “Who is a convenientcompany or shareholder totarget?” rather than “Who isignoring the issue? Whodeserves to be targeted?” isunhelpful in developingpolitical space for futurecampaigns. It may evendamage your credibility.In general, companies aremore likely to respond topressure to improve theirenvironmental and socialperformance if they feel thatcampaigners will target poorperformers, rather than theleaders in the field. Thisapplies particularly whentargeting financial institutions.Here the case for socialresponsibility is even lesswidely accepted that amongmany companies. Targetingthe leaders is likely to deterothers from taking social andenvironmental issues seriously.

Know when to stopKnow when to stopKnow when to stopKnow when to stopKnow when to stop

Even in a successful campaign,you may well reach a pointwhere the targetedinstitutions, having previouslyresponded positively to yourlobbying, become less willingto listen to you. This may bebecause of obstinacy on theirpart, but, equally, it maybecause they have reached thelimits of what they can do.Listen carefully to what theinvestors are saying and try toput yourself in their shoes. Arethey blocking you? Or do theyhave a point? You may havereached the point where it istime to try another approach.


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term market performance. And this iseven more so given that they havesubstantial assets invested in indexfunds, which ‘locks them into’ theirshareholdings.”42

A further regulatory shift in favour ofSRI campaigns comes in the form of anew code of practice issued by theInstitute of Chartered Accountants ofEngland and Wales in 1999.43 Known asthe Turnbull Committee on InternalControls after its chair, a formerfinancial director of the RankCorporation, Nigel Turnbull, the codeupdates previous advice to companydirectors on the measures they shouldadopt to ensure that shareholders’investments and company assets areproperly safeguarded. Although the codeis not legally-binding on companies, ithas the backing of the Stock Exchange,giving it semi-legal status. Any companywishing to list itself on the StockExchange now has to abide by the code.

Under the new Turnbull rules, companydirectors in listed companies areobliged to take account of all“significant risks” which could damagethe company. And for the first time in adocument of this kind, the code listsenvironmental and social risks – inaddition to strictly financial ones –among those that must be taken intoaccount. Moreover, the code requiresthat directors put in place internalcontrols to manage these risks andreview them regularly to ensure theireffectiveness. Directors are alsorequired to identify these risks in thecompany’s annual report and to describethe measures taken to address them.44

Publicly-listed companies had to complywith the new code by the end of 2000.Senior industry figures say that theTurnbull code might well trigger a quietrevolution, transforming environmentalreporting from a PR-driven exercise to acorporate governance issue. Withcorporate governance increasingly amajor focus of shareholder concerns –

the UK Shareholders’Association lists it asits primary concern –shareholder resolutionsquestioning acompany’senvironmental impactwill thus have fargreater purchase.New reforms proposedas part of the UKgovernment’s currentCompany Law Reviewmay also increase the pressure oncompanies to reconsider their social andenvironmental practices. Although theReview drew back from an anticipatedrecommendation to make the welfare ofsociety, rather than shareholder value,the overriding business objective ofpublic companies, it nonethelessproposes that directors should berequired to consider the wider socialand long-term implications of theirbusiness decisions.45 It alsorecommends that companies be requiredto report on social and environmentalissues in their annual reports. Althoughthe Review falls far short of what isneeded to make companies moregenerally accountable to society as awhole, it wouldnonetheless createan opening to thelaw to challengecompanies that failto take account ofwider issues intheir businessdecisions.

9. A willingness9. A willingness9. A willingness9. A willingness9. A willingnessto change?to change?to change?to change?to change?

The morepolitically-astutefinancialinstitutions areaware of the need to adapt – and aremoving to get ahead of the game.

“Increasingly there is noplace to hide. Every

company that has anykind of international

activity has attractedaround

its periphery a bunch ofweb sites devoted to

exposing everything thecompany’s does.”

Ruthworth KidderInstitute for Global Ethics

“Give me ten nuttersthrowing eggs at meany time rather than

one institution castingits votes against re-

electing one ofmy directors”UK Company Executive


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The new pension regulations, combinedwith public pressure, have alreadybegun to shift practice within UKpension funds. According to researchby the consultancy EnvironmentalResources Management (ERM), 21 ofthe 25 largest UK pension funds (whichbetween them own one-third of the UK

stock market) areintending to vet atleast part of theirportfolios againstsocially responsibleinvestment (SRI)criteria.46

Four pension funds– including BritishTelecom’s £29billion fund and,following acampaign bystudents, the

university lecturers’ UniversitiesSuperannuation Scheme (USS) – haveannounced that they will apply an SRIpolicy, focusing on engagement, acrosstheir portfolios (see Box, “The ‘Ethicsfor USS’ campaign”, p.100). Stillothers – for example, CGNU’s MorleyFund Management, which controls £200billion worth of funds, Friends Ivoryand Sime and Henderson GlobalInvestors – are taking up a new style ofpro-active shareholding, with fundmanagers using their power as largeshareholders to engage in “constructivedialogue” with companies, pressing forchange from within. If companies fail toaddress the fund managers’ concerns,disinvestment is likely to follow.

Local authorities, which controlsubstantial pension funds, have alsobeen at the forefront of SRI. Evenbefore the new pension laws came intoeffect, Norfolk, Lancashire andNottingham County Councils haveissued instructions for a portion of theirfunds to be managed on an SRI basis.All told, the value of UK investmentnow subject to some form of social and

environmental scrutiny has mushroomedfrom £3 billion a few years ago to £500billion today. 47

Increasingly, fund managers notpreviously part of the SRI movement arebecoming involved. Societe GeneralAsset Management (with £120 billion)and Schroders Investment Management(£120 billion), for example, aredeveloping their own SRI policies.Moreover, as Giles Chitty, a consultantwith financial advisers Holden Meehan,notes, “The nature of SRI has changed.Research has become wider in scope,deeper in penetration and better atidentifying themes, which helps makeinvestment policy more strategic andfocuses the search for suitableinvestment.” 48

A number of institutional investors – theJupiter Ecology Ecology Fund and NPI’sGlobal Care Fund, managed byHenderson Global Investors, are twoexamples – are now moving beyondscreening out “bad” companies toselecting shares in companies that arebest in their sector when measuredagainst specific social andenvironmental criteria.

The extent to which such policies aretransforming financial institutions shouldnot be exaggerated, however. For themost part, profit is still all that countswith the vast majority of institutionalinvestors. ERM’s survey, for example,revealed that many funds do not have thespecialist staff to undertake thepromised SRI policies – and that “whenquestioned further about what theirpolicy of engagement means, many ofthem didn’t know.” 49

Rob Harrison from Corporate Critic, abusiness ethics website, is still moresceptical. “When the regulation wasfirst being discussed with both anegative screening and engagementcomponent, the pension industry waspredicting, among other things, thecollapse of the arms and tobacco

For a youngergeneration of middlemanagers,environmentalconcerns (albeit of a“light green” variety)are increasinglyaccepted as part oftheir everyday culture.


3 33 33 33 33 3

The impact of shareholder activismThe impact of shareholder activismThe impact of shareholder activismThe impact of shareholder activismThe impact of shareholder activismThe US experienceThe US experienceThe US experienceThe US experienceThe US experience

Historically, so-called“social resolutions,” suchas shareholder proposals

on environmental, humanrights, worker and socialissues, have never achieved a“technical win” at anycompany. This means that nocompany has ever been forcedto take action because a socialresolution has received amajority vote. The lack oftechnical wins has led somecritics to argue thatshareholder power cannoteffectively influence corporatesocial behaviour.However, the ultimate impactof shareholder activism may bedifficult to determine, ascompanies may make changesas a result of shareholderresolutions or dialogue, yetnot publicly cite shareholderconcern and pressure as partof the impetus for makingsuch changes. For example,shareholder concerns andactivity played a part indismantling apartheid in SouthAfrica through disinvestment.It also helped persuadeMcDonald’s to phase out theuse of polystyrene packaging.More recently, shareholdershave contributed to publicpressure on Home Depot tophase out wood sourced fromenvironmentally-sensitiveareas, and for the Maxxam

Corporation to include moreenvironmentally and sociallyconscious board members. InDecember of 1999, after yearsof shareholder dialogue andwith new corporate leadership,Ford announced that it wouldpull out of the Global ClimateCoalition, an industry lobbygroup opposed to cuttingcarbon dioxide emissions.But even when shareholderactivity does not produceimmediate results, the actionsof concerned and vocalshareholders are an importanttool for social change: First,when shareholderscommunicate their values andconcerns to the companies theyown, they exercise ownershipresponsibility, one of their mostimportant rights and avenuestoward making companies moreaccountable. When investorsexpress their social as well asfinancial goals, they help makeWall Street or the City moredemocratic and responsive tosocietal concerns.Second, experience andevidence shows that sustained,strategic shareholder activismhas helped social investors meettheir goal of influencingcorporate culture and socialperformance. Building asustained campaign means thatinvestor activists must have astrategy beyond simply filing

resolutions. Experiencedshareholder activists viewfiling resolutions akin toringing a doorbell: when youfile a proposal, the companycomes to the door. Once thedoor is opened, theshareholder begins oraccelerates a dialogueprocess, which can create anavenue for corporate change.When a social resolutionreceives a significant numberof votes (10% for example),well-governed companiesusually feel the need toaddress the issue at handthrough a dialogue process,which hopefully leads to ameaningful course of action.To build a strategic campaign,one must set realisticobjectives for whatshareholder activism canachieve, and shareinformation with and create/maintain an alliance with socialmovements. Coordination isparticularly important toinform shareholder dialoguesand to keep companies from“dividing and conquering”individual activists throughseparate discussions.

Michelle Chan-FishelReproduced from Friends of theEarth-US, Guide to ShareholderActivism. The Guide can bedownloaded from www.foe.org/www.foe.org/www.foe.org/www.foe.org/www.foe.org/international/shareholderinternational/shareholderinternational/shareholderinternational/shareholderinternational/shareholder.

industries. Since negative screeningwas dropped, the industry now supportsit, as it clearly no longer believes thatengagement alone will changeanything.” 50

Nonetheless, Harrison concedes that thenew regulations are a useful first steptowards reforming corporate behaviour.The commitment to undertake evenminimal screening offers space whichpublic interest groups can usefullyexploit to leverage change, ratchet upstandards and publicise their concerns.

TTTTThe limits ofhe limits ofhe limits ofhe limits ofhe limits ofmarmarmarmarmarkkkkket actiet actiet actiet actiet activismvismvismvismvism

Financial market campaigns have clearlimits – not least because they leaveunchallenged the underlyingfundamentals of the free market agenda.They also pose many dilemmas foractivist groups – to what extent, forexample, do they deflect from efforts toachieve deeper structural change?


3 43 43 43 43 4

There is also a limit to what canactually be achieved through lobbyingfinancial institutions and markets.

First, most companies will not respondunless there is already external orinternal pressure for change. In thatrespect, financial lobbying generallypushes companies in directions inwhich they were already minded to go.

Second, in a globalised world, there isa limit to what even the most successfulcampaign can achieve unlessgovernments and international bodiesare prepared to step in and lay downinternational rules. As Greenpeaceremarks of the campaign for moreresponsible use of timber: “Loggingcompanies may . . . seek to open upmarkets which do not demand greenproducts and they may try tosupplement losses made by increasinglogging rates. This also happens. It isalso the point where the influence ofwood users reaches its limits and theresponsibility of internationalgovernmental bodies and tradefederations is most pressing.”51

That said, lobbying the major players infinancial markets – from banks topension funds and financial analysts –can add to the effectiveness of publicinterest campaigns in a number of ways.

For example:

Campaigns directed againstCampaigns directed againstCampaigns directed againstCampaigns directed againstCampaigns directed againstcompanies can be enhanced by targetingcompanies can be enhanced by targetingcompanies can be enhanced by targetingcompanies can be enhanced by targetingcompanies can be enhanced by targetingsharsharsharsharshareholdereholdereholdereholdereholder sssss.....Many corporate campaigns are oftendirected primarily at consumers, politiciansand the media. If letters are written to thefinancial community, they are generallydirected solely to the company. For a littleextra effort, considerably more pressure canbe exerted by ensuring that the company’smajor shareholders are also kept informedand lobbied. As the chair of one major UKcompany recently remarked: “Sticks andstones may break my bones, butinstitutional shareholders can fire me.Give me ten nutters throwing eggs at meany time rather than one institutioncasting its votes against re-electing one ofmy directors.”52

SharSharSharSharShareholdereholdereholdereholdereholders ars ars ars ars are a lare a lare a lare a lare a largggggelelelelelyyyyydisorganised and untapped constituencydisorganised and untapped constituencydisorganised and untapped constituencydisorganised and untapped constituencydisorganised and untapped constituencythat could prove a potent political forcethat could prove a potent political forcethat could prove a potent political forcethat could prove a potent political forcethat could prove a potent political forcefor progressive social activism.for progressive social activism.for progressive social activism.for progressive social activism.for progressive social activism.Many members of public interest groupsand trade unions are shareholders (via theirpension funds) in major companies withpoor environmental rights records.Mobilised into effective shareholder actiongroups, they could help exert considerablepolitical power within financial markets.

Is a financial campaignIs a financial campaignIs a financial campaignIs a financial campaignIs a financial campaignaaaaapprpprpprpprppropriaopriaopriaopriaopriate fte fte fte fte for yor yor yor yor yourourourourourorororororggggganisaanisaanisaanisaanisation?tion?tion?tion?tion?A campaign targeted at financialinstitutions is just one of many optionsavailable to activists. So the firstdecision that any campaign needs toconsider is whether or not a financialmarkets campaign is even appropriate:other tactics and strategies – such asconsumer boycotts, political lobbying,legal actions or public demonstrations –may be more effective.

Put your own house in orderPut your own house in orderPut your own house in orderPut your own house in orderPut your own house in order

Larger NGOs should be aware of a particularhazard in a financial markets campaign. Youmay be investing in the companies or sectors

you are targeting. This is because you may havesignificant assets in your pension fund, endowmentsor foundations invested in the stock market, andmay be holding shares in those companies you seekto criticise. If the media finds out (and journalistswill look – charities have been criticised on thispoint) you could end up looking foolish. It is easyenough to check first, and to take action to deflectcriticism. Better still, make should such funds havean SRI policy first – perhaps it should be your firststep in financial campaigning.


3 53 53 53 53 5

At this stage, it is critically important toshare ideas and strategies with partnergroups, particularly those at thegrassroots – for example, localcommunity groups or trade unions. Evenif a financial markets campaign is goingto form a small part of your overalllobbying strategy, it may still have majorinstitutional and political implicationsfor the way in which you work. Forexample, financial market campaigns areinevitably focused on players in themarket, which tend to be financialinstitutions in the North; this can lead tograssroots groups (particularly thosedirectly affected by projects) beingexcluded from campaign decision-making, robbing them of the initiative(see Box, “First, do no harm”, p.30).Financial campaigns also tend to go inthe direction of dialogue with partieswith whom many public interest groupshave been at odds: whilst this can openup political space, it can also undermineother strategies being pursued by partnergroups. Keeping others informed of yourthinking – and working through yourmutual concerns – is thus critical.

The following points may help yougauge how useful a financial marketscampaign might be to your work:

Financial markets may be worth

Before finally committing yourself to a financial markets campaign, it is worth asking yourselfsome questions about what a financial markets campaign might mean to your organisation.Have you discussed the implications of the campaign – and in particular of possible engagementwith companies – with your colleagues and partners? Will such engagement undermine theirwork? Will it cut off alliances with other groups?Are you committed to a financial markets campaign and to making it work?Are you prepared to spend the necessary time and money for a successful financial marketscampaign – are there better alternatives?Are you happy with the less confrontational approach that successful financial marketcampaigning entails?What will be the implications internally among your employees and volunteers of such anapproach?Are there possibilities of partnership or co-operation with other organisations?Do your existing partner groups feel comfortable with a financial markets campaign? Will it divertenergy from other more pressing issues or more fruitful avenues for campaigning?

InterInterInterInterInternal rnal rnal rnal rnal reeeeevievievievieviewwwww

targeting if the participants are public(quoted) companies, or if finance is beingobtained from mainstream institutionssuch as High Street banks. In contrast, itwill generally be harder to campaigneffectively when much of the financing isprivate or comes from offshoreinstitutions, which have no obligation todisclose the names of investors.

Targeting financial markets is likely tobe worthwhile if the project appearsmarginal on financial grounds – in suchcircumstances, it may not be too difficultto persuade investors to abandon it.Conversely, where a project appearsfinancially attractive, it will be muchharder to persuade the financial marketsto avoid it, although not impossible.

Financial markets may offer a usefuloption for a highly-focused campaignwhen a more general campaign looksunlikely to have influence, or when otheravenues appear closed or difficult.

Similarly, if the involvement ofinvestors is routine or minor,campaigning may prove fruitless. A keytest here is the level and type of financialinstitutions involved – a majorcommitment from a commercial bank orthe presence of a leading investment areindicators that a financial marketcampaign may be appropriate.

Frequently, there will be synergies


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between financial markets campaignsand a more general campaign. Typically,mobilising a consumer boycott of acompany because of its involvement incertain activities will help make clear thedamage being done to the company’sreputation and the risks it runs. Thismay help make financial institutionsmore open to your approaches,encouraging them to join you in pressingfor change.

That said, there will often betensions between targeting the financialmarkets and other campaign agendas,priorities and tactics. For example,

tactics that have proved fruitful in otherareas of campaigning may not beappropriate for lobbying financiers. Oftena financial markets campaign will bemost effective if the “in-your-face-approach” of many consumer campaignsis eschewed in favour of a more subtleand considered lobbying.

Financial market campaigns also use upresources and time which could be put tobetter use elsewhere. Skimping onresources is not an option, however:don’t expect financiers to take youseriously if you don’t take themseriously.


3 73 73 73 73 7

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3 83 83 83 83 8

F inancial markets are wherethose who want money link upwith those who not only have

money but are also prepared to make itavailable – in the expectation that theywill receive more money back at somepoint in the future.

Understanding the psychology of themarket is key to intervening successfullyin it so as to persuade potential lendersor investors not to part with their moneyif it is going to fund activities that aresocially or environmentally destructive.

The most striking feature of financialmarkets is that they are speculative: thatis, they all involve an element ofgambling.

This makes financial markets differentfrom the markets that most of usexperience in our everyday lives. If we goto a shop, for example, the goods on saleare real, physical objects that we cantake away in our shopping bags.

USING THE MARKETUSING THE MARKETUSING THE MARKETUSING THE MARKETUSING THE MARKETMENTMENTMENTMENTMENTALITY ALITY ALITY ALITY ALITY TTTTTOOOOOYYYYYOUR OUR OUR OUR OUR ADADADADADVVVVVANTANTANTANTANTAAAAAGEGEGEGEGE


3 93 93 93 93 9

What’s on sale in financial markets,however, is the prospect of gettingsomething in the future. Having beenpersuaded to invest in a particularcompany, someone may shelve outmillions – and end up getting nothing atall. Or they may end up getting a heftyreturn on their money. What they getback depends on the relative risk of theinvestment they made. The riskier theventure, the more they expect to makeout of it – and the higher the likelihoodof failure.

Such speculation frames the psychologyof the market. It brings the possibility ofhuge financial gains and with them theplaudits of one’s peers – but the flip sideof speculation is failure. Eveninvestments that appear safe as houses(government stocks, for example) can,like houses, collapse and end up beingworthless. Those who invested inRussian Government bonds before theFirst World War, for example, losteverything when the Tsar was deposedin the Russian Revolution. What hadseemed the safest possible bet in 1914was worthless by 1917.

Unsurprisingly, fear is as great amotivator in financial markets as greed.Whilst the business of financial marketsis to make money, market players arehaunted by the possibility of losing it –and of having to justify bad investmentdecisions to their colleagues andsuperiors. Evaluating the risks of aninvestment is thus a constantpreoccupation. Indeed, when financialinstitutions are investing moneyentrusted to them by others (pensionbeneficiaries, for example), they areobliged by law to undertake what isknown as “due diligence”.

Exposing the risksExposing the risksExposing the risksExposing the risksExposing the risksThis preoccupation with risk providescampaigners with an entry point for anycampaign aimed at directing investment

away from environmentally and sociallydamaging activities towards moresustainable development paths.

However deeply a fund manager orstock broker may care as an individualabout the loss of wildlife to industrialagriculture or the dangersthat toxic chemicals poseto her children, neither ofthese concerns are likelyto influence herinvestment decisions if anagro-chemical companylooks like a safeinvestment bet. But wherecampaigners are able todemonstrate that thefinancial returns from theinvestment are unlikely tobe as high as she isexpecting (the “greed”factor) or that thecompany’s activitiescarry substantial hiddenfinancial risks (the “fear”factor), the fund manageris in a better position toargue for disinvestmentfrom the company or forusing existingshareholdings to bringpressure for change.

In effect, the argumentsthat count in financial markets are notthose that are based on an appeal toethics or environmental self-interest(“investing in this company means thatyour children are more likely to getcancer”) but to financial risk (“law suitsarising from cancer cases will cost thiscompany a lot of money and yourinvestment won’t earn as much as youthought”).

But it should be noted that all financialactivities carry some risk, and to simplypoint out that there is a risk involvedwon’t tell an investor anything new. Thekey concept in finance is the balance ofrisk and reward. Some investments(such as government bonds) are very

Fear is as great amotivator infinancial marketsas greed. Whilstthe business offinancial marketsis to make money,market playersare constantlyhaunted by thestrong possibilityof losing it – andhaving to justifybad investmentdecisions to theircolleagues andsuperiors.


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Reading the balance sheet: How is the company doing?Reading the balance sheet: How is the company doing?Reading the balance sheet: How is the company doing?Reading the balance sheet: How is the company doing?Reading the balance sheet: How is the company doing?

The best way to get aquick view of acompany’s financial

health (at least as reported bythe company) is to look at itsannual accounts. Here aresome of the issues toconsider:

ResultsResultsResultsResultsResultsEarnings is a fundamentalfigure. The greatest emphasisis on the earnings after tax –“the bottom line” – and theearnings per share (earningsdivided by the number ofshares). But there is a never-ending debate about how tocalculate earnings, as there isscope to massage the figuresand to change results, in theshort-term at least. Anotherproblem is with non-recurringitems, such as charges arisingfrom a major takeover, whichcan distort one year’s resultsand affect valuations.

Intermediate financialIntermediate financialIntermediate financialIntermediate financialIntermediate financialindicatorsindicatorsindicatorsindicatorsindicators

These include operatingmargins, interest cover anddividend cover, and the returnon assets/capital employed.These indicate how well thecompany is performing andsome of the risks it faces.Attention is also paid to otherfigures such as:

····· EBITDA (Earnings BeforeInterest, Tax, Depreciationand Amortisation), which isintended to give aindication of the underlyingearning power of thecompany before morevariable factors.····· cash flow / cash flowper share. . . . . These figuresindicate the actual cashflowing into the company –and are intended toexclude many accountingtricks. Note that it takes noaccount of depreciation.····· turnover which indicatesthe overall businessgenerated by the company.

DividendsDividendsDividendsDividendsDividendsThis is the main way thatcompanies repay investors and

are thus an important indicatorof value. Increasingly companiesare looking at other ways torepay investors, such as specialdividends, share buy-backs andstock splits, principally in orderto reduce tax liabilities.

Other considerOther considerOther considerOther considerOther consideraaaaationstionstionstionstionsHaving gathered theinformation above, analysts willthen endeavour to pull it alltogether into a valuation of thecompany. Whilst the currentyear’s results may be known,next year’s figures are likely tobe an estimate, and thefollowing year’s can only beguessed at. The availablefigures do not therefore givemuch indication of a company’sfuture value. To overcome this,analysts use a number of othermeans to value the company:

Price Earnings RatiosPrice Earnings RatiosPrice Earnings RatiosPrice Earnings RatiosPrice Earnings RatiosPrice-Earnings (PE) ratios arethe most common way oflinking price to the currentearnings per share – price isexpressed as a multiple ofearnings per share. This forms asimple basis for comparingdifferent stocks. Thus if thereare two similar companies, onetrading on a PE of 20 and theother on a PE of 30, the one ona PE of 30 would be regardedas more expensive than theother, unless othercompensating factors can beidentified. Essentially, it wouldtake 30 years of currentearnings to repay an investmentrather than 20 years. The mostimportant other factor isgrowth – a higher PE ratiowould normally indicate ahigher expected growth rate.For example, high growthpharmaceutical orbiotechnology stocks may tradeon a PE of 50 or more, whereasa heavy industry stock (mining,pulp and paper, chemicals) maybe on a PE ratio of 10.

Dividend yieldDividend yieldDividend yieldDividend yieldDividend yieldThis represents the dividend asa percentage of price – theopposite of the PE ratio. Thedividend yield provides another

measure of value, again linkedto growth – low growthcompanies should have anabove average yield, whereashigh growth companies willhave a low or zero yield. Theimportance of yield will varyfrom investor to investor andfrom market to market.

Cash flow valuationsCash flow valuationsCash flow valuationsCash flow valuationsCash flow valuations“Cash is king” goes the saying,and many believe that cashflow analysis gives a morerealistic picture of acompany’s real value thanother figures. Cash flowvaluations are based either ona simple ratio, like the PEratio, or on techniques such asdiscounted cash flow analysis.

Asset valuationsAsset valuationsAsset valuationsAsset valuationsAsset valuationsIn certain situations, thebalance sheet can be used as aguide to value – a companywhose market capitalisation isbelow its balance sheet valueis often considered cheap. Butbalance sheets are subject tosubstantial distortion: assetsmay be worth far less or morethan they appear on thebalance sheet, which limits thevalue of such figures – unlessa careful analysis is carriedout. In certain sectors, such asinsurance and property, assetvaluations are useful becausethe balance sheet is morelikely to reflect current values.

Turnover valuationsTurnover valuationsTurnover valuationsTurnover valuationsTurnover valuationsAnother way to value abusiness is focused onturnover, that is thethroughput of money in anyone year. The argument is thatturnover shows the size of thebusiness, and, so long asprofit margins can becompared to an industryaverage, should indicate thebottom line potential.Turnover valuations are mostuseful in sectors such asretailing, and least relevant insectors such as high growthtechnology stocks. Turnovervaluations are often used intakeovers as they give theacquiring company anexample of the size of marketthey are buying.


4 14 14 14 14 1

(relatively!) secure investments – one isunlikely to lose all one’s money onthem; but the trade-off is that the ratesof return on the investment are low.Other investments (for example,providing venture capital for start-uptechnology firms) carry enormous risk,but if the gamble pays off, the investorcan reap huge gains. Some investorsprefer these high risk / high rewardinvestments; others prefer the slow andsteady, safer, low risk / low rewardones; many portfolios try to balance thetwo types. Your real input can be inpersuading investors that they’veunderestimated the total risk of theirinvestment (for example, by neglectingenvironmental or political issues), sothe reward they expect no longerjustifies the risk.

Some kSome kSome kSome kSome keeeeey pry pry pry pry pressuressuressuressuressureeeeepoints – and how topoints – and how topoints – and how topoints – and how topoints – and how touse themuse themuse themuse themuse themMany risks are considered routinely byinvestment analysts when valuingcompanies, using a range of financialindicators (see Box, “Reading abalance sheet”, p.40). Otherconsiderations are also taken intoaccount in order to build up a morecomplete picture of the company.Ultimately, investors want to bereassured that:

The company’s basic finances are ingood order.The company is being competently run.

The company’s business strategy“stacks up” financially.

The return on any investment iscommensurate with the risks involved –the bigger the risk, the higher theexpected return.

The company does not face outstandinglegal liabilities or other “non-financial” risks.

The company is going to be in aposition to repay any money it hasborrowed.

Below we list eight areas wherecampaigners can develop financialarguments that will exertpressure on companiesby highlighting theseinvestor concerns. Tohave maximum impact,it is important to focuson the issues that troubleinvestors, not those thattrouble NGOs. Wherepossible, this meanspresenting yourconcerns in terms thatplay upon thepreoccupations of the financialcommunity and which financial marketswill take seriously.

1. Management quality1. Management quality1. Management quality1. Management quality1. Management quality

For investment analysts, the quality of acompany’s management is of utmostconcern, although it is a factor that isdifficult to assess and quantify. Analystslook for evidence of a good track record– that is, that the management hasdelivered on its promises in the past.Black marks are scored when acompany has become embroiled inadverse publicity; when concerns havebeen raised over corruption or legalliabilities; or when there is evidence ofincoherence in corporate policy.

Campaigners can call attention to“corporate governance” concerns toshow how a company’s depredations arein fact management failures that threatento dent the company’s reputation orotherwise damage its financial value.

Bear in mind, however, that investors indifferent countries may differconsiderably in how much weight theygive to a particular indicator of “goodcorporate governance”. In the UK, forexample, considerable attention iscurrently paid to whether or not the

The most powerfulcampaigns are thosethat use analysis todemonstrate that theproject is not viableor a soundinvestment.


4 24 24 24 24 2

company has an environment policy. Inthe US, by contrast, this is not a major

consideration.

To assess a company’smanagement quality,campaigners should:

Check whetherCheck whetherCheck whetherCheck whetherCheck whetherthe company has anthe company has anthe company has anthe company has anthe company has anenvironmental policyenvironmental policyenvironmental policyenvironmental policyenvironmental policyand a social policand a social policand a social policand a social policand a social policyyyyy.....Compare any policycommitments with thecompany’s operations onthe ground. Highlight anyviolations – and drawattention to how theseindicate a failure by

management to institute proper internalcontrols. Use other company statements(for example, articles by seniormanagement or speeches made to businessseminars) to draw attention to gapsbetween stated policy and actual practice.Raise questions about the integrity ofmanagement – and the extent to which itspronouncements can be trusted. Point tothe potentially severe consequences for thecompany’s image at a time when investorsare becoming increasingly sensitive tocorporate ethics when deciding on theirinvestment portfolios. If the company hasno policy, highlight this lack as a majorcorporate governance failure.

Compare the company’s policies andCompare the company’s policies andCompare the company’s policies andCompare the company’s policies andCompare the company’s policies andinterinterinterinterinternal contrnal contrnal contrnal contrnal controls (or lacols (or lacols (or lacols (or lacols (or lack ofk ofk ofk ofk of them) to them) to them) to them) to them) tobest prbest prbest prbest prbest practice elseactice elseactice elseactice elseactice elsewwwwwherherherherhere in the industre in the industre in the industre in the industre in the industryyyyy.....If there are better guidelines which othercompanies follow, cite them as evidence ofthe management’s failure to keep pace withits competitors. As Michelle Chan-Fishel, acampaigner at Friends of the Earth-US,notes: “Argue that the company of thefuture will be ‘forward-looking’,‘innovative’, ‘intelligent’, ‘dynamic’,‘setting the benchmark’ and characterisedby its environmental responsibility, goodcommunity ties and strong labourrelations.”53 By contrast, use the targetedcompany’s record and inferior managementstandards to portray it as “backwards”,

“stagnant” or “insular”.

Check whether the company is aCheck whether the company is aCheck whether the company is aCheck whether the company is aCheck whether the company is asignasignasignasignasignatortortortortor y to any to any to any to any to any sectory sectory sectory sectory sector-based-based-based-based-basedenvironmental statement or guidelines.environmental statement or guidelines.environmental statement or guidelines.environmental statement or guidelines.environmental statement or guidelines.For example, more than 100 banks are nowsignatories to the United NationsEnvironment Programme’s “Statement onBanking and Sustainable Development”,which commits the banks to incorporateenvironmental concerns in all aspects ofbusiness. Draw attention to how currentpractice violates the stated commitments –and the implications for management. In thecase of dam-building companies, a usefulset of guidelines to cite are those of theWorld Commission on Dams (WCD),54

which recommends inter alia that damsshould be built only when the project enjoysdemonstrable public acceptance. TheSwedish construction firm Skanska hasstated that it will observe the WCDguidelines and a number of other companiesare considering following suit.

ChecChecChecChecCheck the compank the compank the compank the compank the company’y’y’y’y’s anns anns anns anns annual rual rual rual rual reeeeeporporporporpor t:t:t:t:t:ararararare there there there there there boare boare boare boare board led led led led levvvvvel direl direl direl direl directorectorectorectorectorsssssresponsible for environmental andresponsible for environmental andresponsible for environmental andresponsible for environmental andresponsible for environmental andcommcommcommcommcommunity afunity afunity afunity afunity af fffffairairairairair s?s?s?s?s?If there aren’t, raise this omission as acorporate governance issue. Point to thedamage being done to the company’sreputation by environmental controversiesor community resistance. Relate these to themanagement’s failure to ensure clear linesof accountability for addressing thecompany’s environmental and socialimpacts. If the company does have anenvironmental director, demand that he orshe be held accountable for the damagedone by the company, for example, bybeing replaced.

ChecChecChecChecCheck the compank the compank the compank the compank the company’y’y’y’y’s anns anns anns anns annual rual rual rual rual reeeeeporporporporpor t tot tot tot tot tosee wsee wsee wsee wsee whahahahahat “non-financial”t “non-financial”t “non-financial”t “non-financial”t “non-financial” risks it r risks it r risks it r risks it r risks it reeeeeporporporporpor tststststs.....Does it assess environmental risks? Does itreveal allegations of corruption that havebeen made against the company? Does itcite legal proceedings that have beenthreatened against the company? If not,raise these omissions. For UK companies,cite the recent Turnbull Report (see p.31)which now requires companies listed on theUK Stock Exchange to report annually on

Campaigners can callattention to “corporategovernance” concernsto show how corporatemisconduct is in fact a“management failure”that threatens thecompany’s reputation orotherwise damage itsfinancial value.


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ABB – Moving out of damsABB – Moving out of damsABB – Moving out of damsABB – Moving out of damsABB – Moving out of dams

A sector-wide campaignA sector-wide campaignA sector-wide campaignA sector-wide campaignA sector-wide campaign

In March 2000, ABB – AseaBrown Boveri, the Swedish-Swiss power giant –

announced that it was sellingits hydropower division. Threemonths later, ABB announced anew focus on alternativeenergy technologies, such aswind and solar – a market thecompany described as “huge”.ABB stated that it expected toincrease its sales ofrenewables and small-scalepower generation from $400million to $1.4 billion by theyear 2004.

ABB and damsABB and damsABB and damsABB and damsABB and dams

The decision followed adecade-long campaign bySwiss, Swedish and other NGOsto persuade ABB and otherpower generation companiesto reconsider theirinvolvement in hydropower – acampaign that had includedtactics from mass letter writingto protests and shareholderactions.Since its birth in 1988 — theresult of a merger betweenthe European engineeringgiants Asea of Sweden andBrown Boveri of Switzerland —ABB has established itself asone of the world’s biggest andmost dominant engineeringand technology companies.Major divisions include powergeneration; powertransmission and distribution;financial services;transportation; and industrialand building systems. Inaddition to supplying oil, gas,nuclear and petrochemicalgenerating and distributionequipment, the company’senergy divisions have beeninvolved in numerous damsaround the world, often actingas lead equipment supplier.ABB has supplied some 2,200generators for hydroelectricdams — generatingapproximately 150,000 MW, orone-fifth, of the world’sinstalled hydropower capacity.

International criticism of ABB’sinvolvement in projects such asBakun (Malaysia), Three Gorges(China) and the LesothoHighlands Water Project(Lesotho) had made thecompany defensive of itshydropower division. Since1996, the company’s annualreports and environmentalmanagement reports regularlycarried large sections on theissue of dams.

A sector wide campaignA sector wide campaignA sector wide campaignA sector wide campaignA sector wide campaignInitially, campaigners focusedon ABB’s involvement inindividual dams, conductingclassic letter writing campaignsto the company drawing itsattention to the environmentaland social problems its projectswere causing. These generateda huge public response – 25,000postcards were sent to ABBover its involvement in theThree Gorges dam from Swisscitizens alone. Protests werealso held outside ABB’s officesin several countries. Suchprotests resulted in majoradverse publicity for thecompany – denting itsreputation as a leader insustainable development andexerting increased pressure onthe company.Following the highly-successfulinvestor-focused campaignagainst the Bakun dam inMalaysia, the Berne Declaration,a Swiss NGO, and the SwedishSociety for Nature Conservation(SSNC) commissioned a reportfrom Eco-Asia (Consultants) Ltd,a UK-based consultancy, toreview the long-term financialviability of ABB’s power sectorstrategy. Entitled High Risk–LowReturn, the report forecast ashrinking hydropower marketfor companies such as ABB dueto social and environmentalprotests and a lack of privateand public finance. Describinghydro as a “sunset” industry, itargued:

Growth in the hydro sector is

unlikely to be more than 4%annually for the period 1990to 2020 – much lower than forother power industries and insharp contrast to renewableswhich are growing at 10-20%;

The industry is facingmounting public opposition,declining political support andthe drying up of developmentsubsidies for large damprojects;

Hydro is proving unable tocompete in the increasinglycompetitive energy market.Private investors are reluctantto finance hydro projects,which are seen as high riskinvestments but with low ratesof return. The report alsostressed that the problemsfacing hydropower raisedmajor issues for ABBshareholders about thecompany’s strategy and itscommitment to managementexcellence. Most obviously:

ABB’s failure to heedwarnings about the flimsyfinancial viability of the Bakundam in Malaysia, from which itwas forced to withdraw, castserious doubts over seniormanagement’s corporatejudgment.

Opposition to dams inwhich ABB was involved wasalready having a negativeimpact on the company’simage, with financialimplications for investors.

The need to “manage” theadverse publicity caused byABB’s hydro portfolio wastaking up considerable seniormanagement time which mightbe more productively spentelsewhere.

ABB’s strategy of “chasingorders” in Asia might beexposing the company tounwarranted financial risks,often not recorded on thecompany’s balance sheet.

ABB was losing out to itsrivals by missing opportunitiesin the renewable energy sector– a “natural market for the


4 44 44 44 44 4

company”.The report concluded:“Shareholders should call onABB to review its commitmentto hydro and to justify anycontinuing involvement in thecontext of the company’soverall business strategy.”

SharSharSharSharShareholder actioneholder actioneholder actioneholder actioneholder actionFollowing publication of thereport, the Berne Declarationand SSNC ensured that itsfindings were circulated tokey ABB analysts, major ABBshareholders and financialjournalists. The groups alsomounted a shareholderresolution at ABB’s 1998Annual General Meeting,calling on ABB to reconsiderits power sector strategy andto shift its research anddevelopment to alternativeenergy technologies.The resolution recommendedthat “ABB undertake acomprehensive study on theimpacts which the growingsensitisation regarding thesocial and environmentalimpacts of large dams; thedrying up of public funds forsuch projects; and the globaltrend of privatisation in the

energy sector are having for thefuture risks and returns of thehydropower industry.” Theresolution was supported byseveral socially-responsibleinvestors, but rejected by thevast majority of shareholders.

Broadening the campaignBroadening the campaignBroadening the campaignBroadening the campaignBroadening the campaignIt is unknown how far the Eco-Asia report influenced the ABBmanagement in its subsequentreappraisal of the company’sinvolvement in hydro. ABB hassaid that the decision was takenon the basis of an overallmarket analysis – but that thecompany took the growingsensitivity of major shareholdersregarding social andenvironmental concerns “veryseriously”. Many of thearguments in the report,however, were subsequentlytaken forward by the BerneDeclaration and others to theWorld Commission on Dams(WCD), set up by the WorldBank and the International Unionfor the Conservation of Nature(IUCN) in 1996 to review thepast performance of dams andto make recommendations forfuture guidelines. ABB’s ChiefExecutive, Goran Lindahl, wasone of the WCD Commissioners.

The WCD reported inNovember 2000, just monthsafter ABB had announced itswithdrawal from the hydroindustry. The Commissionvindicated the majority of theconcerns that non-governmental organisationshad been raising about thesocial, economic andenvironmental impacts oflarge dams. It recommendedradical reforms in the planningprocess for energy and waterprojects and made a series ofrecommendations for newdam projects, includingensuring the demonstrablepublic acceptance of affectedcommunities.NGOs are now urging industryto adopt, as a minimum, therecommendations of the WCDand are lobbying investors toscreen out projects that donot comply. Already theSwedish construction giantSkanska has stated that it willadopt the WCD’srecommendations. ABB’swithdrawal from thehydropower industry providesa powerful argument forpressuringcompanies whoseshareholders still view largedams as a financially viablesector.

the steps they have taken to instituteinternal controls for managing all risks totheir businesses, including non-financialrisks. Argue that the risks cited should fallwithin the remit of any such report – andthat failing to include them is evidence ofpoor management.

Where you have evidence ofWhere you have evidence ofWhere you have evidence ofWhere you have evidence ofWhere you have evidence ofenvironmental damage caused by theenvironmental damage caused by theenvironmental damage caused by theenvironmental damage caused by theenvironmental damage caused by thecompancompancompancompancompanyyyyy,,,,, document it in r document it in r document it in r document it in r document it in relaelaelaelaelation totion totion totion totion tocorcorcorcorcorporporporporporaaaaate gte gte gte gte gooooovvvvvererererernance fnance fnance fnance fnance failurailurailurailurailureseseseses.....Investors will be less interested in thenumber of fish killed by a pollution incidentthan in what the incident tells them aboutthe company’s management structures.Relate the damage done to deficiencies inany environmental impact assessment thatwas undertaken or to the failure ofmanagement to heed warnings thatproblems were afoot. If there are potentiallegal liabilities, highlight these.

Cite examples of protests against theCite examples of protests against theCite examples of protests against theCite examples of protests against theCite examples of protests against thecompancompancompancompancompanyyyyy.....

If you have run a letter-writing campaign,let investors know how many letters thecompany was sent (this is not informationthat the company itself is likely to impart).Where protests are international, give detailsof how many companies are involved.

Again, link the protests back to corporategovernance concerns: what does thecompany’s poor handling of environmentaland social issues tell investors about itsability to handle other aspects of itsbusiness? Have the protests meant thatsenior management is now spending toomuch time on one or two controversialprojects – to the detriment of other businessactivities? Are there signs that themanagement is obsessed with the issue/project? And that their judgement hasbecome impaired?


4 54 54 54 54 5

Stress the damage done to theStress the damage done to theStress the damage done to theStress the damage done to theStress the damage done to thecompany’s reputation by scandals, suchcompany’s reputation by scandals, suchcompany’s reputation by scandals, suchcompany’s reputation by scandals, suchcompany’s reputation by scandals, suchas briberas briberas briberas briberas briber yyyyy,,,,, pollution, pollution, pollution, pollution, pollution, the e the e the e the e the exploitaxploitaxploitaxploitaxploitation oftion oftion oftion oftion ofwwwwwororororor kkkkkererererer sssss,,,,, associa associa associa associa association with human rights’tion with human rights’tion with human rights’tion with human rights’tion with human rights’abuses or the failure to react quickly toabuses or the failure to react quickly toabuses or the failure to react quickly toabuses or the failure to react quickly toabuses or the failure to react quickly toethical concerethical concerethical concerethical concerethical concerns wns wns wns wns when rhen rhen rhen rhen raised baised baised baised baised by they they they they thepublic.public.public.public.public.Stress that the best way of avoiding scandalsis to develop an ethical culture whichunderpins all a company’s businessoperations and practices. Underline the needfor the company to give its workers andcustomers convincing signals of its ownmoral commitment. Make the point that“reputation management” can backfire badlyif a company is not truly committed to thevalues it claims to espouse.55 Stress thatcompanies which do not introduce deep-rooted commitments, grounded in strictinternal controls, quickly find the problemsrecurring. Emphasise that once a reputationhas been dented, it takes considerableexpense and management time to get backinto favour.

ArArArArAre there there there there there historic or cure historic or cure historic or cure historic or cure historic or cur rrrrrent linksent linksent linksent linksent linksbetwbetwbetwbetwbetween the senior manaeen the senior manaeen the senior manaeen the senior manaeen the senior managggggererererers and thes and thes and thes and thes and theissue/project, such as non-executiveissue/project, such as non-executiveissue/project, such as non-executiveissue/project, such as non-executiveissue/project, such as non-executivedirdirdirdirdirectorectorectorectorectorships or past emploships or past emploships or past emploships or past emploships or past employment?yment?yment?yment?yment?If so, raise the issue of possible conflicts ofinterest – again an indication of poorcorporate governance procedures.

Conduct a search of newspaper andConduct a search of newspaper andConduct a search of newspaper andConduct a search of newspaper andConduct a search of newspaper andother arother arother arother arother ar ticticticticticles to learles to learles to learles to learles to learn ofn ofn ofn ofn of other other other other othermanamanamanamanamanagggggement concerement concerement concerement concerement concerns thans thans thans thans that hat hat hat hat havvvvve beene beene beene beene beenrrrrraised in the financial praised in the financial praised in the financial praised in the financial praised in the financial pressessessessess.....Cite these to bolster your concerns. Themessage: “We aren’t the only ones who areworried about the management of thiscompany.”

2.2.2.2.2. Business str Business str Business str Business str Business straaaaatetetetetegggggyyyyy

The credibility of a company’s long-termbusiness strategy – and in particular theextent to which it is perceived to addvalue to the business in the future – is akey concern for investors. Castingdoubts on the wisdom of a company’soverall strategy may undermine investorconfidence in the company’smanagement – and open up space for

Investors will be lessinterested in the

number of fish killedby a pollution incident

than in what theincident tells them

about the company’smanagement

structures.

change. Outside groups, which oftenhave access to information that is notgenerally available toshareholders, may beable to draw attentionto weaknesses in acompany’s businessstrategy in a number ofareas:

Is the industrIs the industrIs the industrIs the industrIs the industry liky liky liky liky likelelelelelyyyyyto continue growing into continue growing into continue growing into continue growing into continue growing inthe long-terthe long-terthe long-terthe long-terthe long-term (fim (fim (fim (fim (fivvvvveeeeeyyyyyearearearearears plus)?s plus)?s plus)?s plus)?s plus)?Are the growth rates ashigh as the companypredicts? Are they likelyto be sustained? A key question here is thehealth of the company’s market and that ofthe wider industry of which it is a part: doconsumers want to buy the company’sproducts? Draw attention to any consumerboycotts or signs of shifting public attitudesthat might threaten future sales. Makecomparisons, if possible, with otherindustries which have been dented byconsumer boycotts (see Box, “Geneticslump”, p.60) Are rival companies leavingthe sector? If so, link their withdrawal toprescient business management – “themarket is dying and those with an eye to thefuture are getting out whilst they can.” Citeany upcoming regulations that might affectthe market – particularly if the company’senvironmental and social record shows it tobe ill-equipped to respond to them.

How strong is the company’s positionHow strong is the company’s positionHow strong is the company’s positionHow strong is the company’s positionHow strong is the company’s positionwithin the marwithin the marwithin the marwithin the marwithin the markkkkket? Is its sharet? Is its sharet? Is its sharet? Is its sharet? Is its share ofe ofe ofe ofe of the the the the themarmarmarmarmarkkkkket get get get get grrrrrooooowing or shrinking?wing or shrinking?wing or shrinking?wing or shrinking?wing or shrinking?Here again, pressure groups are on strongestground where opposition to a company’sactivities is reflected in consumer spending.Boycotts, or the threat of boycotts, canseverely dent a company’s share of themarket, particularly when other companiesare able to pick up business because theyare perceived to have a more responsibleattitude to environmental and social issues.Link these threats to the company’s futuregrowth in terms of the company’s failure toaddress public concerns over theenvironment or human rights.


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Does the company’s future growthDoes the company’s future growthDoes the company’s future growthDoes the company’s future growthDoes the company’s future growthrrrrrelelelelely on ney on ney on ney on ney on new strw strw strw strw straaaaatetetetetegic mergic mergic mergic mergic mergggggererererer s?s?s?s?s?The last decade has seen a spate ofmergers between companies, creating giantglobal conglomerates. Often these place thecompanies in a stronger position – forexample, a cash-strapped company mayobtain the capital it needs to expand byteaming up with a cash-rich company.However, increasingly, mainstreamcommentators are beginning to question theeffectiveness of mergers in adding value forshareholders – something that campaignerscan build upon.For example, when companies come fromdifferent sectors – for instance, whenpharmaceutical companies have teamed upwith chemical companies to form “lifescience” companies – the promisedsynergies have not necessarily come about,in large part due to a clash of corporatecultures, research techniques and the like.Some “life science” companies are nowseeking to sell off their agricultural wings,but are facing difficulties because anoutright sale to a major rival would involveanti-trust problems.Campaigners seeking to challenge newmergers can raise these issues to goodeffect. Will the claimed “synergies” of themerger bring the predicted commercialbenefits? Will the merger cause anti-trustproblems? If the merger fails, will the newcompany be able to unload any unwanteddivisions?

Is the companIs the companIs the companIs the companIs the company an industry an industry an industry an industry an industry leader?y leader?y leader?y leader?y leader?Will this project/issue help it maintain itsWill this project/issue help it maintain itsWill this project/issue help it maintain itsWill this project/issue help it maintain itsWill this project/issue help it maintain itsleaderleaderleaderleaderleader ship?ship?ship?ship?ship?Many of the largest companies are trying toreposition themselves as leaders insustainable development – and their greencredentials have become a major sellingpoint in the market. Even when thesecredentials rest largely on PR, use thecompany’s stated commitments to youradvantage. Point to the damage being doneto the company’s long-term businessstrategy by its current activities or by itspotential involvement in a new project thatcould have adverse social andenvironmental impacts. Highlight how theproject reflects the company’s past, ratherthan its future – “investment in this projectis investment in a dinosaur sector: the

company should be pursuing new sunrisetechnologies in line with its stated long-termcommitment to sustainable development.”Campaigners are on strongest ground whenthe activity or project is outside thecompany’s core business or is driven by adivision that represents only a smallsegment of the company’s earnings. Arguethat the activities of this division arejeopardising the financial prospects of thecompany as a whole.

WWWWWould alterould alterould alterould alterould alternananananatititititivvvvve pae pae pae pae paths yield betterths yield betterths yield betterths yield betterths yield betterfinancial rfinancial rfinancial rfinancial rfinancial retureturetureturetur ns fns fns fns fns for the bor the bor the bor the bor the business?usiness?usiness?usiness?usiness?In critiquing the company’s current businessstrategy, highlight alternatives that point tohigher financial returns for the company. Ifthe company is involved in hydropower, forexample, point to the declining market forhydroelectric dams – and compare itunfavourably to the expanding market insolar, gas and other energy alternatives. (SeeBox, “ABB – moving out of dams”, p.43)Similarly, compare the company with othersin its peer group. Is it missing out onstrategic business opportunities that its rivalshave already identified?

3. Financial risk –3. Financial risk –3. Financial risk –3. Financial risk –3. Financial risk –Companies and projectsCompanies and projectsCompanies and projectsCompanies and projectsCompanies and projects

City analysts – whose job it is to valuecompanies – tend to concentrate onpurely financial risks. NGOs are at adisadvantage in this area because theyare likely to be less expert inconventional financial assessment –analysts should be experts in this area,after all.Nonetheless, there can be opportunitiesto intervene, particularly when thejudgement of analysts appears to havebeen distorted by political pressure, bythe prospect of large commissions, oreven by the momentum of the market.But intervening in this area needs to bedone carefully and without arrogance ifinvestors are to listen. The types of riskthat campaigners may be able tohighlight depend on whether thecampaign is directed against a specificcompany or a specific project, asdetailed below.


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Three Gorges damThree Gorges damThree Gorges damThree Gorges damThree Gorges damBond issues challengedBond issues challengedBond issues challengedBond issues challengedBond issues challenged

In 1997, China turned to theinternational capital marketsto raise funds for the

massive Three Gorges dam onthe Yangtze River, triggeringan international campaign byNGOs to persuade Westernbanks not to back the project,which has become a symbolnot just of environmentallyand socially destructivedevelopment but also of thesilencing of dissent.The dam’s massive 400-kilometre long reservoirwould drown 13 cities, 1,711villages, 116 towns and 1,600factories. A minimum of 1.3million people (latestestimates put the figure at 1.9million) would be forced toleave their homes. Bribery andcorruption are reported tobeset the project, accordingto local farmers who claimthey are being cheated ofgovernment resettlementfunds. Critics also charge thatChinese authorities haveunderestimated the landavailable for resettlement, andthat much of what land isavailable is unsuitable forfarming. These concerns havebeen acknowledged byChina’s Prime Minister ZhuRongji. In addition, there arefears that the tightconstruction schedule,coupled with shoddyconstruction work, could leadto a collapse of the dam,risking the lives of millionsdownstream. In December1998, Zhu criticised theshoddy construction of newinfrastructure to replace thatbeing submerged.

RRRRRaising interaising interaising interaising interaising internananananationaltionaltionaltionaltionalcapitalcapitalcapitalcapitalcapitalThe dam is expected to costat least $24.5 billion —although some unofficialestimates put the figure at$75 billion. Hesitant tocommit money from its ownbudgetary resources, theChinese Government has

sought to mobilise fundingfrom Western private sectorsources through the sale ofbonds issued by the ChinaDevelopment Bank (formerly theState Development Bank–SDB).Initially, the Three GorgesProject DevelopmentCorporation (which is in chargeof the construction of the dam)sought to raise money on itsown account by issuing bonds.Its three bond issues failed inthe international capitalmarkets, however, because theproject was not viewed ascommercially viable.In 1996, however, the Chineseauthorities changed tack,issuing general-purpose bonds,only part of which would beused to fund the dam. Insteadof the Project DevelopmentCorporation issuing the bonds,the then State DevelopmentBank (SDB), whose largestborrower is the Three GorgesDevelopment Corporation,issued general obligationbonds. In Japan, NomuraSecurities helped underwriteone such bond issue butwithdrew from a second after aleading Japanese critic of ThreeGorges, Professor Kazuo Sumi,pointed out to the JapaneseMinistry of Finance that Nomurahad violated Japanese securitieslaw by not disclosing SDB’srelationship with the ThreeGorges.In January 1997, a group of sixUS and European investmentbanks – Lehman Brothers,Credit Suisse First Boston, J.P.Morgan, Morgan Stanley, SmithBarney and BankAmericaSecurities – underwrote a $330million bond issue for the SDB.Later the same year, newsbroke that the same banks wereconsidering a second bondissue. As in Japan, theannouncement prompted astorm of protest.Further bond issues linked toThree Gorges have followed. InDecember 1998, the Peoples’Republic of China issued a $1billion bond, underwritten by

Credit Suisse First Boston andGoldman Sachs, whichmentioned Three Gorges inthe prospectus, raising fearsthat the money would be usedfor the dam. In May 1999, thenewly-constituted ChinaDevelopment Bank alsolaunched a new bond issue($500 million), underwritten bySalomon Smith Barney andMerrill Lynch, both of whichput in $225 million. Theremaining $50 million was puttogether by 10 other banks,including Chase Securities,Barclays Capital and DeutscheBank AG London.

ArArArArArguments usedguments usedguments usedguments usedguments usedIn November 1997, some 46non-governmentalorganisations wrote to USunderwriters urging them tostop underwriting SDB bonds.Subsequently, campaign-ersused a number of argumentsto pressure the banks towithdraw from the bondissues:

The dam is notThe dam is notThe dam is notThe dam is notThe dam is notcommercially viable andcommercially viable andcommercially viable andcommercially viable andcommercially viable andcould affect the financialcould affect the financialcould affect the financialcould affect the financialcould affect the financialfuture of SDBfuture of SDBfuture of SDBfuture of SDBfuture of SDBThe groups pointed out thatSDB was committed to lending$3.6 billion to Three Gorges,whose ultimate costs were stillunknown and whose financialviability was questionable.There was a strong possibilitythat SDB would lose money onthe project, undermining itsability to repay bond-holders.The NGOs pointed out thatgovernment estimates for theproject costs were grosslyunderestimated, since they didnot include the costs ofresettlement.

The project couldThe project couldThe project couldThe project couldThe project coulddamage China’s macro-damage China’s macro-damage China’s macro-damage China’s macro-damage China’s macro-economic performanceeconomic performanceeconomic performanceeconomic performanceeconomic performanceExcessive state investment incommercially unviableinfrastructure projects wasone of the main reasons forthe South-East Asian economic


4 84 84 84 84 8

collapse in 1997 whichresulted in major unpaid debtsto Western banks. China itselfhad admitted that suchprojects should be avoided –yet project proponents werepushing ahead with ThreeGorges, whose planning andimplementation exemplifiedthe problems of such state-run projects. Investing inThree Gorges was thus“inconsistent with China’smodernisation objectives”,jeopardising China’s macro-economic performance and,with it, other more preferableinvestments.

Corporate responsibilityCorporate responsibilityCorporate responsibilityCorporate responsibilityCorporate responsibilityis underminedis underminedis underminedis underminedis underminedMany of the financialinstitutions involved in thebond issue, including CreditSuisse First Boston andSalomon Brothers, aresignatories to the UnitedNations EnvironmentProgramme’s Statement byBanks on Environment andSustainable Development. Thestatement recognises that“sustainable development is . .. an integral part of [the]pursuit of good corporatecitizenship” and the need toensure “openness anddialogue relating toenvironmental managementwith all relevant audiences.”BankAmerica Corporation is asignatory of the Coalition forEnvironmentally ResponsibleEconomies (CERES) Principles,which state that participatingcompanies will “conduct allaspects of their business asresponsible stewards of theenvironment by operating in amanner that protects theEarth.” Three Gorges clearlyviolates such principles,argued the campaigners:supporting the project thuscast doubts on the banks’commitment to sustainabledevelopment and thus theirintegrity.

Underwriting the bondsUnderwriting the bondsUnderwriting the bondsUnderwriting the bondsUnderwriting the bondscould damage the banks’could damage the banks’could damage the banks’could damage the banks’could damage the banks’reputationreputationreputationreputationreputationUnderwriting the bonds wouldsend a symbolic message tothe public that the banks wereprepared to support the SDBregardless of the social,environmental, technical andeconomic merit of itsborrowers’ projects,

campaigners argued. Thedamage to the banks’ corporatereputation would be profound –an argument reinforced by thewide publicity which thecampaign was attracting,including coverage in thefinancial press.

Broadening the investorBroadening the investorBroadening the investorBroadening the investorBroadening the investorcampaigncampaigncampaigncampaigncampaignIn addition to writing to thebanks, the International RiversNetwork (IRN), which led thecampaign in the US, took out afull-page advertisement in theNew York Times, adding to thepressure on the banks’ publicreputation. The advertisementannounced: “An Exclusive BondOffering – Here’s your chanceto invest in a Grand Monumentto China’s authoritarian regime.Don’t fund China’s ThreeGorges Dam.”Campaigners also made directcontact with BankAmerica andCredit Suisse. In Switzerland,the Berne Declaration, one ofthe main international NGOsopposed to the project, alsoapproached ethical investmentfunds with a holding in CreditSuisse, urging them toreconsider their investmentpolicy based on whether or notthe Credit Suisse Group choseto maintain its support for theThree Gorges Project.In the US, pressure was also puton the shareholders of MorganStanley, which by 1998 hadmerged with Dean Witter toform Morgan Stanley DeanWitter (MSDW). The merger gavecampaigners an additionalleverage point since Dean Witterhad a High Street presence,including the Discover creditcard. In April 1999, the ethicalinvestment fund FranklinResearch & DevelopmentCorporation (now called TrilliumAssets Management) tabled ashareholder resolution onbehalf of two stockholders. Theresolution criticised thecompany for havingunderwritten the first bondissue in 1997 and raisedquestions about the impact ofthe decision on the company’sreputation. “Even throughindirect involvement in theThree Gorges Dam”, the

resolution stated, “MorganStanley Dean Witter risksexposing itself to negativepublicity and possibleboycotts of its brokerageservices and the Discovercard.”The resolution, which wasopposed by the Board ofDirectors, called on thecompany “to issue a report toshareholders and employeesby October 1999, reviewingits underwriting, investing andlending criteria . . . with aview to incorporating criteriarelated to a transaction’simpact on the environment,human rights and risk to thecompany’s reputation.” In2000, a second resolution wasfiled against MSDW and ChaseManhattan by Trillium: boththese resolutions receivedsome 6% of the shareholder’svote. After the resolution,MSDW agreed to meet withTrillium and NGOs.Further pressure has beenexerted through a letterwriting campaign by membersof US environmental groups tothe Chief Executive Officer ofthe company. In addition torequesting that the companyissue a report on how itintended to assess the socialand environmental impacts ofits investment policies, letterwriters were urged to requestthe company:

To commit to a publicpolicy of not acting “as anissuer, intermediary, oradvisor for any stocks,bonds or privateplacements” for the ThreeGorges DevelopmentCorporation or the StateDevelopment Bank ofChina;To commit to a process ofdetermining how it canbetter incorporateenvironmental and humanrights criteria into its corebusiness operations;To examine how the firm’spolicies compare withthose developed by CERES,UNEP, the World Bank andthe US Export-Import Bankand to makerecommendations to theBoard;To inform the investors,


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the public and itscustomers about existinglending and underwritingguidelines on theenvironment and humanrights; andTo commit to a policy offull disclosure on theenvironmental and humanrights risks of bonds orstocks that the companyunderwrites.

OutcomeOutcomeOutcomeOutcomeOutcomeThe second bond issue nevermaterialised, in part due tothe financial collapse inSouth-East Asia. BankAmericasubsequently adopted a policyto avoid providing directsupport to the Three GorgesProject. Morgan Stanley DeanWitter is considering a similarpolicy. In the meantime, aboycott of Morgan StanleyDean Witter’s Discover card isunderway to pressure thebank to implementenvironmental and socialcriteria in a timely manner.Pressure from the campaignled the China DevelopmentBank to give verbal assurancesto some of the banks thatnone of the money from asubsequent bond issue in1999 would go to ThreeGorges. But NGOs insist that,to be credible, suchassurances should be inwriting and that monitoringmechanisms should be inplace, since the money isfungible.

Lessons learLessons learLessons learLessons learLessons learnednednednednedReflecting on the campaign,Peter Bosshard of the Berne

Declaration, the Swiss NGO atthe forefront of lobbying CreditSuisse, says “The fact that theChinese authorities resorted tousing an indirect conduit forfunding Three Gorgesdemonstrates that they aresensitive to the impacts whichpublic criticisms can have onprivate funders. The need tokeep track of these privatefunding mechanisms challengesNGOs to strengthen theirmonitoring capacities.”

Julie Tanner of the NationalWildlife Federation, a US NGOactively involved in thecampaign, points to the needfor fundamental reform in theapproach of financialinstitutions to the environmentand society. “In monitoring thefirms involved in financing theCDB bonds, it has become clearthat most of the leading banksin Europe and the US lackenvironmental guidelines anddo not have environmentalmanagement systems in placeto address social, environmentaland reputational risks. Assessingthe environmental and socialimpacts of projects shouldbecome part of everydaybusiness. Shareholders andcustomers of banks shouldpress them to develop andimplement environmentalguidelines to ensure that theirmoney does not fundenvironmentally and sociallydestructive projects.”

The campaign has also openedup new avenues for pressing forchange and put campaigngroups in touch with newconstituencies. “Working withshareholders has allowed NGOsto develop high-level dialogueswith major US investment banksnot only on Three Gorges butalso how the banks deal with

other socially andenvironment-ally sensitivetransactions.”

Doris Shen of IRN concludes,“NGOs have dialled a WallStreet wake up call.Investment firms can nolonger abdicate the impacts oftheir underwriting andfinancing. Three Gorges Damis one litmus test for anyenvironmental or socialpolicies they claim to have inplace. It is unlikely the firmswill change their behaviouruntil they feel the impacts ontheir bottom line. Which iswhy IRN and other NGOs arecalling on people to boycottthe Discover card – andpressure Morgan Stanley tostay out of Three Gorges untilthe economic and social rightsof those impacted aresecured. An activist web site –www.floodwallstreet.org – hasbeen a useful tool instrengthening our efforts andcommunicating this issue tothe media and the public.”

A. Company analysisA. Company analysisA. Company analysisA. Company analysisA. Company analysis

Analysis of the financial risks to whichcompanies are exposed includes looking atthe level of debt on the balance sheetrelative to equity or to assets, and the ratioof cash flow to interest payments on suchdebt. For many analysts, the greatestconcern is the proportion of short-term debtin the balance sheet. If this is high, thenthere is a risk that the company could have

difficulty replacing it or could suffer ifinterest rates rise. Analysts specialising incredit risk look more widely at the riskprofile and consider many other factors,such as insurance cover.

Where a company is well-respectedamongst investors, it may be difficult toidentify and make a credible argument onfinancial risks. In such instances,campaigners would be well advised to work

SourcesSourcesSourcesSourcesSourcesInternational Rivers Network, Letterto Lehman Brothers, 6 November1997; Berne Declaration, Letter toCredit Suisse Group, 5 July 1999;Shareholder Resolution No. 6, MorganStanley Dean Witter Annual GeneralMeeting, April 1999; “Morgan StanleyDean Witter and the Three GorgesDam”,EnviroAction, March 1999.....For further information, contact:International Rivers Network, Tel: + 1510 848 1155; Email:[email protected]@[email protected]@[email protected] Web:www.floodwallstreet.orgwww.floodwallstreet.orgwww.floodwallstreet.orgwww.floodwallstreet.orgwww.floodwallstreet.org andwww.irn.orgwww.irn.orgwww.irn.orgwww.irn.orgwww.irn.orgNational Wildlife Federation, Tel: + 1202 797 6602FOE-US, Tel: +1 202 783 7400(ext.242); Email: [email protected]@[email protected]@[email protected]: www.foe.org www.foe.org www.foe.org www.foe.org www.foe.org


5 05 05 05 05 0

with a specialist or sympathetic analyst.Where a company is already experiencingfinancial troubles, however, it may berelatively easy to make a case againstinvesting in the company on financialgrounds.

For example, if investors are deserting thecompany, campaigners can usefully drawthis to the attention of other investors. AsMichelle Chan-Fishel of Friends of theEarth-US advises, “Suggest these peoplemay be more informed, particularly if theyhave been long time partners.” 56

B. Project analysisB. Project analysisB. Project analysisB. Project analysisB. Project analysisWhere finance is being raised for a specificproject, detailed financial risk analysisforms a major part of the investmentdecision. If campaigners can successfullypuncture the financial case for investing,they will strike at the core of the project. Inthe case of the proposed Bakun dam inMalaysia, for example, campaignerssuccessfully deterred investors frombacking the project.Project-specific financial risks worthhighlighting include:

ArArArArAre the fe the fe the fe the fe the forororororecasts ofecasts ofecasts ofecasts ofecasts of futur futur futur futur future re re re re returetureturetureturnsnsnsnsnsfrfrfrfrfrom the prom the prom the prom the prom the project foject foject foject foject fairairairairair llllly estimay estimay estimay estimay estimated?ted?ted?ted?ted?Are the assumptions used in the forecastsdisclosed and reasonable? In the case ofhydroelectric dams, for example, theexpected electricity output dependscritically on the dam’s reservoir filling up asanticipated. If the river’s flow declines –for example, because of a drought orbecause of water abstraction upstream –the dam’s reservoir level will be lower thanexpected. If historical data has been used toestimate the river’s flow, is it complete androbust? Is it appropriate to extend it intothe future – for instance, if the river’s flowhas been estimated using meteorologicaldata, what allowance has been made forclimate change? Draw attention to anyflaws in the methods for such calculations– and use them to cast doubts on theviability of the project. Similarly, forprivate sector-financed road schemes,scrutinise the traffic forecasts: are theyrobust?

How are delays to the project likely toHow are delays to the project likely toHow are delays to the project likely toHow are delays to the project likely toHow are delays to the project likely to

affect cash flow and debt repayment?affect cash flow and debt repayment?affect cash flow and debt repayment?affect cash flow and debt repayment?affect cash flow and debt repayment?Cost and time overruns can significantlyalter the revenue flows from a project – andhence the time it takes to make a profit (ifthere is a profit to be made). Constructiondelays are therefore of critical concern,particularly to those who have made short-and medium-term loans, since delays inconstruction mean delays in the projectgenerating an income and hence in debtsbeing repaid. Have the risks of overrunsbeen properly factored in? What is therecord of overruns elsewhere in theindustry? If overruns are common, stressthis – and highlight the likely implicationsfor creditors.

ArArArArAre ee ee ee ee exterxterxterxterxternal enal enal enal enal experxperxperxperxper ts contrts contrts contrts contrts contracted bacted bacted bacted bacted by they they they they thecompancompancompancompancompany try try try try tr ulululululy indey indey indey indey independent?pendent?pendent?pendent?pendent?Many supposedly independent consultantsmay have specific interests in securingfurther work on the project in question,such as monitoring the project towardscompletion, or be keen to support thedevelopment of the sector as a whole forsimilar reasons. Highlight these conflicts ofinterests and how they may influence theconsultants’ judgement.

ArArArArAre the contre the contre the contre the contre the contracts underacts underacts underacts underacts underpinning thepinning thepinning thepinning thepinning theproject robust?project robust?project robust?project robust?project robust?If the project involves the generation ofelectricity, for example a coal-fired powerstation, it may involve an electricity supplycompany agreeing to purchase the powerproduced at an agreed price. This is knownas a Power Purchasing Agreement (PPAs).In many instances, particularly where theelectricity company is state-run or semi-privatised, such PPAs may have beenforced on the power company by thegovernment. If this is the case, legalchallenges may subsequently arise if thegovernment changes. PLN, Indonesia’sstate electricity utility, for example, iscurrently challenging a number of powerpurchasing agreements that it signed whenGeneral Suharto was President, claiming itwas forced into them, despite their beingfinancially disadvantageous. Highlight thisrisk. Raise questions also, whereappropriate, about the credit-worthiness ofthe power purchaser: if a power projectcan’t sell the power it produces, its revenueflow will be severely affected.


5 15 15 15 15 1

What is the record of investor interestWhat is the record of investor interestWhat is the record of investor interestWhat is the record of investor interestWhat is the record of investor interestin other similar prin other similar prin other similar prin other similar prin other similar projects? Haojects? Haojects? Haojects? Haojects? Havvvvve ine ine ine ine invvvvvestorestorestorestorestorsssssshied away from them?shied away from them?shied away from them?shied away from them?shied away from them?If so, highlight this. For example, “Hydro isproving unable to compete in theincreasingly competitive energy market.Private investors are reluctant to financehydro projects, which are seen as high riskinvestments but with low rates of return.”

How shaky is the economy of the hostHow shaky is the economy of the hostHow shaky is the economy of the hostHow shaky is the economy of the hostHow shaky is the economy of the hostcountrcountrcountrcountrcountr y?y?y?y?y?Creditors (in particular those who havebought government bonds issued to financea project) will want to know whether thegovernment is considered politically stableand whether it is overburdened with debt. Apoint to bring out here is the hidden debtthat many countries have taken on as aresult of the move to private sector financedprojects. In order to attract privateinvestors, many governments in the Southhave committed themselves to billions ofdollars’ worth of contractual obligations, alldue in a lump sum, to protect investors andlenders against foreign exchange risks. Thecapital structure of many privately-financedinfrastructure projects also generallyincludes a high percentage of debt, withproject lenders taking government-supportedcontracts (in addition to the assets of theproject developer) as security. Raise thequestion: “Is the governmentovercommitted? And what are theimplications of this for creditors?”

WWWWWhahahahahat art art art art are the cure the cure the cure the cure the currrrrrencencencencency risks fy risks fy risks fy risks fy risks for theor theor theor theor theinvestor?investor?investor?investor?investor?Many private sector-financed powerprojects involve power purchasingagreements in which the project developersare paid in dollars but the income is earnedby the national utility in local currency. Thisis viable so long as the host currency isstable – but if it collapses, the host countrycan find itself in serious difficulties. The1997 South-East Asian economic collapse,for example, has meant that many PowerPurchasing Agreements have had to berenegotiated. This can result in reopeningthe whole project finance negotiations, withsevere consequences for investors. Highlightany indications that the local currency maybe heading for a fall in value – or losing its

convertibility.

What are the interestWhat are the interestWhat are the interestWhat are the interestWhat are the interestrrrrraaaaate risks?te risks?te risks?te risks?te risks?Long-term loans atfloating (that is, variable)interest rates are the normfor project debt ininternational projectfinancing. Questionwhether the assumedinterest rates for theproject are based on thereal financial situationlikely to be faced by theproject – or on someartificial projection.Assuming unrealisticallylow interest rates maydistort the financialviability of the project –and undermine theviability of alternatives.

4. Non-financial risks4. Non-financial risks4. Non-financial risks4. Non-financial risks4. Non-financial risksWhen consideration of risks isbroadened out from narrow financialrisk to wider risks which could stillhave a financial implications for theproject or investment, many NGOconcerns can be raised directly. When aproject means that people have to leavetheir homes and lands, for example,resettlement issues can be translated intodirect financial risks to a potentialinvestor. For instance, if the numbers tobe resettled have been underestimated,the costs of the project – and thepolitical risk of opposition leading toconstruction delays – are likely to rise.Likewise, human rights’ abuses areevidence of a political climate ofrepression – with political risks thatmay deter investors.

It is important to state these risksrealistically and to focus on those thatimpact the bottom line, especially in thenear term. In the case of the Bakun damcampaign, for example, issues such asresettlement (relatively few peopleinvolved) and decommissioning

When a projectmeans that peoplehave to leave theirhomes and lands,

resettlement issuescan be translated into

direct financial risksto a potentialinvestor. It is

important to statethese risks

realistically and tofocus on those thatimpact the bottom

line.


5 25 25 25 25 2

liabilities (too long-term) were notfinancially significant– whereas concernsabout overpricedpower were very real.Concerns aboutdeforestation also hadsome influence. (seeBox, “Bakun –Lobbying the analysts”,p.81)

Key pressure pointsinvolving non-financialrisks include: politicalrisks, legal risks andenvironmental risks.

These are dealt with below.

5.5.5.5.5. P P P P Political riskolitical riskolitical riskolitical riskolitical risk

Political risks primarily revolve aroundthe threat to theinvestment from changesin government, civil strife or otherpolitical upheavals:

Highlight fHighlight fHighlight fHighlight fHighlight factoractoractoractoractors thas thas thas thas that pose a politicalt pose a politicalt pose a politicalt pose a politicalt pose a politicalrisk to the investment, such as publicrisk to the investment, such as publicrisk to the investment, such as publicrisk to the investment, such as publicrisk to the investment, such as publicopposition.opposition.opposition.opposition.opposition.Draw attention to the possibility of delaysdue to protests – and cite examples ofwhere this has happened elsewhere (forexample, delays due to the occupation ofnuclear sites or direct action against miningand oil installations or road schemes).

Emphasise any risk that the projectEmphasise any risk that the projectEmphasise any risk that the projectEmphasise any risk that the projectEmphasise any risk that the projectmay be cancelled or renegotiated.may be cancelled or renegotiated.may be cancelled or renegotiated.may be cancelled or renegotiated.may be cancelled or renegotiated.This is a strong possibility where theproject does not have cross party politicalsupport or does not offer a fair deal tocertain groups involved.

If new environmental regulations areIf new environmental regulations areIf new environmental regulations areIf new environmental regulations areIf new environmental regulations arein the pipelinein the pipelinein the pipelinein the pipelinein the pipeline,,,,, dr dr dr dr draaaaaw out the implicaw out the implicaw out the implicaw out the implicaw out the implicationstionstionstionstionsfffffor inor inor inor inor invvvvvestorestorestorestorestor sssss.....New environmental regulations could addsignificantly to the costs of the project.

Stress that the failure to address localStress that the failure to address localStress that the failure to address localStress that the failure to address localStress that the failure to address localenenenenenvirvirvirvirvironmental conceronmental conceronmental conceronmental conceronmental concerns or to consultns or to consultns or to consultns or to consultns or to consultadequately with affected communitiesadequately with affected communitiesadequately with affected communitiesadequately with affected communitiesadequately with affected communities

exacerbates the political risks of projectexacerbates the political risks of projectexacerbates the political risks of projectexacerbates the political risks of projectexacerbates the political risks of projectfailure by fuelling opposition.failure by fuelling opposition.failure by fuelling opposition.failure by fuelling opposition.failure by fuelling opposition.Quote the major credit rating agencies, forexample Standard & Poor, which recognisesthe value of public participation in planningprojects in developing countries.57 Localcommunities may be able to use this asleverage for negotiations.

Highlight how double standardsHighlight how double standardsHighlight how double standardsHighlight how double standardsHighlight how double standardsconstitute a political risk for companiesconstitute a political risk for companiesconstitute a political risk for companiesconstitute a political risk for companiesconstitute a political risk for companiesand inand inand inand inand invvvvvestorestorestorestorestor sssss.....Many projects that companies back in theSouth – nuclear power plants, for example –would not be tolerated in their owncountries. Point to the high risk that this willlead to protesters targeting the company.Quote industry-friendly reports to reinforcethe point – for example, the 1997 report bythe Control Risk Group, a businessmanagement consultancy, onenvironmentalism as a risk to investors:“Western investors cannot afford to allowtheir standards to slip in developingcountries . . . Companies are increasinglyperceived as accountable to a constituencyfar wider than merely their shareholdersand the relevant authority. Business cantherefore no longer rely on regulatory andscientific approval. Instead, they must winpublic acceptance of their ‘licence tooperate’.” 58

6. Legal risks6. Legal risks6. Legal risks6. Legal risks6. Legal risksLegal claims against companies canresult in huge liabilities that severelyimpact the value of an investment. In theUS, legal claims by victims of asbestosduring the early 1980s inflicted hugedamage costs on the asbestos industry,severely curtailing its activities.

Highlight any risk of legal actionHighlight any risk of legal actionHighlight any risk of legal actionHighlight any risk of legal actionHighlight any risk of legal actionagainst the company or project.against the company or project.against the company or project.against the company or project.against the company or project.Stress the possible liabilities to the companyif the court decides against it. These can behuge. In 1999, for example, Asian workersin the Northern Mariana Islands in theSouth Pacific filed a suit against a USclothing company for $1 billion in damages.

Emphasise any delays to a project thatEmphasise any delays to a project thatEmphasise any delays to a project thatEmphasise any delays to a project thatEmphasise any delays to a project thatararararare like like like like likelelelelely to occur wy to occur wy to occur wy to occur wy to occur whilst impending courhilst impending courhilst impending courhilst impending courhilst impending cour ttttt

Legal claims againstcompanies can result inhuge liabilities thatseverely impact thevalue of an investment.In the US, legal claimsby victims of asbestosduring the early 1980sinflicted huge damagecosts on the asbestosindustry, severelycurtailing its activities.


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cases are heard.cases are heard.cases are heard.cases are heard.cases are heard.How will these delays affect the flow ofrevenue from the project?

Highlight any possible future legalHighlight any possible future legalHighlight any possible future legalHighlight any possible future legalHighlight any possible future legaldisputes.disputes.disputes.disputes.disputes.For example, where communities are to bedisplaced, are legal claims – such as overindigenous claims to land and water rights –likely to lead to court proceedings?

DrDrDrDrDraaaaaw aw aw aw aw attention to potential long-terttention to potential long-terttention to potential long-terttention to potential long-terttention to potential long-termmmmmlegal liabilities.legal liabilities.legal liabilities.legal liabilities.legal liabilities.Are there potential liability risks associatedwith the project or issue, especially if theyare not insured or managed? For example,who will be legally responsible for anypollution from the project? Who will pay upin the event of a major industrial accident?In the case of biotech companies, what arethe legal liabilities arising from cross-contamination by genetically-engineeredcrops, health and safety lawsuits and anti-trust cases?

Stress new technologies that may makeStress new technologies that may makeStress new technologies that may makeStress new technologies that may makeStress new technologies that may makelelelelelegggggal suits aal suits aal suits aal suits aal suits agggggainst a companainst a companainst a companainst a companainst a company mory mory mory mory more like like like like likelelelelelyyyyy.....For example, cheap new testing devices arebecoming available that enable easydetection of genetically-modified (GM)material in foodstuffs, leading to an increasein the detection of crops that exceed agreedGM content limits.

7. Environmental risks7. Environmental risks7. Environmental risks7. Environmental risks7. Environmental risks

Highlight any direct financial costs thatHighlight any direct financial costs thatHighlight any direct financial costs thatHighlight any direct financial costs thatHighlight any direct financial costs thatmamamamamay be incury be incury be incury be incury be incur rrrrred thred thred thred thred through enough enough enough enough envirvirvirvirvironmentalonmentalonmentalonmentalonmentaldamage.damage.damage.damage.damage.For example, pollution incidents can result infines or a requirement to pay clean-up costs.Bring out how costly these can prove. Stressthat those affected by environmentaldamage caused by a project – for example,loss of fishing rights – may seek damagesfor the losses suffered.

Bring out the financial implications forBring out the financial implications forBring out the financial implications forBring out the financial implications forBring out the financial implications forinininininvvvvvestorestorestorestorestors ofs ofs ofs ofs of en en en en envirvirvirvirvironmental deonmental deonmental deonmental deonmental degggggrrrrradaadaadaadaadationtiontiontiontionthat is unrelated to a project but whichthat is unrelated to a project but whichthat is unrelated to a project but whichthat is unrelated to a project but whichthat is unrelated to a project but whichnonetheless impacts on its vianonetheless impacts on its vianonetheless impacts on its vianonetheless impacts on its vianonetheless impacts on its viabilitybilitybilitybilitybility.....In the case of dams, for example, estimate

the likely reduction in the life of the projectif the dam’s reservoir silts up faster thanexpected as a result of deforestation.

Highlight long-Highlight long-Highlight long-Highlight long-Highlight long-terterterterterm risks to them risks to them risks to them risks to them risks to theproject fromproject fromproject fromproject fromproject fromenvironmentalenvironmentalenvironmentalenvironmentalenvironmentalchange, for examplechange, for examplechange, for examplechange, for examplechange, for examplethrough globalthrough globalthrough globalthrough globalthrough globalwwwwwararararar mingmingmingmingming.....To continue theexample of dams,what would happen tolocal river flows if thearea gets hotter anddrier? Would this lead to reduced flows –and therefore to problems in filling thedam’s reservoir? What would be theimplications for electricity output – and thusthe project’s income? And what would bethe implications for dam safety if climatechange resulted in increased flooding?Would this increase insurance costs?

RRRRRaise the long-teraise the long-teraise the long-teraise the long-teraise the long-term financialm financialm financialm financialm financialimplications of possible environmentalimplications of possible environmentalimplications of possible environmentalimplications of possible environmentalimplications of possible environmentalcharges or taxes which may becharges or taxes which may becharges or taxes which may becharges or taxes which may becharges or taxes which may beintrintrintrintrintroduced to interoduced to interoduced to interoduced to interoduced to internalise ennalise ennalise ennalise ennalise envirvirvirvirvironmentalonmentalonmentalonmentalonmentalcosts.costs.costs.costs.costs.These may have a considerable impact onthe viability of a project or investment.

8. Reputational risks8. Reputational risks8. Reputational risks8. Reputational risks8. Reputational risks

As noted, companies are increasinglyconcerned about their public image –and their involvement in environmentalpollution or human rights’ abuse canhave a major impact on their “reputationrisk”. Many are seeking to measure andmonitor their reputation more actively.Different companies will have differentsensitivities to reputation risk, however,with consumer-orientated companies orcompanies with strong brand valuebeing more vulnerable. Theeffectiveness of playing the reputationcard will depend critically on the abilityof campaigners to publicise theirconcerns over the company.

The effectiveness ofplaying the reputation

card will depend criticallyon the ability of

campaigners to publicisetheir concerns over the

company.


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Different players in themarket have differentinterests. Lumping allinvestors together as“Wall Street” or “TheCity” deniescampaigners thenuanced mapping ofsplits, divisions andconflicting institutionalmotivations that, ifexploited, can openspace for change.

MaMaMaMaMatctctctctching the prhing the prhing the prhing the prhing the pressuressuressuressuressureeeeepoints to the financialpoints to the financialpoints to the financialpoints to the financialpoints to the financialplaplaplaplaplayyyyyerererererThe above are just a few of the risksconnected with socially orenvironmentally damaging corporatepractices.

To be effective in pointing them out,however, it is critical that campaignersmatch the risks to the market playersthat they are targeting. Different playershave different interests – and manyrisks that are of concern to one financialactor will not trouble another. Thisopens up considerable political spacefor campaigners to play one group offagainst another.

Indeed, a common error in financialmarket campaigning is to assume that

all the players in themarket are the same.At one level, this iscertainly true: allinvestors hope tomake a profit. Butlumping them alltogether as “WallStreet” or “The City”(or more accurately,but less helpfully in acampaigning context,as “capitalists”)denies campaignersthe nuanced mappingof splits, divisionsand conflictinginstitutionalmotivations that mightenable them to exertpressure successfully.

When lobbying financial markets,understanding the differences betweenfinancial players is as important asunderstanding their similarities.

Such differing interests are most

apparent in project finance. Consider thenumerous different participants in atypical private sector-financed BuildOperate Transfer power generationproject. They include companies,financiers and the public sector, all ofwhich will come to the table with verydifferent interests.

The companies are likely to come in theform of:

The project developers (who initiatedthe project and brought together all theparticipants). They will often invest in theproject company at an early stage andexpect a higher return on this investment, asit is more risky.

The power purchaser, often agovernment-owned utility, which contractsto buy the electricity generated.

The construction contractor.

The equipment supplier.

The operator (often, though not always,the same as the project company).

The fuel supplier, in the case of a powerproject.

Financiers will include:

The lenders which provide the debtfinance for the project. These includeprivate banks and multilateral developmentbanks, such as the World Bank.

Export credit agencies or the privatesector arms of the MDBs, such as theWorld Bank’s Multilateral InvestmentGuarantee Agency, which insure lendersagainst defaults on payments or politicalrisks.

Any other independent investors in thespecial purpose project company (note thatalong with the developer and financialinvestors, other participants in the projectwill often be expected to invest in theproject company).

The public sector may be representedthrough agencies of the host government,such as the energy ministry or theenvironment agency, whose perspectiveson the project may well conflict.


5 55 55 55 55 5

As negotiations for the project proceed,it rapidly becomes clear that theseplayers have very different interests.One obvious schism is between thecompanies involved and the financiers.Companies will want to maximise themoney they make from a project bycharging the most they can.

Conversely, financiers will want to payas little up front as they can to maximisetheir returns and minimise their risks.When a project is financially robust, itmay be easy for everyone to do well, orat least adequately, out of it. But when itis more marginal, there may beconsiderable tension between thedifferent parties, which campaigners canseek to exploit.

Another major division can be betweenthe purchasers in a project finance deal(for example, those who will buy thepower from a power project) and theproject backers (the project developer,the financiers and other companies withan investment in the project). Thepurchasers will want to pay a lowerprice for power: the project backers, bycontrast, will want a higher price toguarantee an adequate return on theirinvestment. Even when there isagreement on a base price, there is oftendisagreement on some of the details.

Similarly, the project developers willseek to off-load any costs due toconstruction delays onto the constructioncontractors who, in turn, will seek tominimise the penalties imposed on them.The host government, meanwhile, maybe anxious to avoid having to give asovereign guarantee to any export creditsthat are obtained, whilst the exportcredit agencies and their clients(generally the construction companiesand the lenders) will generally be keento obtain such a guarantee, whichultimately means that the hostgovernment underwrites any debt.

Even amongst financiers, there can be

tensions. For example, there are cleardivisions between creditors (those whohave loaned money to theproject) and equityholders (those who havebought shares in theproject). Creditors willbe primarily concernedwith avoiding risks andgetting their loansrepaid, preferably asquickly as possible,whereas equity investorswill be more interestedin the long-termprospects of the ventureand with the possibilitiesof enhanced futureearnings.

Project developers will try to addressthese tensions through a complexnetwork of contracts – a common featureof most projects. They may also seek toget the various parties to becomeinvestors in the project so that they allhave a degree of financial interest. But,in many cases, tensions and resentmentmay remain, creating “contract stress”.This can be a very useful factor forcampaigners – for example, when thepower purchaser has been coerced intopaying more for power than it wouldhave preferred.

Whereas most projects, by their verynature, consist of varied groups ofdifferent parties, companies tend to bemore homogenous, and the competinginterests less obvious. But it isimportant to realise that tensions anddiffering interests exist withincompanies as well which can be usefulwhen directing a campaign at companiesor their investors.For instance, the marketing director of acompany is likely to be more concernedabout damage to a company’s reputationthan the finance director, because it isthe marketing director that sells thecompany’s services. In addition, there

When lobbyingfinancial markets,

understandingthe differences

between financialplayers is asimportant as

understandingtheir similarities.


5 65 65 65 65 6

may be different views between “oldguard” managers who have been in thecompany for decades and youngermanagers who are often more sensitiveto environmental concerns.When pursuing an “engagement” typestrategy, it may be possible to use thesedifferences positively – reinforcing thesympathetic factions within companiesand targeting the less sympathetic. Indoing so, different arguments will havedifferent weight with differentindividuals.Similarly, investors may have differentreasons for investing in a company anddifferent views on its valuation. Thiscan be gauged by reading what thepress and other analysts havecommented about a company.Reinforcing the points made by moresympathetic analysts can put yourarguments on a more credible footing.

It is difficult to offer firm guidance as towhich of the above risks to focus upon,but campaigners might start byconsidering the following questions:

WWWWWhahahahahat do int do int do int do int do invvvvvestorestorestorestorestors (fs (fs (fs (fs (for eor eor eor eor examplexamplexamplexamplexample,,,,,analysts) and the financial press consideranalysts) and the financial press consideranalysts) and the financial press consideranalysts) and the financial press consideranalysts) and the financial press considerthe importhe importhe importhe importhe impor tant ftant ftant ftant ftant feaeaeaeaeaturturturturtures ofes ofes ofes ofes of the companies the companies the companies the companies the companiesinvolved?involved?involved?involved?involved? Which of your argumentsWhich of your argumentsWhich of your argumentsWhich of your argumentsWhich of your argumentsreinforce these features? Which help toreinforce these features? Which help toreinforce these features? Which help toreinforce these features? Which help toreinforce these features? Which help torrrrreeeeevvvvveal neeal neeal neeal neeal new concerw concerw concerw concerw concerns?ns?ns?ns?ns?

Which of your arguments have theWhich of your arguments have theWhich of your arguments have theWhich of your arguments have theWhich of your arguments have themost financial impact,most financial impact,most financial impact,most financial impact,most financial impact, par par par par par ticularticularticularticularticular llllly in they in they in they in they in theshorshorshorshorshor t tert tert tert tert term? Gim? Gim? Gim? Gim? Givvvvve pre pre pre pre prefefefefeferererererence toence toence toence toence toarguments that stress actual financialarguments that stress actual financialarguments that stress actual financialarguments that stress actual financialarguments that stress actual financialimpacts. impacts. impacts. impacts. impacts. Where the issue is one of risk,Where the issue is one of risk,Where the issue is one of risk,Where the issue is one of risk,Where the issue is one of risk,focus on the biggest and most likely risk.focus on the biggest and most likely risk.focus on the biggest and most likely risk.focus on the biggest and most likely risk.focus on the biggest and most likely risk.TTTTTrrrrry to be ry to be ry to be ry to be ry to be realisticealisticealisticealisticealistic..... Don Don Don Don Don’’’’’t rt rt rt rt relelelelely on othery on othery on othery on othery on otherssssssharing your assumption that some riskssharing your assumption that some riskssharing your assumption that some riskssharing your assumption that some riskssharing your assumption that some risks“should” be serious.“should” be serious.“should” be serious.“should” be serious.“should” be serious.

Do any of your arguments exposeDo any of your arguments exposeDo any of your arguments exposeDo any of your arguments exposeDo any of your arguments exposethe company as having lied in the past orthe company as having lied in the past orthe company as having lied in the past orthe company as having lied in the past orthe company as having lied in the past orhahahahahaving misled inving misled inving misled inving misled inving misled invvvvvestorestorestorestorestors?s?s?s?s?

Do any of your argumentsDo any of your argumentsDo any of your argumentsDo any of your argumentsDo any of your argumentsdemonstrdemonstrdemonstrdemonstrdemonstraaaaate a lacte a lacte a lacte a lacte a lack ofk ofk ofk ofk of g g g g good prood prood prood prood practiceacticeacticeacticeactice,,,,,parparparparpar ticular comparticular comparticular comparticular comparticular compared with competitored with competitored with competitored with competitored with competitors?s?s?s?s?

IfIfIfIfIf an an an an any iny iny iny iny invvvvvestorestorestorestorestors or potentials or potentials or potentials or potentials or potentialparparparparpar tnertnertnertnertners has has has has havvvvve withdre withdre withdre withdre withdraaaaawn,wn,wn,wn,wn, w w w w whhhhhy hay hay hay hay havvvvve thee thee thee thee theyyyyydone so? Can you use or infer anythingdone so? Can you use or infer anythingdone so? Can you use or infer anythingdone so? Can you use or infer anythingdone so? Can you use or infer anythingfrfrfrfrfrom their withdrom their withdrom their withdrom their withdrom their withdraaaaawwwwwal?al?al?al?al?


5 75 75 75 75 7

PPPPPararararart t t t t TTTTThrhrhrhrhreeeeeeeeee

CampaigningCampaigningCampaigningCampaigningCampaigningin thein thein thein thein themarmarmarmarmarkkkkketetetetet


5 85 85 85 85 8

I f you decide that a financialcampaign is an appropriate part

of your overall strategy, thenext step is to decide what you andyour partners want out of such acampaign. This may lead you toreassess your involvement. Should youdecide to proceed, however, there are anumber of different areas where thefinancial markets could usefullycontribute to a broader campaignstrategy. They include:

Placing pressure through thefinancial markets on industry sectorswhich cause public concern. One aimmay be to reduce the flow of capital toa sector (or redirect it to moreacceptable companies); another toencourage the adoption of sustainablepractices across the industry as awhole;

Using investors to target individualcompanies, asking them to ceasecertain activities or to adopt bestpractice;

STRASTRASTRASTRASTRATEGIESTEGIESTEGIESTEGIESTEGIES,,,,,TTTTTAAAAACTICSCTICSCTICSCTICSCTICSAND TIMINGAND TIMINGAND TIMINGAND TIMINGAND TIMING


5 95 95 95 95 9

Directly lobbying investors to withdrawfinancial support for individual, privately-financed, destructive infrastructure projects;and

Pressing financial institutions andcompanies to adopt new rules that wouldplace “sustainable development” at the heartof investment decisions.

IndustrIndustrIndustrIndustrIndustry-widey-widey-widey-widey-wide

are Dead, which advised investors toabandon ship, the main argument beingthat the technology did not have amarket.59 Within months, major biotechfirms were selling off (or attempting tosell off) their agricultural biotechdivisions. (See Box, “Genetic slump”,p.60)

Groups have also used financialarguments to persuade institutionalinvestors to pressure companiesinvolved in building or equipping damsto move out of the hydropower sector. A1997 report directed at investors inAsea Brown Boveri, a Swedish-Swissconglomerate involved in dam projectsworld-wide, highlighted the increasingunprofitability of the hydropower sector,particularly given the move to privatesector financing of new projects and theincreasing reluctance of the World Bankand other multilateral developmentbanks to become involved in dampojects (see Box, “ABB – moving out ofdams”, p.43).60

Changing companyChanging companyChanging companyChanging companyChanging companyprprprprpracticesacticesacticesacticesacticesObjective: Changing the behaviourof a company.

Approach: Most typically, attempts towin change through activeengagement with the company andshareholders, possibly through theuse of shareholder resolutions.Analytical approaches may also beeffective. Occasionally, moreconfrontational campaigning may benecessary. Emphasis on the need toadopt “best practice”.

Individual companies can also betargeted, with the objective of gettingthem to withdraw from a particularenterprise, to change their strategy orto adopt certain policies.

campaignscampaignscampaignscampaignscampaignsObjective: Changing the financialmarkets’ perception of an industry

Approach: Typically analytical. Theemphasis is on changing perceptionsof risks, growth prospects or consumeracceptability. Occasionallyengagement, where new best practiceis important to emphasise.

Many financial market campaigns areaimed at pressing financial institutions,such as banks and pension funds, towithdraw support from industrial sectorsthat are destructive of the environment,or to place pressure on individualcompanies to move into other, moresustainable, areas.

In such campaigns, two argumentsfeature prominently:

“Business-as-usual” is likely to yielddiminishing financial returns; and

Increasing public concern is alreadypuncturing the market for existingproduct lines.

Perhaps the most spectacular example ofsuch a campaign in recent years has beenthat against the genetically modified(GM) food industry. As growing healthand environmental fears led towidespread consumer boycotts of GMfoods – and activists took legal anddirect action to prevent the planting ofGM crops – so the markets began tosense that the industry was in deeptrouble. Critical to the campaign was areport by Deutsche Bank, entitled GMOs


6 06 06 06 06 0

Genetic slumpGenetic slumpGenetic slumpGenetic slumpGenetic slump

In the mid-1990s,agricultural biotechnologylooked to many investors –

and governments – like theindustry of the future.Aggressively promoted byleading companies likeMonsanto, the industry toutedits new technologies as theresponse not only to worldhunger but also to disease andfears over farm pollution.Seeking to capitalise on thecoming “genetics revolution”,companies in the chemicalsand pharmaceutical sectorssought out partners with aview to creating new “LifeScience” companies with thecash and research skills toexploit the synergies thatgenetics was predicted tobring when traditionallyseparate industries werebrought together.

PrPrPrPrProtests wotests wotests wotests wotests wororororor ldldldldldwidewidewidewidewideWithin months of the firstgenetically modified foodshitting the supermarketshelves of Europe, consumerfears over food safety haddriven the new industry to thewall. Environmental groupslaunched a boycott;supermarkets which hadinitially voiced confidence inGM products withdrew themfrom their own brandproducts; and activists furtherpublicised the environmentaldangers by uprootingexperimental crops.Friends of the Earth, one ofthe groups at the forefront ofthe campaign in Britain, wroteto the directors of the leadingsupermarkets warning themthat they could be personallyliable for any adverse healthimpacts of GM foods boughtfrom their companies. In theUS, where consumer concernsover GM foods were slower totake off, environmentalistslaunched a series of classaction lawsuits against themajor biotech companies foralleged “anti-competitivebehaviour”.

Meanwhile, in India and otherdeveloping countries – the mainbeneficiaries of thebiotechnology, according to itspromoters – small farmersburned GM crops, outraged atthe patenting of seeds by thebiotech companies. Accusingthe companies of “bio-piracy”,they demanded that seedsremain (as they have alwaysbeen) part of humanity’scommon property – developedby farmers over centuries andbelonging to no one. Far fromrelieving hunger, they argued,biotechnology wouldexacerbate it by forcing farmersto pay for what was previouslyfree – and by furtherconcentrating food productionin the hands of richer farmers.The net result would be toincrease landlessness andpoverty, further excluding themany from access to food.

“GMOs ar“GMOs ar“GMOs ar“GMOs ar“GMOs are Dead”e Dead”e Dead”e Dead”e Dead”

The body blow to the industry –at least in the short-term –came with the release of areport by Deutsche Bankanalysts Frank Mitsch andJennifer Mitchell, advisinginvestors to steer clear ofagricultural biotech shares – andto sell those they had. At painsto point out that they were notopposed to biotech – andstrenuously distancingthemselves from “anti-capitalist” opposition to theindustry – Mitsch and Mitchellwarned investors: “We predictthat GMOs, once perceived as abull case for this sector, willnow be perceived as a pariah.”Two arguments in particulardominated the report:

The market for GMOs wasThe market for GMOs wasThe market for GMOs wasThe market for GMOs wasThe market for GMOs wascrumbling and would not becrumbling and would not becrumbling and would not becrumbling and would not becrumbling and would not beeasily restored.easily restored.easily restored.easily restored.easily restored.“The perception wars are beinglost by industry. Foodcompanies, retailers, grainprocessors and governmentsare sending a signal to seedproducers that ‘we are notready for GMOs’.’” “Consumers

may very well decide thatbiotechnology derived foodsare not as appealing as all-organic or current offerings –‘Thanks, but no thanks’.”

GMOs are “becoming aGMOs are “becoming aGMOs are “becoming aGMOs are “becoming aGMOs are “becoming aliability to farmers”.liability to farmers”.liability to farmers”.liability to farmers”.liability to farmers”.Non-GMO grains were alreadyselling at a premium pricewhich, if the trend continued,would far outweigh anyeconomic benefit in growingGMOs. Farmers were thuslikely to turn their backs onagricultural biotech – creating“an earnings nightmare” forcompanies such as PioneerHybrid and Monsanto.The report is widelyacknowledged to have playeda major role in dentinginvestor confidence inagricultural biotech, with manycompanies (such as Monsanto)seeing millions wiped off theirshare value.Since the report’s publication,several US banks have refusedto finance GM seed purchasesand others have voiced theirreservations. The influentialAmerican Corn GrowersAssociation Farmers has alsowarned its members: “Withprices hitting historic lows, thelast thing a farmer needs tooccur is that both foreignconsumers and domestic grainbuyers refuse to purchasecertain products. In this event,farmers need to think longand hard before planting GMOseeds.”Many of the companies thatmerged with agriculturebiotech firms are also havingsecond thoughts. Pharmacia &Upjohn in the US, Novartis inSwitzerland and AstraZeneca inBritain have all sold or spunoff their agriculturalbusinesses – often at priceswell below what the parentcompanies had hoped to get.Aventis, which was widelypredicted to be the companythat would hold out againstthe tide, announced in late2000 that it, too, would beselling its $2.7 billion crop-sciences operations.


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There are several different ways inwhich financial markets can be used to

possible, target the companies andinvestors involved. Strees thepotential adverse impact ofinvolvement on their reputation.

Campaigning through the financialmarkets may be one of the few ways tostop damaging infrastructure projects,particularly when repression rendersother avenues less open to citizens.

The most powerful campaigns are thosethat use analysis to demonstrate that theproject is not viable or a soundinvestment. The complex framework ofcontracts, the tension between thevarious parties involved (see p.56), andthe desire to reduce risks to a minimumcreate fertile ground for criticalfinancial analysis. In addition, financialmarkets may be less familiar with theenvironmental and social factors thatcampaigners know well; an analysis ofthe financial risks that these pose to theproject may help undermine investorconfidence.

For instance, campaigners supportingMalaysian groups opposed to theproposed Bakun Hydroelectric damsuccessfully exposed gaping holes in thefinancial viability of the project.In a letter to potential investors, Friendsof the Earth (UK) warned that projectdelays had dogged other dam projectsand were highly likely in the Bakuncase; that the predicted power outputwas unlikely to materialise; and that thepower purchasing agreement wasoverpriced and would probably end inrenegotiation. The letter concluded:“Investment in Bakun is unlikely tooffer the return you require.” Theproject failed to raise the necessaryfinance and was eventually cancelled inthe wake of the Asian financial crisis.(See Box, “The Bakun campaign –Lobbying the analysts”, p.81)

If analytical campaigns are notapplicable or fail to be effective,markets can be used to exert pressure in

exert pressure on companies to changetheir policies and practices. Perhaps themost common approach involvespersuading major institutionalshareholders to press for change.Generally, shareholders prefer to exertpressure discretely, arranging for a“quiet chat” with senior management. Ifthis fails, however, they may choose totake a more public stand, for example,by backing a special resolution at thecompany’s Annual General Meeting.

One limitation of such shareholder“engagement” is that it can be relativelyslow. It is best suited to raising broadissues of management or policy – manyinvestors believe that it is the job ofmanagement to manage and are thusreluctant to criticise a company for aspecific action. They may, however, beprepared to support a resolution callingfor the introduction of policy or areview of strategy.

If specific action is required, it is morelikely to be successful if it can bebacked up with good analyticalarguments, and if the management isgiven some specific, challengingquestions to answer. If the analysisconvinces financial analysts and fundmanagers, the company may find that itsshare price comes under pressure.Publishing a critical analysis of acompany can be a very powerful meansof influencing potential investors when acompany first offers its shares on themarket (see p.71).

InfrInfrInfrInfrInfrastrastrastrastrastructuructuructuructuructure pre pre pre pre projectsojectsojectsojectsojectsObjectives: Encourage financialinstitutions to withdraw support froma controversial infrastructure project.

Approaches: Develop a financialanalysis of the project. Highlight risksand uncertainties. If this is not


6 26 26 26 26 2

other ways. In many controversialprojects, major listed companies areinvolved as lead contractors, equipmentsuppliers or purchasers of the project’sservices (for example, utilities buyingelectricity). Although other competitorsmay be plentiful, the involvement ofwell-known companies may be vital forthe credibility of the project. If this isthe case, then these companies can be

lobbied throughvarious forms ofshareholderengagement.

If the project involvesthe violation of humanrights or grossenvironmentaldegradation, it may bepossible to launch adirect campaign onmoral grounds againstany institutionbecoming involved inthe project. This may

prove a successful approach if theprofitability of investment in aparticular project is fairly modest. Insuch circumstances, banks and otherinvestors may feel that it is easier to getout of the project than it is to remain inand face hostile publicity.

Financial marFinancial marFinancial marFinancial marFinancial markkkkketetetetetprprprprpracticeacticeacticeacticeacticeObjectives: Encourage financialinstitutions to invest ethically, as amatter of course.

Approaches: Highlight long-termfinancial risks of current “business-as-usual” approaches. Developcontacts with socially responsibleinvestor (SRI) community – with theaim of strengthening its influencewithin the wider market.

Campaigners have also begun to directtheir attention to the general rules andpractices that govern investments. Iffinancial institutions can be encouragedto invest ethically as a matter of courseand to act “on their responsibility tocontribute to the protection andpromotion of human rights and theenvironment”,61 then the need forindividual campaigns is reduced andbad practice may be prevented from theoutset.Few financial institutions or companiescurrently require that due diligence beexercised as a matter of course withregards to environmental and socialsustainability in the same way that duediligence is performed to ensureprojects are financially, economicallyand technically sound. Campaigners arethus demanding that companies andfinancial institutions adopt policies –and the staff and career incentives toensure that they are applied – whichwould require the screening of projectsfor their environmental and human rightsimpacts. The Australian-based MineralPolicy Institute (MPI), for example, hascalled for companies to ensure, amongstother measures, that :

Environmental and social duediligence is applied to each projectthroughout the lifetime of the project;

Environmental and social issues areaddressed early enough in the projectcycle to consider all relevant alternatives,mitigation measures and efficiencyimprovements and to allow the option offinance to be withheld if appropriate; and

Meaningful public participation inproject planning on the basis of timelypublic disclosure of environmental andsocial information. 62

Using a “carrot and stick” approach,MPI is exerting pressure on financialinstitutions, ranging from banks topension funds, to screen out egregiousprojects and investments from theirportfolios and to adopt new rules thatwould institutionalise such screening

Few financialinstitutions orcompanies currentlyrequire that duediligence be exercisedas a matter of coursewith regards toenvironmental andsocial sustainability.


6 36 36 36 36 3

within the financial sector as a whole.

The carrot comes in the form of thepotential profits to be made fromadopting an ethical approach toinvestment decisions. In the UK, ethicalfunds have been the fastest-growingsector in the investment market for morethan ten years, in terms of funds undermanagement. According to Frank Bligheof the UK’s Friends Provident, thecompany’s annual investment survey in1997 indicated a huge potential demandfor ethical funds, and showed that mostpeople care very much about where theirmoney is invested. Blighe also notes thatthere are huge opportunities for growthin Europe and that ethical funds in theUS are already high.63

Such evidence, combined with theincreasing opprobrium that companiesreceive where they become involved indestructive projects, has persuadedseveral sectors to draw up ethicalguidelines or Codes of Practice. Underthe auspices of the UN EnvironmentProgramme (UNEP), for example,leading insurance firms agreed in 1995to a “Statement of EnvironmentalCommitment”, which commitssignatories to “reinforcing the attentiongiven to environmental risks in our coreactivities”, “managing internaloperations and physical assets . . . in amanner that reflects environmentalconsiderations”, and supporting“insurance products and services thatpromote sound environmentalpractice”.64 UNEP has now broadenedthe initiative to include the bankingsector and other financial institutions.65

Although such statements often inpractice commit companies or industriesto little, and even then are frequentlymore honoured in their breach than theirobservation, they can still provide usefulbenchmarks against which campaignerscan hold financial institutionsaccountable.

In addition, sector-wide statements help

lay the foundations on whichsympathetic insiders can build aplatform for internal reforms. Noinstitution is homogenous and within anyfinancial body there will be those whodisapprove of the investment policiesthat are made. But individuals whochallenge the decision making of othersmay find themselves excluded or co-opted. Codes of Conduct and Statementsof Environmental Responsibilityprovide such “dissenters” with a toolfor challenging controversial decisionsand making investment decisions that goagainst the tide.

TTTTThe main optionshe main optionshe main optionshe main optionshe main optionsfffffor interor interor interor interor intervvvvventionentionentionentionentionOnce you have decided what you wantto get out of your campaign, the nextstage is to decide the type of financialcampaign that seems most likely to beeffective. Again, there are a number ofdifferent possible options. The strengthof the financial arguments which you candevelop to make your case will have ahuge bearing on which option is mostlikely to yield results.

Option 1: analysis andOption 1: analysis andOption 1: analysis andOption 1: analysis andOption 1: analysis andre-evaluationre-evaluationre-evaluationre-evaluationre-evaluation

Summary: Encourage a financialreassessment of a project or company.

Target audience: Analysts, Fundmanagers

Tools: Financial analysis

Encouraging a financial reassessment ofthe project or company should be yourfirst option. If you can convincefinanciers that the project is not worthinvesting in – it is too risky, won’t makethe money they expect and is generallynot worth pursuing – then you are halfway there. This is the argument mostlikely to persuade investors. If you


6 46 46 46 46 4

succeed, then the project or companywill need to be restructured or evenabandoned. However, it is not alwayseasy to make a strong financial caseagainst a project that will convinceinvestors. Furthermore, whenpresenting your argument, you shouldbear in mind that you are dealing withprofessionals who believe in their ownanalysis and judgment, and who aregenerally well-informed. Expect anuphill struggle to get your messageacross – your credibility will belimited to start with. If you have accessto information that the financial marketsare not aware of or a greaterunderstanding of certain key issues, thenyour chances of success will be greatlyenhanced. The clearer your case, themore likely that you will get a hearing.

Option 2: engagement and reducingOption 2: engagement and reducingOption 2: engagement and reducingOption 2: engagement and reducingOption 2: engagement and reducing“bad pr“bad pr“bad pr“bad pr“bad practice”actice”actice”actice”actice”

Summary: Expose weaknesses inmanagement practice.

Target audience: Fund managers(corporate governance people), someinvestment institutions.

Tools: Engagement, shareholderresolutions

If you do not have the informationneeded to win the argument on financialground alone, you may be able to makea broad case that the management isfailing to act in a sufficient accountableand open manner.In Europe, the financial markets arenow generally supportive of the ideathat companies should have clearpolicies on key issues such as theenvironment and human rights andshould report on their activities in thesespheres. If a company does not havethese elements in place, financialinstitutions may be more sympathetic toyour arguments and be prepared to

support change rather than siding withthe management automatically.Note that this option is largely limited topublicly-listed companies whose sharesare owned by financial institutions.Furthermore, it is essentially an indirectstrategy: the hope is that by establishingspecific policies and reportingprocedures, the objectionable activitieswill be avoided. This means that it willoften be better as a long-term strategy,changing practice over time andpreventing recurrence of the problemrather than stopping a particular projector activity immediately. (That said,however, it may help create politicalspace for campaigning – for example, itmay give greater credence todiscussions with government if thefinancial markets agree that a companyis not following best practice).

There are three main ways of pursuingthis option:

Informal engagement with companymanagement through financial institutions(see specimen letter below);

Voting against the company on anordinary motion at the AGM (such as there-election of the CEO or the approval ofthe report and accounts); or

Tabling a resolution on the issue atthe AGM.

Which of these options is the mostappropriate depends very much onwhere the company is based. In theUSA, special resolutions are seen as aprime means of getting an issue on theagenda and forcing a company torespond. This is for two reasons. First,shareholder resolutions are relativelyeasy to launch. Second, and moreimportantly, the US fund managementmarket is very diverse, and even thelargest fund mangers control relativelysmall amounts of stock and may havedifficulty in getting the attention ofcompanies via other means.In the UK, it is somewhat harder tolaunch resolutions. Moreover, because


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Campaign option 1: Specimen LetterCampaign option 1: Specimen LetterCampaign option 1: Specimen LetterCampaign option 1: Specimen LetterCampaign option 1: Specimen Letter

Dear Chair of the Investment Committee,The ABC Dam and XYZ Corporation.As you may be aware, XYZ is due to be listed on the [country] stockexchange. The company is to own and operate the ABC hydroelectricdam, a major new independent power project, due to be built in[country]We are writing to you to urge you not to invest in companiesinvolved in the highly controversial ABC hydroelectric dam project in[country]: specifically, we request that you do not invest in XYZ, theproject developer.ABC is opposed by a wide range of groups in [country] andinternationally on human rights, environmental and economicgrounds. The project would require the forcible resettlement of Xnumber of people and the destruction of Z hectares of forest. Localcourts have ruled that the environmental impact assessment for theproject was conducted illegally.You may feel financial issues have to take precedence over theseconcerns when making your investment decisions. But you should beaware that doubts have been raised about the financial viability ofthe project and whether it can offer adequate returns to investors. Areport by HIJ, an independent financial consultancy, has concludedthat the project carries far greater risks than other private sectorprojects in the region. These risks include “probable” cost overruns;a “substantial risk” that the project will produce less power thatforecast; and possible long term technical problems with reservoirsedimentation and power transmission links.Under the most optimistic assumptions, the HIJ report finds thatreturns will only be around 11% (a figure confirmed by the projectdevelopers). Quite feasibly, they could be much lower. Yet, even at11%, the project would still compare unfavourably with other powerprojects in the region, which currently yield 16% or more, or indeedwith the long-term return on European equities. Investing in ABCwould appear to conflict directly with your financial objectives.Investing in ABC is unlikely to offer the returns you require, andcould bring your organisation into disrepute.NGOs and other groups opposed to ABC will be monitoring closelythe shareholders in XYZ, and seeking to press them to withdraw theirinvestments on social and environmental grounds.We would urge you to:1. Ensure that these issues are brought to the attention of yourregional fund manager and other senior staff covering [country];2. Ensure that these issues are raised at the next meeting of yourinvestment committee.We hope that after due consideration, you will be persuaded not tobuy shares in XYZ. If you would like further information on the issuessurround the ABC project, we would be happy to arrange a briefing.Yours Faithfully

The initial listing of acompany on the stockexchange is a primemoment to intervene.

Keep the details short –append an annex withmore information onyour concerns. Mentionany legal problems thatmight deter investors.Cite your ownassessment of thefinancial viability of theproject – or better still,an independentassessment.Unflatteringcomparisons withalternatives will bepersuasive – but ensurethat the alternatives areacceptable to yourpartner groups,particularly within thelocal community.Give details of anyfigures which castdoubts on the returnsfrom the investment.

Ensure that theinvestors know you arewatching them. Letthem know a campaignagainst them ispossible.Seek to ensure yourconcerns reach otherkey decision makers,stimulating criticalinternal debate.Restate the bottom linearguments. Offer ameeting. Your bestchance of getting theinvestors on your sideis to brief thempersonally.


6 66 66 66 66 6


Dear Fund ManagerSerious Governance Failures in XYZ plcWe are writing to express our concerns about your holdings inXYZ plc and to ask you to press for change at the AGM nextmonth.Two recent incidents have exposed major failures of managementcontrol within XYZ. The first relates to their involvement in theproposed ABC Dam in Developing Country, which involves majoradverse environmental and social impacts, as well as exposing thecompany to serious financial risks. The second arises from theMega Water Project, where the company is being charged (as partof the managing consortium) with corruption, This could havedisastrous impacts on future business should a conviction result inthe company being debarred from World Bank contracts, andraises particularly serious questions about the internal control andcompetence. Details of both projects and their financialimplications for the company are attached.We note that XYZ does not have a* group level environmental policy,* does not report adequately on its environmental and socialimpacts* does not have a director responsible for environment.In view of the seriousness of the concerns raised, we are writingto urge you to vote against the reappointment of the Chair and toask the company to withdraw from the ABC project unless it cansatisfy shareholders that the environmental and human rightsconcerns can realistically be addressed.We would very much welcome the opportunity to meet anddiscuss our concerns in more detail.Yours Faithfully,

Issues discussed onlybriefly

Focus on financialconsequences and failureof management controlThese measures areincreasingly recognisedas good practice.

Voting against chair is amajor step, but we aregoing for it.

Always invite furtherdiscussion.

leading investment institutions areincreasingly willing to engage oncorporate governance issues, fundmanagers generally have no difficulty ingaining access to companies at a seniorlevel – and have no need of resolutionsto draw attention to an issue. For thatreason, there is a general preferenceamongst fund managers for engagementand informal dialogue with companies,rather than placing pressure throughspecial resolutions.

Nonetheless, many fund managers areincreasingly prepared to use theirshares to exert other forms of pressureat AGMs, for example when it comes tothe vote on the company’s annual report

and accounts. Furthermore, forcampaigners, the key advantage of ashareholder resolution – namely that itplaces an issue clearly on the company’sagenda and requires fund managers tothink about the issue – remains valid.Indeed, most financial commentatorsexpect the practice of submitting specialresolutions to become more widespreadin the future. In much of continental Europe, andJapan, formal voting can be surprisinglydifficult – even the basics of gettingadequate advance information on whenAGMs are to be held can be difficult.While the situation is improving, thebottom line is that engagement is likely


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to be effective – particularly if some ofthe key institutions that hold largenumbers of shares can be contacted. (InGermany, for example, banks are majorshareholders in many companies.)

Whether or not engagement or specialresolutions are used, it is important toremember that the key to makingprogress is to work with the financialinstitutions – they are the ones with thevotes and the influence overmanagement. Thus it is important to tryand open a dialogue with them at anearly stage in the campaign – forinstance, to explore how your concernsmight fit in with theirs. Generally, it isnot worth rushing into a decision to optfor a special resolution, although thisoption can be explored at any stage.Timing may also play a role here – thedate for a company’s AGM is fixed, asis the date by which resolutions have tobe submitted. If the AGM is a long wayoff, it is probably sensible to start withan engagement approach, with thesupport of fund managers, to see how itdevelops. A decision to launch a specialresolution can be made later, and from amore informed position. If time is short,it may be worth going straight for ashareholder resolution – although thisrisks being less successful.A key issue with shareholder resolutionsis the need for care in structuring theresolution in a way that makes it mostsupportable by shareholders (see Box,“Wording your resolution”, p.68). Thisis another reason to work withsympathetic fund managers at an earlystage, as they will be able to say directlywhat they can support. Furthermore,involving them early will mean they feelsome “ownership” of any resolution, andwill provide it with far more credibility.The ideal approach to engaging withfund managers is as follows:

1. Undertake your initial research intothe company and identify keyweaknesses of concern to shareholders;

2. Contact sympathetic investors (forexample, ethicalinvestors) andinitiate apreliminarydialogue withthem;3. Broadenapproach to othersocially-responsibleinvestors (forexample, all thoseactively involvedin corporategovernanceissues);4. Possibly form working group,prepare engagement strategy, setobjectives;5. Involve all investors. Publiciseconcerns.

A decision to go for a special resolutioncould be taken at any of the steps above.While sometimes, companies willsometimes respond quickly to pressurefrominstitutionalinvestors, inmany casescampaignersshould beprepared for thelong haul. Inparticular,campaignersshould be awareof the need for“second round”action – aftereither a round ofengagement or aspecial resolution, there will be a needto maintain the pressure. Whencompanies have responded positively,there will be a need to monitor theiractions and ensure they do what theypromise. Where companies are lesspositive, then consideration will have tobe given to ways in which furtherpressure can be brought to bear. This

Encouraging a financialreassessment of the projector company should be your

first option. If you canconvince financiers that the

project is not worthinvesting in – it is too riskyand won’t make the money

expected – then you arehalfway home.

No institution ishomogenous, and within

any financial institutionthere will be those who

disapprove of theinvestment policies that

are made.


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WWWWWororororording yding yding yding yding your rour rour rour rour resolutionesolutionesolutionesolutionesolution

Shareholder resolutions have become anincreasingly common form of shareholder

activism in recent years. Although thelikelihood of a hostile resolution being votedthrough is slim, resolutions can be powerful toolsfor initiating a debate amongst investors andgathering support for your campaign. If they fail toattract a significant percentage of the shareholders’votes, however, the company can use this to arguethat you have failed to make your case.Winning active institutional support will dependcritically on giving investors plenty of time to raisethe issues with the company – in the UK, thoughless so in the US, most investors will not evenconsider supporting your resolution unless theyhave exhausted other avenues for persuading thecompany to change. You will also need to devoteconsiderable time to visiting investors personally,answering their queries and providing them withbackground information on your concerns.The wording of your resolution will also be key toits success or failure. In the financial markets, it isgenerally considered legitimate for shareholders tomake proposals about the company’s overall policyor business strategy. Conversely, it is widely heldthat shareholders should not attempt to “micro-manage” the company – this is viewed asmanagement’s job. Consequently, resolutions thatare very specific – for example, calling on acompany to withdraw from a given project or tocease a particular activity – are unlikely to gathersupport from institutional investors, whose votesare crucial to the resolution’s success. Indeed, inthe USA, narrow shareholder resolutions can beruled invalid under the rules of the Securities andExchange Commission – creating a legal precedentthat can undermine other campaigns. It is thusimportant that campaigners who are new toshareholder activism link up with more experiencedcolleagues who can advise them on wording.Where the management of a company has clearlybreached its own policies, or has misledshareholders (for example by withholdingimportant information), it may be possible to gofor the jugular – to ask fund managers to voteagainst the re-election of the company’s board, ineffect a vote of no confidence in the management.This is a controversial tactic, for which it will begenerally difficult to gain support. Your case willbe greatly strengthened if the company’s financialperformance has been weak – or if other actionshave annoyed shareholders, for example theawarding of excessive salary increases for directors.For campaigners, the limitations on the wording ofresolutions has important implications, which needto be thoroughly discussed with colleagues beforeembarking on a shareholder resolution. Will aresolution that does not name the project you arecampaigning against deliver any political gains? Orwill a call for the company to adopt a new policyon, say, the environment, further your work – evenif there is no call to withdraw from the project?

may mean preparing a new resolutionfor the following year, and particularlygathering support for it, or otherwiselooking at ways to increase pressure onthe company. It is also worth noting that,in many cases, the result may be apartial success – a response by thecompany to do something, but which israther less than campaigners might wish,although enough to keep fund managersquiet for the time being. Campaignersshould be prepared for such outcomes.

Option three: direct campaigning andOption three: direct campaigning andOption three: direct campaigning andOption three: direct campaigning andOption three: direct campaigning andmormormormormoral peral peral peral peral persuasionsuasionsuasionsuasionsuasion

Summary: Demanding change atinstitutional level.

Targets: All

Tools: Consumer write-ins,management meetings, Consumerboycotts, negative publicity

This is the option to pursue when you donot have a financial argument to supportyour case. It is the most difficult – don’tbe tempted to consider it just because itis familiar for many campaigners.Financial markets will generally reactbadly to being told what to do.

Nonetheless, such campaigns can work,particularly where the particular activityyou are objecting to, while it may beattractive financially, is marginal to thecore activities of a company orinstitutional investor. If defending thisactivity starts to become a hassle,particular for senior management, orinvolves damage to the company’sreputation, then the company may decideto disinvest – time is money in financialinstitutions.

One drawback of such a campaign isthat it is usually focused on oneinstitution or organisation at a time. Insome cases, this may be sufficient – forexample, when one financial institutionhas a key role. In other cases, it may not


6 96 96 96 96 9

PPPPPotential and limitaotential and limitaotential and limitaotential and limitaotential and limitations oftions oftions oftions oftions of shar shar shar shar shareholder reholder reholder reholder reholder resolutionsesolutionsesolutionsesolutionsesolutionsInsights from the USInsights from the USInsights from the USInsights from the USInsights from the US

Is a shareholder resolutionright for the causes andcampaigns you’re

concerned about? What canrealistically be achievedthrough shareholder activism?

PPPPPotential ofotential ofotential ofotential ofotential of shar shar shar shar shareholdereholdereholdereholdereholderactiactiactiactiactivism – wvism – wvism – wvism – wvism – whahahahahat it oft it oft it oft it oft it offffffererererersssss

1. Access to corporations:1. Access to corporations:1. Access to corporations:1. Access to corporations:1. Access to corporations: Direct access to top

management Constructive dialogue with

management Possibility of affecting

corporate culture Voluntary changes by

corporations Potential to change

company policies and practices

2. Access to shareholders:2. Access to shareholders:2. Access to shareholders:2. Access to shareholders:2. Access to shareholders: Media attention for

resolutions Investor education Partnership with

shareholders

Limitations ofLimitations ofLimitations ofLimitations ofLimitations ofSharSharSharSharShareholder eholder eholder eholder eholder ActiActiActiActiActivismvismvismvismvism1. Limited Objectives:1. Limited Objectives:1. Limited Objectives:1. Limited Objectives:1. Limited Objectives: Cannot address the validity

of company’s product or line ofbusiness

Achieves only voluntarychange (versus legal orregulatory means)

Sometimes is lengthy andlegalistic

Content strictly limited bySEC rules/history. Incrementalchange.

2. Tactical Limitations:2. Tactical Limitations:2. Tactical Limitations:2. Tactical Limitations:2. Tactical Limitations:In some cases, may require

adjustment of confrontationalstrategies

Invalidated by simultaneouslitigation (one can’t file aresolution if one is suing acompany)

Need to think throughimplications of publicitystrategies. For example,company conversations mayneed to be confidential. So, inorder to get a better resultfrom shareholder negotiations,publicity efforts may need to bescaled down or up

Need to think throughimplications of resolution.Although uncommon, somecompanies have stopped talkingto shareholder activists after aresolution has been filed.

3. Restrictions resulting3. Restrictions resulting3. Restrictions resulting3. Restrictions resulting3. Restrictions resultingfrom collaborations:from collaborations:from collaborations:from collaborations:from collaborations: Necessity of communication

between campaigners,

commun-ities, shareholders,etc.

Complexity of having toset objectives and strategyjointly, or ensuring that co-filers agree with lead filer’sobjectives

Negotiating differentthresholds for acceptableresults (For example, at whatpoint would the coalition bewilling to withdraw aresolution?)

4. Demands on your4. Demands on your4. Demands on your4. Demands on your4. Demands on yourorganization:organization:organization:organization:organization:

Requires ability to translatedemands into concrete yetsignificant annual steps forcompanies

Can require defendingresolutions on short notice,participating in meetings withcompanies, and evaluatingcopious amounts of corporatematerial.

May incur legal costs todefend resolutions

Possible costly (if aprofessional is hired) orcomplex solicitation effort toincrease votes

Time-intensiveMichelle Chan-Fishel

Reproduced from Friends of theEarth-US, Guide to Shareholder

Activism. The Guide can bedownloaded from www.foe.org/www.foe.org/www.foe.org/www.foe.org/www.foe.org/

international/shareholderinternational/shareholderinternational/shareholderinternational/shareholderinternational/shareholder.

be. In particular, there is a danger thatanother financial institution picks up thebusiness rejected by the targetedcompany. This may make it even harderto exert pressure: the new company maybe from a country in which it is farharder to campaign, or may take a formwhich is less visible (for example, anoffshore company).

Typically, a campaign of this type willinvolve writing a formal letter to the

company (see p.70) and organisingmeetings with institutional investors (forexample, banks and pension funds) inorder to make them aware of yourobjections to their involvement in thecompany. Ideally, appointments shouldbe obtained with the senior managementof these financial institutions as it istheir appointed role to consider the “bigpicture”. Stress any relevant social orenvironment commitments or policiesthat have been adopted by the investors.


7 07 07 07 07 0

achieve your main objectives becauseyou have not moved quickly enough atthe right moment.

The importance of timing can vary. Insome areas (for example, when makingarguments about a company’s strategicdirection), it is not critical. But if onewishes to stop a major capital raisingexercise (such as a new share offeringor a project financing), timing becomesall important: once the money has beenraised, the project will have the funds itneeds to go ahead. It is also possible tobe lulled into a false sense of security:sometimes raising the money for a


Keep the letterbrief; and politebut firmDon’t spend toolong on why theproject is bad –use attachments.Provide contactdetails within theorganisation ifpossible.Refer to theorganisation’sown policies ifyour can.Mention the risksfor the company’sreputation, butdon’t overdo it.Ask for a meeting– getting to knowthe people is thebest way forwardDon’t involve themedia yet – theycan be brought inlater.

Dear CEOWe are writing to you to express our concern over your organisationsinvolvement in XYZ project.We object to this hydroelectric project on both environmental and socialgrounds, involving as it does the flooding of an important area of naturalhabitat and the displacement of 50,000 native people. Environmental impactassessments that have been carried out are generally acknowledged asflawed. Local consultation has been negligible. The attached sheets providemore information. Your have apparently agreed to be lead financier of thisproject, out of your ZZZ office.Your involvement in the project is in direct contrast with your ownenvironmental policy, where you state that sound business managementshould take account of the effects that business has on the environment,with a view to minimising detrimental impact. Your involvement alsoappears in conflict with you commitments as a member of the UNEP BankingInitiative. Here you state that you regard sustainable development as afundamental aspect of sound business management – yet this project iswidely condemned as unsustainable.Your involvement in this project is likely to do serious damage yourreputation. It is already attracting media interest. Many of our 450,000members are likely to find banking at an organisation involved in suchprojects unacceptable, and many other organisations may react negativelyto your involvement. We hope therefore that you will reconsider yourposition before serious harm is done to your business.We would very much welcome the opportunity to meet with you, and toexplain our concerns to you in more detail. We hope this matter can beresolved speedily and quickly.Yours sincerelycc: Chairman/ President (if not CEO)

Senior non-executive / independent director

Director responsible for environmental policy,

Head of Environmental unit

Possibly head of retail banking (whose business you can threaten)

Possibly relevant divisional / countries heads

If this does not yield results, then thecampaign can be geared up by pensionor account holders to write protestletters. Ultimately, if the financialinstitution has a household presence,consumer boycotts could be considered.

TimingTimingTimingTimingTimingTiming can be key in the financialmarkets. It is possible to run acampaign that is reasonably successfulin engaging with investors, but still not


7 17 17 17 17 1

project appears to be moving veryslowly but, very suddenly, everythingseems to be in place. Partly this isbecause much of the preparatory work inproject financing is not particularlyvisible; partly it reflects the intensework that participants put in immediatelyprior to closing a deal.

For campaigners, a key lesson is to startearly, be prepared and keep badgeringaway. The initial stages are often themost time consuming as one gathersinformation, conducts analysis andidentifies contacts. But once this is done,it is relatively easy to accelerate thecampaign if the need arises.

KKKKKeeeeey intery intery intery intery intervvvvvention pointsention pointsention pointsention pointsention pointsThere are a number of key moments inthe life of a company or project thatpresent campaigners with majoropportunities to intervene in order topress for change. These include theInitial Public Offering (IPO) of thecompany’s shares on the market, theissuing of quarterly annual reports,annual credit reviews by rating agencies,and the Annual General Meeting (AGM)that every company is required by law tohold for its shareholders. IPOs andAGMs are considered in more detailbelow:

1. Initial Public Offerings (IPOs)1. Initial Public Offerings (IPOs)1. Initial Public Offerings (IPOs)1. Initial Public Offerings (IPOs)1. Initial Public Offerings (IPOs)

A key time for a company is when it islisted on the stock exchange for the firsttime. This involves the company gettingapproval from the stock exchange to listits shares. To do so, it must publish aprospectus – a full description of thecompany and its activities. The InitialPublic Offering (IPO) is usually handledby an investment bank on behalf of thecompany. It is a statutory requirementthat the prospectus gives as full a pictureas possible of the company’s activitiesand liabilities, including environmentalliabilities.

This provides campaigners with severalopportunities. Prior to the IPO beinglaunched on the market, for example, itis common for the company andrepresentatives of the investment bank tohold a series of seminars (known as“roadshows”) in which the deal isexplained to potential investors,including corporate clients, privateclients, investment houses and pensionfunds.

Such roadshows (which also take placewhen companies are making other newshare issues) offer a major opportunityfor intervention. In 1994, for example,campaigners obtained the list of guestsbeing invited to a “roadshow” hosted bythe Indonesian logging company, Barito,which was seeking $200 million on theinternational financial markets to expandits logging and plywood operations.Barito’s record on environmental andsocial issues is appalling. ForestsMonitor, a UK advocacy group, sentinformation on Barito’s environmentaland social track record to all thoseinvited to the roadshow: as a result,many investors declined to buy theshares being offered.66

2. AGMs and shareholder resolutions2. AGMs and shareholder resolutions2. AGMs and shareholder resolutions2. AGMs and shareholder resolutions2. AGMs and shareholder resolutions

The Annual General Meeting (AGM) ofa company also presents campaignerswith a range of opportunities to drawattention to their particular issue and topress for change. At their simplest,shareholder actions may involve ademonstration either outside the AGMor, if campaigners have bought shares,inside the meeting itself. (Forinformation on how to buy shares, seeBox: “Organising a shareholderresolution”, p.91) Such actions bringcampaigns both publicity and the chanceto put company directors on the spot infront of those who nominally control thecompany – the shareholders.Individual shareholders who do notwant to take part in more active protests


7 27 27 27 27 2

Pull out ofPull out ofPull out ofPull out ofPull out of Bur Bur Bur Bur Burmamamamama

PrPrPrPrProtestsotestsotestsotestsotests,,,,, bo bo bo bo boyyyyycotts and sharcotts and sharcotts and sharcotts and sharcotts and shareholder actions bring reholder actions bring reholder actions bring reholder actions bring reholder actions bring resultsesultsesultsesultsesults

Opponents of themilitary dictatorship inBurma have been

calling on US and Europeancompanies and financialinstitutions for nearly adecade to disinvest from thecountry, where the militarydictatorship has beenconsistently condemned bythe UN for systematic humanrights’ abuses. Burma’s pro-democracy leader and NobelPeace Prize laureate, Aung SanSuu Kyi, states: “I’d like tomake it clear that the peopleof Burma are not suffering asa result of sanctions – the realprofits do not go to thepeople of Burma, it is allconcentrated in the hands of(foreign) investors orprivileged people. Aninternational boycott wouldbe the best instrument toexercise pressure on themilitary regime and get thesituation moved out of thestalemate that Burma iscurrently facing.”Operating in support of thesecalls, public interest groups inthe West have successfullyused protests, boycotts,“selective purchasing” laws(whereby public bodies refuseto buy from companiesinvolved in Burma) andinvestor campaigns topersuade a range ofcompanies to pull out of thecountry. Pepsi, Texaco, BritishHome Stores, Levi-Strauss,River Island, The BurtonGroup, Amoco and Disneyhave all now disinvested.

Selective PurchasingSelective PurchasingSelective PurchasingSelective PurchasingSelective PurchasingAgAgAgAgAgrrrrreementseementseementseementseements

A key tactic has been todiminish their markets viaSelective PurchasingAgreements. Several US statessuch as Massachusetts andCalifornia, in addition to cities

like New York and SanFrancisco, have enacted lawsbanning any public contractswith companies doing businessin Burma. US and non-UScompanies wanting to gaincontracts with US authoritiesthat have enacted Burma lawsmust thus pull out of Burma orrisk losing business.Following the introduction ofthe California ban, for example,the Swedish telecommunicationsgiant, Ericsson, lost contractsworth up to $90 million with theCity of San Francisco because ofits dealings with Burma. Ericssonlater announced it wasdisinvesting.“Forced to chose betweenlucrative local governmentcontracts and often mediocrebusiness opportunities inBurma, a host of American firmshave chosen the former”, noteTiffany Danitz and WarrenStroebel of the US Institute forPeace. “The Massachusetts lawalone was cited by Motorola,Hewlett-Packard and AppleCorp. and other majorcompanies as the reason theypulled up stakes in Burma.”Indeed, Burma laws have “bittenhard enough that both theEuropean Union and Japan havecomplained to the US StateDepartment and intend tochallenge the law in the WorldTrade Organisation.”In 1997, pressure on UScompanies was furtherincreased after the ClintonAdministration announced a banon all new US investment inBurma.

BoycottsBoycottsBoycottsBoycottsBoycottsBoycotts have also played acentral role in forcingcompanies to pull out of Burma.Companies selling consumergoods have been particularlyvulnerable to such pressure,particularly when combined withinvestor campaigns.

In the US, student groups havebeen at the forefront of suchconsumer activism. AtPennsylvania State University,students pressed theuniversity administration toadopt a Selective PurchasingPolicy “in which Penn State willneither renew nor sign newcontracts with companiesdoing business in Burma”. Onecontract threatened was a 10-year, $14.5 million monopolycontract with PepsiCo tosupply the university campuswith Pepsi.Pepsi, which was then makingaround $8 million a year inBurma, was also targeted atother campuses. At Harvard,student pressure resulted inthe University cancelling plansto switch its dining hall colasupplies from Coca-Cola toPepsi – a contract that wouldhave been worth $1 million ayear for five years. InCalifornia, studentssuccessfully banned sales ofPepsi at the University ofCalifornia’s campuses atBerkeley and Stanford.Students across the US alsoinitiated boycotts of productsmarketed by PepsiCo’ssubsidiaries, including PizzaHut, Taco Bell and KFCrestaurants and Doritos andLay chips.Pepsi eventually withdrewfrom Burma in January 1997.

Investor campaignsInvestor campaignsInvestor campaignsInvestor campaignsInvestor campaigns

Students have also mobilised –largely via the Internet – toplace pressure on theiruniversity administrations touse their shareholdings in anycorporation investing in Burmato vote in favour ofresolutions calling of on thosecompanies to disinvest fromBurma. Washington, Wisconsinand Stanford are just three ofa number of universities which


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responded to the call. In 1995,the University of Washington’sBoard of Regents decided tovote for, and sponsor,shareholder resolutions aimedat limiting corporateinvolvement in Burma.Responding to studentpressure, the University ofWisconsin went further,announcing that they wouldsell the University’s shares inTexaco because of thecompany’s involvement in anatural gas project in Burma.Days later, Texaco announcedthat the company was lookingfor way to withdraw fromBurma.

Other groups mobilised bypublic interest groups includerepresentatives from theInterfaith Center on CorporateResponsibility and sociallyresponsible investors such asTrilium Asset Management.

TTTTThe Prhe Prhe Prhe Prhe Premier Oilemier Oilemier Oilemier Oilemier Oilcampaigncampaigncampaigncampaigncampaign

One of the companiesremaining in Burma is PremierOil, which together withUnocal, is investing in an oilpipeline in the Tenasserimregion of Burma, wherethousands of people havealready been driven from theirhomes. Forced labour –including men, women,children and even sick andelderly people – has beenused to build military roadsand barracks. Refugees fleeingthe area say that human rightsabuses have increased as aresult of security operationsby the Burmese armyprotecting the pipeline.Premier has a 27% interest inthe pipeline and is alsomanager of the project.UK and continental Europeancampaigners have been activein pushing for Premier todisinvest.Protests have been heldregularly at the company’sAnnual General Meeting: majorUK shareholders in Premier (asof 24 January 2000) includeAmerada Hess, parentcompany of Amerada Gas,which supplies domestic gas

to households in the Midlands,and Guardian Royal Exchange,the life insurance company.However, neither Premier norits shareholders have shownsigns of responding to publicconcerns over the company’sinvolvement in Burma.Public interest groups have alsopressed the UK government tolive up to its “ethical foreignpolicy”. In April 2000, thisresulted in Foreign Minister JohnBattle asking Premier towithdraw from Burma: “I reallyexpect Premier to do thedecent thing without having toresort to legal pressure.” ButPremier’s Chief Executive,Charles Jamieson, maintains thatthe company’s continuingpresence enables it to use itsinfluence on the Burmesemilitary regime for the good.“Constructive engagement . . .is more likely to bring aboutresults”, says Jamieson.This claim is rejected bycampaigners, who callconstructive engagement “naiveat best”, pointing out that it isopposed by opponents of theregime in Burma. “Apart fromthe actual revenues that PremierOil brings to the government,”says Aung San Suu Kyi, “it alsoconstitutes a psychologicalboost because it makes thegovernment feel that, howeverrepressive they may be, theystill have the support of bigcompanies or at least one ortwo big companies. And if thesecompanies are from Westerndemocracies, it’s even moreserious because it gives themilitary regime the chance tosay: ‘Look, even companiesfrom Western democraciessupport us, so what we’re doingcan’t be that wrong. Why aredemocratic forces making sucha fuss when companies fromWestern democracies are infavour of what we are doing?’So, Premier Oil, by coming intoBurma at this time, does a greatdisservice to the cause ofdemocracy.”In effect, the foreign currencysupplied by companies likePremier is what is keeping theregime alive. As the WorldDevelopment Movement puts it:“Their project is fuellingoppression in a country wheretorture, forced labour andhuman rights abuses are routine

and widespread.”

Limits ofLimits ofLimits ofLimits ofLimits of the mar the mar the mar the mar the markkkkketetetetetapproachapproachapproachapproachapproachIn the autumn of 2000, someprivate, roundtable discussionswere held between groupscampaigning on Burma andsome large institutionalinvestors. While the investorsexpressed some sympathiesfor the campaign, they alsoidentified two majordifficulties. The first was thatPremier is controlled by twomajor shareholders – AmeradaHess and Petronas InternationalCorp., a Malaysian oilprospecting company – whichmeans that the influence ofexternal shareholders is low(and, ultimately, forcingchange would be difficult). Thesecond was that Burmarepresents a major proportionof Premier’s assets and cashflow. For Premier to write offthe assets would beunacceptable to the companyand to institutional investorswhich have a legalresponsibility to maximisereturns to their investors.Moreover, for the company tosell its assets would not reallysolve the problem as Burmawould still have the oilrevenues and the investment.These problems arecompounded by the fact thatPremier stock is neitherparticularly widely held norwell regarded in investmentcircles. Even if manyshareholders did boycott thestock, it would be unlikely tohave a major impact on thecompany’s share price.Currently, campaign groups inthe UK are trying to find a wayto overcome these problems.The key will be finding astronger business case forPremier to disinvest in Burma.The Premier case indicatessome of the problems that canarise with a financial marketscampaign, particularly once theinitial investment has occurred.SourcesSourcesSourcesSourcesSourcesBurma Campaign UK,www.burmacampaign.org.ukwww.burmacampaign.org.ukwww.burmacampaign.org.ukwww.burmacampaign.org.ukwww.burmacampaign.org.ukStudents for a DemocraticBurma,www.enviroweb.org/fcg/www.enviroweb.org/fcg/www.enviroweb.org/fcg/www.enviroweb.org/fcg/www.enviroweb.org/fcg/sdb/sdb/sdb/sdb/sdb/


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against the company, or who cannotattend the AGM, can also make theirfeelings known. As shareholders, thecompany is obliged to send them proxy

voting forms,indicating how theywant their vote to beused at the AGM. Ifshareholders areunhappy with thecompany’s activities,they can use the formto vote against thereappointment ofmembers of thecompany’s board orthe adoption of thecompany’s annualreport (two votesthat the company is

obliged to put to its AGM). If enoughindividual shareholders take this action,it sends a significant message to thecompany, particularly if the proxy formis accompanied by a letter explainingwhy the shareholder is voting againstthe company.67

If a decision hasbeen taken to launcha shareholderresolution, then theAGM will obviouslybe the culmination ofthat action. But muchof the hard workshould have beendone in the monthsbefore the AGM –for example, bylobbying pensionfund managers (see“Option 2” and

section on fund managers, pp.97-106).

For an account of how one campaign inthe UK (on Balfour Beatty) set aboutlaunching a shareholder resolution –the steps it went through to submit theresolution, to buy shares and to lobbyshareholders – see Box, “Organising ashareholder resolution”, p.91.

CrCrCrCrCreaeaeaeaeating political spaceting political spaceting political spaceting political spaceting political spaceAs an outsider, getting your argumentsacross to the financial markets willnever be easy, particularly sincefinanciers often do not view NGOs ascredible. To strengthen your position,you will need to develop some“political space” so that you have anaudience for your concerns. NGOs havebecome good at reaching out to thepublic and consumers and even topoliticians. In contrast, there is atendency to regard financial markets aspart of the enemy rather than as anotherconstituency (with very considerableinfluence) which can be targeted andwhere political space can be developed.

How campaigners seek to build such aconstituency will depend to a largeextent on whether the need is to cultivateone or two specific institutions (a“narrow” strategy) or to influence themarket as a whole (a “broad” strategy).

A narA narA narA narA nar rrrrrooooow strw strw strw strw straaaaatetetetetegggggy will bey will bey will bey will bey will beappropriate if you are dealing with theappropriate if you are dealing with theappropriate if you are dealing with theappropriate if you are dealing with theappropriate if you are dealing with thefinancing offinancing offinancing offinancing offinancing of a pr a pr a pr a pr a project,oject,oject,oject,oject, or the ear or the ear or the ear or the ear or the ear llllly day day day day daysysysysysof a proposed flotation, when oneof a proposed flotation, when oneof a proposed flotation, when oneof a proposed flotation, when oneof a proposed flotation, when onefinancial institution typically takes thefinancial institution typically takes thefinancial institution typically takes thefinancial institution typically takes thefinancial institution typically takes thelead, perhaps with the assistance of onelead, perhaps with the assistance of onelead, perhaps with the assistance of onelead, perhaps with the assistance of onelead, perhaps with the assistance of oneor twor twor twor twor two othero othero othero othero other sssss.....Usually, the best place to start is at the topwith senior management – if you can gettheir attention. In addition, there may belower level staff who are already open toyour concerns and willing to take them up,such as an environmental management unit,public relations officers or those responsiblefor accounts with charities and NGOs.

A brA brA brA brA broad stroad stroad stroad stroad straaaaatetetetetegggggy is mory is mory is mory is mory is more suited toe suited toe suited toe suited toe suited tocampaigns in which you need to convincecampaigns in which you need to convincecampaigns in which you need to convincecampaigns in which you need to convincecampaigns in which you need to convincethe marthe marthe marthe marthe markkkkket as a wet as a wet as a wet as a wet as a whole to chole to chole to chole to chole to changhanghanghanghangeeeee,,,,, or a or a or a or a or atttttleast a larleast a larleast a larleast a larleast a larggggge pare pare pare pare par t oft oft oft oft of it. it. it. it. it.Where you are trying to change the cultureor sentiments of a whole particular market(for example, the UK equity market), thesenior management of individual companiesare likely to have little influence. The keyconstituency consists of analysts, fundmanagers and others who help create and

Using a carrot andstick approach,campaigners areexerting pressure onfinancial institutions,from banks to pensionfunds, to screen outegregious projects andinvestments from theirportfolios

As an outsider, gettingyour arguments acrossto the financial marketswill never be easy. Tostrengthen yourposition, you will needto develop some“political space” so thatyou have an audiencefor your concerns.


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BP – Mobilising inBP – Mobilising inBP – Mobilising inBP – Mobilising inBP – Mobilising invvvvvestorestorestorestorestors fs fs fs fs for cor cor cor cor changhanghanghanghangeeeee

Pushing a major globalconglomerate to moveout of fossil fuels is no

small task. But increasingclimate instability, linked bythe burning of fossil fuels,makes the transformation ofcompanies like BritishPetroleum (BP), Shell andother oil companies a majorinternational priority.Greenpeace is oneenvironmental group that hastaken up the challenge,highlighting the issue throughdirect action, high profilepress campaigns, lobbying ofinsurance companies and,most recently, shareholderresolutions.

Aiming highAiming highAiming highAiming highAiming highBP is one company that hasbeen targeted by the group.With the value of BP’s sharesaccounting for approximately7% of the total value of theLondon stock market, andwith almost every institutionalinvestor a shareholder, thecompany presented aparticularly difficult target fora shareholder-focusedcampaign. To gain significantshareholder support for anyresolution demanding morethan small changes in thecompany’s energy strategywas, many sympatheticfinancial analysts thought, animpossibility – the more sosince BP has gained areputation in the financialcommunity as anenvironmental leader in the oiland gas sector, havingrecognised the reality ofclimate change, pulled out ofthe climate-skeptic GlobalClimate Coalition andintroduced a range ofenvironmental initiatives.Undeterred, Greenpeace putforward a resolution to theApril 2000 Annual GeneralMeeting (AGM) of BP callingon the company not only toabandon its half-completeddevelopment of the Northstaroil field in Alaska but also to

reinvest the money in solarpower. Northstar, the world’sfirst offshore Arctic oil field, iscurrently being developed byBP at an estimated cost ofbetween $0.5-1.5 billion.As well as increasing oil industryaccess to currently inaccessiblereserves of oil in Arctic areas,argues Greenpeace, thedevelopment would “increasethe rate and magnitude ofimpacts to Arctic wildlife fromthe anthropogenic greenhouseeffect.” Retreating sea ice, thegroup pointed out in itsshareholder resolution, “isalready threatening theexistence of several Arcticspecies, including walrus andpolar bears.”

ArArArArArguments fguments fguments fguments fguments for cor cor cor cor changhanghanghanghangeeeeeGreenpeace’s resolution playedto a number of leverage points.These included: BP’s reputation;its past statements on climatechange; confusion over thecompany’s investment strategy;technical problems with theNorthstar field; and the long-term financial profitability ofmoving of oil and into solar.

ReputationReputationReputationReputationReputationIn a covering letter to BP, sentwith the shareholder resolution,Greenpeace pointed out that,since 1997, “BP has sought toposition itself as distinct fromother oil companies on theissue of climate change.” As aresult, the company enjoyed areputation in many quarters as“a responsible and pragmaticcompany, concerned about theenvironment and willing tolisten.” If the company failed toback up its public statementson the environment withchanges in investment strategy,“both the reputation and thelong-term value of thecompany will be eroded.”

Confusion overConfusion overConfusion overConfusion overConfusion overinvestment strategyinvestment strategyinvestment strategyinvestment strategyinvestment strategyGood corporate governanceimplies a clear investmentstrategy about whichshareholders should be properly

informed. The development ofthe Northstar field, arguedGreenpeace, was evidence ofconfusion at the board levelover the company’sinvestment strategy.Greenpeace pointed out thatBP’s 1997 annual report hadacknowledged that “if [theKyoto climate change treatytargets] are to be met, a majorreduction in the use of fossilfuel would be required, andthis is likely to have an effecton BP’s main business.” Thedevelopment of the Northstarfield suggested, however, thatBP’s business strategy wasbased on a contraryassumption – namely thatgreater quantities of oil andgas would be sold in thefuture. Greenpeace concluded:“BP Amoco has not informedits shareholders of howclimate protection is affectingthe company’s investmentstrategy in relation toexploring and developing newoil and gas reserves.”

Technical problems withTechnical problems withTechnical problems withTechnical problems withTechnical problems withthe Northstar fieldthe Northstar fieldthe Northstar fieldthe Northstar fieldthe Northstar fieldGreenpeace stressed thatNorthstar is behind scheduleand running over cost. Thisdelay offered BP Amoco “theopportunity to rethink itsinvestment strategy andinitiate a planneddiversification out of fossilfuels.”

Long-term profitabilityLong-term profitabilityLong-term profitabilityLong-term profitabilityLong-term profitabilityof solarof solarof solarof solarof solarIncreasing acceptance bygovernments of the need forprecautionary action onclimate change could meanthat BP Amoco’s long-terminvestment in new oilproduction “will result in thecompany having to choosebetween undermining climatechange protection by trying toincrease future markets for itsproducts or being left with‘stranded’ assets from whichthere is no return oninvestment.” By contrast,stated Greenpeace, solarenergy offered a cost-competitive energy sourcewith a future.


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TTTTThe viehe viehe viehe viehe views ofws ofws ofws ofws of the City the City the City the City the CityThe resolution met with amixed reaction from the City.Many were, of course,dismissive. Others thoughtthere was an important pointto answer, although they werenot sure of the wording of theresolution. Support forGreenpeace was boosted whenthe resolution won the supportof Pensions InvestmentResearch Consultants (PIRC),the corporate governancewatchdog. Prior to the AGM,PIRC sent a report to fundmanagers, urging its clientfunds to vote for theresolution. The reportcountered many of thearguments that BP Amoco hadput up in response to theGreenpeace resolution.PIRC criticised BP for takingtoo passive an approach to theneed to shift away from fossilfuels, arguing that “it would bemore appropriate for [thecompany] to show strongerleadership.” The group’sreport also countered BP’sclaim that there is insufficientdemand to justify moreinvestment in solar energy: “Acompany with the resourcesand scale of BP Amoco canplay an important role increating the conditions forincreased demand.”PIRC acknowledged that therewould be a short-term cost inmoving away from oil butinsisted that there would be

“compensatory gains” forshareholders, principally in BPbeing able to reposition itself inorder to take advantage of ahuge future market in solar.

OutcomeOutcomeOutcomeOutcomeOutcomeNo one ever expected theGreenpeace resolution to becarried, but it was hoped that itwould gain the support of atleast 5% of shareholders. In theevent, it won 13% support. Thesuccess of the resolution iswidely acknowledged to havesent BP a major signal thatchange was necessary – and hadinstitutional support. As a result,BP has been consulting widelywith its major shareholders.Campaigners have also learntfrom the resolution. One lessonhas been that having areputation as an environmentalleader does not put a companyoff-limits to shareholderactions. On the contrary, thefact that BP was viewed asenvironmentally forwardlooking, yet was still acting inan environmentally damagingway, meant that its own wordscould be used against it – inessence, the company could beaccused of hypocrisy. In thatrespect, the company made amore suitable target than acompletely unreconstructedcompany which could moreeasily deny the relevance of theissues raised.While this strategy is valid, itcarries a number of risks. The

targeted company may revertto a “bunker mentality” andabandon its tentative effortsto embrace reform. And othercompanies may see noincentive to change if theleaders in the field aretargeted.A second lesson was that theresolution might havegarnered more votes if thewording had not been sospecific. In laying down whatthe company should do in oneparticular area, it was seen bymany shareholders as usurpingthe role of management – andwas thus close to a vote of noconfidence. This was a steptoo far for many shareholders.In addition, it was felt that agreater degree of consultationwith leading shareholdersbefore finalising the wordingof the resolution would havegenerated wider support atthe AGM.Some City commentatorsargue that the resolutionmight have succeeded if it hadcalled on the management todevelop a policy onbiodiversity and against theopening up of wilderness areasrather than a pull-out fromNorthstar. Similarly, a call onthe company to develop acomplete carbon transitionstrategy might have faredbetter than one calling forinvestment in specific areas.SourcesSourcesSourcesSourcesSourcesGreenpeace, Shareholder Resolutionto BP Amoco, April 2000

form opinions about a relevant industry.(Some campaigns have mistakenlyassumed that pronouncements from seniormanagers will carry weight with traders andfund managers.) Cultivating thisconstituency will take time and a degree ofperseverance. It is best to divide the workinto a number of stages:

Develop a bridgeheadDevelop a bridgeheadDevelop a bridgeheadDevelop a bridgeheadDevelop a bridgeheadWork with some financial institutions thatare prepared to listen to you and supportyou. The “green” financial institutions(such as ethical funds and some localauthority pension funds) can play a keyrole here. Having even a few namessupporting you will boost your credibility

and help you refine your language,arguments and demands.

Broaden out to convincing moreBroaden out to convincing moreBroaden out to convincing moreBroaden out to convincing moreBroaden out to convincing moremainstream financial organisations.mainstream financial organisations.mainstream financial organisations.mainstream financial organisations.mainstream financial organisations.Identifying individuals in mainstreamfinancial institutions who are likely to besympathetic can be difficult, and this maybe one of the hardest steps in the campaign.The key here is to be persistent, not towaste time on those who are obviouslyhostile, and to develop personal contactthrough meetings as this will be the mosteffective way of convincing individuals.Once you have the support of a number ofmainstream organisations, a momentumbegins to build up, bringing new allies.


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PPPPPararararart Ft Ft Ft Ft Fourourourourour

PlaPlaPlaPlaPlayyyyyererererersssssin thein thein thein thein themarmarmarmarmarkkkkketetetetet


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UNDERSTUNDERSTUNDERSTUNDERSTUNDERSTANDINGANDINGANDINGANDINGANDINGYYYYYOUR OUR OUR OUR OUR AAAAAUDIENCEUDIENCEUDIENCEUDIENCEUDIENCE

The key to a financialmarket campaign isunderstanding the psychology

and culture of the financial markets.Financiers are a very differentaudience to that with which mostcampaigners are familiar – civilservants, politicians or the generalpublic, for example.

Unlike government institutions,financiers have no obligation to listento or consider what you say. Thus,when engaging with financiers, it isoften useful to regard yourself as a“salesperson” trying to sell a difficultproduct to a reluctant customer.

A golden rule when selling suchproducts is to put yourself in the otherparty’s shoes, to understand theirdesires and motivations.

Never forget that the prime motivationof financiers is to make money. Someorganisations (for instance, investment


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banks) do this directly through trading,arranging deals or lending money. Others(such as fund managers and investmentanalysts) make money by managing otherpeoples’ funds or providing analysis andresearch. In both instances, employeesare under tremendous pressure to “closedeals”, achieve the best returns oncapital and bring in new business.This pressure to succeed encourages amacho institutional culture. Those whosurvive in the high-pressure world offinancial markets do so largely becausethey are successful at making money –and many develop a confidence in theirfinancial judgement that borders onarrogance.Whilst sensitive to the opinions of theirpeers, financiers are generally hostile tooutsiders who question their views.Once they have pronounced on acompany’s worth or the viability of aproject, they are often reluctant to backdown. Moreover, despite the aggressivecompetition of the financial markets,financiers tend to be conservative,fearing the ridicule of their colleagues ifthey support views that appear “radical”or “flaky”.This institutional culture has importantimplications for campaigning. Manyfinanciers view campaigns as achallenge to their personal judgement:hectoring them about a project’sfinancial vulnerability or lecturing themon “sustainability” is likely to trigger adefensive reaction. Many will simplydig in their heels, unwilling to concedethat the investment is flawed.Although some of the ideas behindsocially responsible investment (SRI)have become much more accepted inmany circles over recent years, for mostfinanciers they remain controversial.Even when SRI is accepted, there maybe differences between what you wantand what financiers considerappropriate. Many will shy away fromsticking their necks out too far for fear ofdenting their reputation with more

mainstreamcolleagues. Finally,financiers have to siftthrough huge amountsof information everyday – from companyand analysts’ reportsto the latest marketfigures. The pressureson them aretremendous, and timeis short. Their willingness to engagewith critics – let alone ideas that seemnew or radical to them – is limited.

Overcoming hostilityOvercoming hostilityOvercoming hostilityOvercoming hostilityOvercoming hostility

Persuading financiers that yourcampaign has merit requires more thangood arguments. It also requiresovercoming the cultural andpsychological hostility of manyfinanciers to criticism and tailoring yourmanner and approach accordingly.Appear professional and knowledgeableabout your case, but don’t try to give theimpression that you understand themarkets better than they do. One-upmanship won’t get you anywhere. Youwill only succeed in causing irritation.Instead, try to enlist their help tostrengthen your case. Keep letters brief(a one-page rule is sensible), usesummaries and bullet points, and make iteasyfor them to understand and agree toyour argument.

Don’t forget that financiers are humanbeings, too! Many may well beconcerned about the issues you’reraising and may even be members ofcampaigning groups themselves. So trynot to give the impression that you arecriticising them as individuals. Try toappeal to any common ground you mayshare.

These points are covered in thefollowing sections on each of the keyplayers: analysts, institutional investors,fund managers, ethical fund managers,bankers and project financiers.

Persuading financiersrequires overcominga hostility to criticism

by outsiders andtailoring your

approach accordingly.


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ANANANANANALALALALALYYYYYSTSSTSSTSSTSSTSteam. Like stockbroker analysts, they maybe expected to help in marketing their fund,in which case they will be keen to see theirviews quoted in the press. They will haveaccess to the research produced bystockbroker analysts.

Bank analystsBank analystsBank analystsBank analystsBank analystsBank analysts assess credit risks for abank’s lending and their area of expertise istherefore rather different to that ofstockbroker or fund manager analysts. Inaddition to valuing companies, they willlook at a variety of other investments, suchas project lending. Their focus is more ondebt than equity, and on downside risks.

Economic and strEconomic and strEconomic and strEconomic and strEconomic and straaaaatetetetetegic analgic analgic analgic analgic analystsystsystsystsystsBesides analysts who follow individualcompanies, a number of specialists takemore of an overview of the market, lookingat how funds should be allocated betweendifferent sectors and markets – a fieldknown as “asset allocation”. If the issue thatcampaigners are addressing is broader thana single company (for example, climatechange and the oil sector), it may benecessary to engage with these analysts. Ifso, bear in mind that they are most likely tobe persuaded by an analysis of themacroeconomic factors affecting aparticular sector (for example, future oilprices).

TTTTTececececechnical and quantitahnical and quantitahnical and quantitahnical and quantitahnical and quantitatititititivvvvve anale anale anale anale analystsystsystsystsystsIn contrast to the analysts above who assessthe “fundamentals” of a company or sector,technical analysts use only the price historyof a company’s shares as a guide to value.(Essentially, they assume that the markettrends follow a fixed pattern which tends toremain within certain trading ranges.)Quantitative analysts use computers andmathematical models to combine bothfundamental and technical data so as toproduce recommendations on whether tobuy or sell particular shares. Because theydeliberately do not look at broader issues,influencing these analysts is virtuallyimpossible.

Analysts provide a vital service in thefinancial markets. Their job is tounderstand businesses and projects, tovalue them using various models andthus to provide fund managers andtraders with recommendations as towhich shares to buy and which to sell.Without analysts, the financial marketswould be guessing about the value ofcompanies much of the time.

TTTTTypes ofypes ofypes ofypes ofypes of anal anal anal anal analystsystsystsystsystsAnalysts are employed by a range offinancial institutions. They include:

Stockbroker and investment bankStockbroker and investment bankStockbroker and investment bankStockbroker and investment bankStockbroker and investment bankanalysts (“sell side” analysts)analysts (“sell side” analysts)analysts (“sell side” analysts)analysts (“sell side” analysts)analysts (“sell side” analysts)

The most influential and high profileanalysts are those who work forstockbrokers and investment banks. One oftheir main activities is researching andpublishing reports on companies, which arethen distributed to their employer’s clientsand to the press. These analysts are verycompetitive and keen to be well-regardedby their peers. They are very well-informedfinancially but tend to be arrogant and tothink they know everything. Unlike manyin the City, stockbroker and investmentbank analysts are often keen to see theirviews publicised in the press – indeed, inmany instances, marketing their institutionis viewed as part of their job. In the UK,Extel conducts an annual survey in which itinvites fund managers to rate analysts andto identify the most highly-regarded in eachsector.

Fund manager analysts (“buy sideFund manager analysts (“buy sideFund manager analysts (“buy sideFund manager analysts (“buy sideFund manager analysts (“buy sideanalysts”)analysts”)analysts”)analysts”)analysts”)Many of the larger fund managers havetheir own in-house analysts. These tend tobe less competitive and publicity-seekingthan stockbroker analysts since theyprimarily provide an internal service to thefund manager. They also tend to work as a


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The Bakun campaign – Lobbying analysts to stop a damThe Bakun campaign – Lobbying analysts to stop a damThe Bakun campaign – Lobbying analysts to stop a damThe Bakun campaign – Lobbying analysts to stop a damThe Bakun campaign – Lobbying analysts to stop a dam

Campaigns byinternationalenvironment anddevelopment groups

against investment in theproposed 2,400MW BakunHydroelectric Project on theBalui river in Sarawak,Malaysia, played a key role inhalting the project – at leastin its then-intended form.Although the dam wasabandoned in 1997, however,those in the proposedreservoir area were stillmoved – and are currentlyliving in appalling conditionsin resettlement camps. Theproject has since beenrevived.

TTTTThe prhe prhe prhe prhe projectojectojectojectojectOriginally planned by theMalaysian government in theearly 1980s, Bakun wasabandoned in 1990 after acampaign by local indigenouscommunities and a downturnin the Malaysian economy. Thedecision to shelve the projectwas described by MalaysianPrime Minister MahathirMohammed as “proof thatMalaysia cares about theenvironment”. In 1993,however, he revived theproject, announcing that the$6 billion dam would beprivatised to Ekran Bhd, aSarawak-based company withstrong political connections tothe ruling party. The contractwas awarded without tenderand apparently without propercosting.The job of clearing thereservoir area of forest, inaddition to much of theancillary construction work,was subcontracted tocompanies controlled by TingPek Khiing, Ekran’s chair. Anumber of internationalconstruction companies bidfor the main contract or forparts of the project which, inaddition to building the 205metre-high dam, alsoinvolved laying 1,500kilometres of overland cableand three or four 650kilometre-long undersea

cables to transmit the powergenerated to PeninsularMalaysia. The Swiss engineeringcompany, ABB, and the Brazilianconstruction company,Companhia Brasileira deProjectos e Obras (CBPO), wereawarded the main constructionpackage, including supplyingthe generators. Competingconsortia included THTInternational, consisting ofTabung Haji Technologies,Siemens, Voith, Zublin,Impregilo, Dragados and Pirelli.In early September 1997, ABBand Ekran fell into dispute overwho would pay for costoverruns, and ABB wasunceremoniously sacked fromthe project. Subsequently,Malaysian Energy Minister LeoMoggie announced negotiationsbetween Ekran and a newconstruction consortiumincluding Siemens and Alcatel(France). Negotiations came tonothing, however, as theproject soon collapsed infinancial ruin, leaving thegovernment to pick up thepieces.

Finance – Finance – Finance – Finance – Finance – TTTTThe dam’he dam’he dam’he dam’he dam’sssssAchilles’ heelAchilles’ heelAchilles’ heelAchilles’ heelAchilles’ heel

Finance proved the Achilles’heel of the dam. To implementthe project, Ekran set up BakunManagement Sdn Bhd (a wholly-owned subsidiary responsiblefor project management) andthe Bakun HydroelectricCorporation Sdn Bhd (BHC),which would own and operatethe dam. Ekran retained a 35%share in BHC, with externalinvestors and partners providingthe remainder of the equity anddebt capital. From the outset,Ekran was unable to raise thenecessary finance on theinternational markets. Initially,this was overcome by tappingMalaysian state-controlledcompanies for support, withagencies like Tenega National,Malaysian Mining Corporationand the Employees ProvidentFund, as well as the Sarawakstate government, taking majorshares in the project. This wasdespite assurances from Ting,

Ekran’s chair, that the projectwould not have to rely ongovernment money.Doubts over the project’sfinancial viability continued togrow, however, particularlyfollowing publication of adamning financial analysis ofthe project by London-basedfinancial analysts DelphiInternational. The reporthighlighted a number offinancial risks associated withthe project, including:

likely cost overruns;possible long-term

technical problems with thedam structure;

reservoir sedimentationand possible shortening ofthe life of the dam;

limited insurance coverin the event of a damfailure;

outstanding legal issuesrelating to the lack ofconsultation with affectedcommunities;

unresolved issuesrelating todecommissioning; and

a “substantial risk” thatthe dam would produceless power than forecast,partly because ofuncertainties in futurerainfall as a result of globalwarming.

Delphi calculated that thelikely returns to investorswould be substantially lowerthan the 11.5% claimed byEkran. It warned bankers andother financiers that “the damcarries an abnormal level ofrisk, much of ituncontrollable”.

NGO investor campaignNGO investor campaignNGO investor campaignNGO investor campaignNGO investor campaign

Even before the release of theDelphi report, NGOs in Europeand the US had begun tolobby investors to reject theproject. Initially, the NGOsconcentrated on shareholdersin Ekran, alerting them to theconcerns of environmental andhuman rights groups inMalaysia over Bakun. Letters


8 28 28 28 28 2

were sent to 120 majorEuropean pension funds,banks and insurancecompanies urging them not toback the project. Each letterwas tailored to the specificfinancial institution: banks whowere signatories to the UNEPStatement on Environment andSustainable Development, forexample, received lettersdrawing their attention to howthe project conflicted with theUNEP statement. Each newdevelopment in the project –for example, a court rulingthat the Environmental ImpactAssessment had beenconducted illegally – wasrelayed to potential investors,in this instance with a warningthat the ruling could carrylegal implications forinvestors. Fund managers werealso urged to “considerputting in place a process toform a policy decision on acompany code of sociallyresponsible investment.”Care was also taken to ensurethat the letters wereaddressed to the right person,or group of people, in eachfinancial institution – and to leteach of those addressed knowthat others in theirorganisation had also beencontacted. Pension fundmanagers, for example, werespecifically asked to bring theconcerns over Bakun to seniormanagement covering Malaysiaand to the Head of Assets,who also received lettersasking them to alert their fundmanagers. Self managedpension funds received

different letters from pensionfunds which were managedunder contract – the lettersagain being directed to theappropriate investment board ineach institution.Initially, the campaign stressedthe risks that investment inBakun posed to the reputationof investors. With thepublication of the Delphireport, greater stress was laidon the financial risks of theproject to investors. Thecampaign circulated the reportto the press and, as withprevious new developments inthe project, wrote to majorfinancial institutions, bringingthe report’s conclusions to theattention of key financialanalysts and potential investors.

OutcomeOutcomeOutcomeOutcomeOutcomeIn June 1997, investor doubtsled Ekran to cancel a rightsissue to help pay for its 35% inBHC, which was due to befloated on the Kuala Lumpurstock exchange. The floatationnever took place. In September,just hours after Ekran dismissedABB from the project, Mahathirannounced the “indefinitepostponement” of the project.The subsequent governmentbail-out of the project costMalaysia an estimated M$950million, including M$390 millionto Ekran, M$436 million tofinancial backers, M$24 millionto Dong Ah (a construction firm)and M$100 million to the BakunHydroelectric Corporation. In1999, Ibrahim Anwar, who had

been Deputy Prime Minister atthe time, testified to aMalaysian court that Mahathirhad instructed him “to useTreasury funds to compensatethe company without goingthough proper audit andaccount.” Leaving no room fordoubt, Anwar went on to say:“I’m referring specifically toTan Sri Ting and Ekran.”In 1999, the Malaysiangovernment announced that itwould go ahead with ascaled-down version of thedam, with the undersea cableomitted. All those in thereservoir area of the originaldam have already beenrelocated or are in theprocess of being moved to aresettlement site 300 milesaway. According to a 1999report by the MalaysianCoalition of Concerned NGOson Bakun, the resettlementsite is grossly inadequate. Thenew houses are poorly builtand culturally inappropriateand none of those relocatedhave been compensated forthe loss of their old homes. Arecent report by the Coalitionsays: “It is difficult toadequately capture in wordsthe utter desperation anddislocation being experiencedby the indigenouscommunities forcibly resettledbecause of the Bakunproject.”

SourcesSourcesSourcesSourcesSourcesMansley, M. (1996) Bakun: HighDam, High Risk, DelphiInternational, London, 1996.

WWWWWhahahahahat sort sort sort sort sort oft oft oft oft of people people people people peopleararararare anale anale anale anale analysts?ysts?ysts?ysts?ysts?

intimate knowledge of those sectors anda few companies within it. Often theyhave some technical knowledge and mayhave worked in the sector itself forsome years.

WWWWWhahahahahat art art art art are their successe their successe their successe their successe their successfffffactoractoractoractoractors?s?s?s?s?The reputation of stockbroker analystsrests on how much their colleagues (for

Some analysts are among the mosthighly-regarded and well-paidemployees in financial institutions.Many, however, are fairly low ranking– many firms see analysis as providinga good introduction to new employeeswho then move on to other areas, suchas sales or trading. Most analysts focuson one or two sectors and develop an


8 38 38 38 38 3

example, traders) and clients (forexample, fund managers) value theiradvice. Clearly, much depends onwhether their recommendations as towhich shares to buy or to sell have madeor lost money. But this is not the onlyfactor: indeed, research shows thatanalysts are notoriously unreliable whenit comes to advising on future shareprices. Analysts are also judged on thequality of their research – for example,whether it provides thought-provokinginsights on the company – and to a lesserextent on the quantity of theirpublications and reports. They will alsobe assessed on the extent to which theyhelp with marketing – for example, bygetting their company mentioned in thepress or making presentations toprospective new clients (the quality ofresearch is often an important factorwhen clients decide to award business).

Thus campaigners trying to get analyststo listen to them and to take on boardtheir arguments and concerns should aimto:

Improve analysts’ forecasts andrecommendations;

Provide analysts with additionalinsights for their assessments;

Give analysts a story that will getthem press publicity which they can useto attract new clients.

WWWWWhahahahahat art art art art are their outputs?e their outputs?e their outputs?e their outputs?e their outputs?The most visible output of analysts is thereports they produce on companies orsectors. Their influence goes beyondtheir written reports, however: analystsalso make substantial oral contributionsat the meetings held by most financialinstitutions every morning in order tobrief department heads. They also makecomments directly to colleagues andclients.

In terms of content, their output can bedivided into three areas – analysis,

forecasts and recommendations:Analysis – assessing the strengths

and weaknesses of a company’smanagement, its business strategy and itsfinances;

Forecasts – predicting a company’sresults for the next financial year and theyear after;

Recommendations – advising fundmanagers and others as to what to dowith stock: for example, “Buy”, “Hold”or “Sell”. Some analysts haveintermediate recommendations: “weakhold”, “buy on weakness” are just two.They may also make separate long- andshort-term recommendations or givetarget prices or price ranges for thestock.

WWWWWhahahahahat inft inft inft inft infororororormamamamamation dotion dotion dotion dotion doanalanalanalanalanalysts vysts vysts vysts vysts value?alue?alue?alue?alue?Analysts work in an information-rich, ifnot information-saturated, environment.In addition to the data available to themfrom on-line information sources, theyreceive umpteen reports fromcompanies, journals, magazines andbriefings.

They tend to rely first and foremost oncompany-based sources of information,such as the annual report, meetings withmanagement and site visits. They areless well-serviced with information onbackground issues and on the views ofother parties – for example, they may notknow about overseas politics or theviews of other stakeholders such asemployees and the local community.

Environmental matters are rarelycovered and certainly not systematically.Note that analysts will often rely onspecialists for views on technicalissues. Rarely do they conduct their ownindependent research (even if it is asbasic as visiting a retailer’s shops orlooking at a company’s productsdirectly).


8 48 48 48 48 4

When do they do theirWhen do they do theirWhen do they do theirWhen do they do theirWhen do they do theirrrrrresearesearesearesearesearccccch?h?h?h?h?There is a clear periodic cycle toanalysis, particularly analysis ofcompanies. Most analysts focus on theannual results of a company: theyusually produce one or more forecastsbefore the results are announced by thecompany and a more detailed analysisafterwards. They also comment oninterim results. Additional analysis maybe conducted on an occasional basis –for example, in response to regulatorychanges or to takeover rumours.Occasionally, analysts take it uponthemselves to carry out a detailedanalysis of a company or sector.

But when it comes to analysis of majornew share issues or to the floatation ofa company or the closure of projectfinance deal, analysts have to respondto events as they happen. For majorshare issues, most analysts covering thesector will carry out a substantialamount of research, which is then usedto advise clients on the value of theflotation and whether or not investorsshould buy the new shares. If the shareissue is small, the analysts of the banksinvolved in managing the issue arelikely to have undertaken similarresearch in order to advise the bankitself whether or not to becomeinvolved in the share issue.

WWWWWhahahahahat sort sort sort sort sort oft oft oft oft of time time time time timefrfrfrfrframe do analame do analame do analame do analame do analystsystsystsystsystshave?have?have?have?have?Most financial analysts have areputation for having a rather short-termfocus – a reputation that is generallyjustified. One reason is that analysts are

generally preoccupied with the next setof company results, and possibly theones after that. A longer-termperspective only comes into play whenthe analyst is considering a company’sbusiness strategy, or when analysing thedisclosed balance sheet and theintangible assets of a business (forexample, its brand identity or the valueof its research and development). Thisis one area where there is real scope foroutsiders to provide additional insightsand value, as long as their critiques arecarefully prepared and presented.

Engaging analystsEngaging analystsEngaging analystsEngaging analystsEngaging analystsPossibly the first step in any campaignfocused on trying to influence analysts isto set out your own arguments as to whyinvestors should be concerned about aparticular company or project. Giventhat analysts are likely to be distrustfulof reports from campaign organisers,which they view as biased, it is oftenbetter to commission an independentanalysis rather than to write ityourselves as this will have morecredibility within the investmentcommunity. You can then refer to thereport’s findings in a covering letter.

The next step is to circulate the report.Here you will need to spend timefinding out the names of the analystswho specialise in your given companyor project (see p.143). Remember thatthey receive a huge postbag of materialevery day, much of which goes straightinto the dustbin, so you will need tothink of ways to maximise the chancesthat they will read your report. It isworth ringing up in advance to ask themif they would like a copy (send itanyway) and to outline the keyarguments. If you can get their attentionat this stage, it is more likely that theywill at least skim through the reportwhen it arrives on their desk and, ifsufficiently interested, read it in full.


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Follow this up with calls to a fewspecific analysts. Ask for a meeting. Ifyou can get one or two individuals onyour side, the institutional pressure onanalysts to retain the respect of theirpeers will work in your favour. Thosewho are persuaded by your argumentswon’t want to lose credibility with theircolleagues – and will be anxious topersuade others of the merits of yourcase. Let them do your work for you –having an analyst put your arguments toother analysts will have more impactthan if you do it yourself.

PrPrPrPrPresenting yesenting yesenting yesenting yesenting yourourourourourrrrrresearesearesearesearesearccccchhhhhThe information-rich environment inwhich analysts work has consequencesfor attempts to communicate with them,whether in writing or orally:

Make sure your facts are right.Any errors will rapidly lose you credibilityand severely undermine your case.

Make your reports clear and to thepoint.While excessive exaggeration iscounterproductive, a clear, blunt view isappreciated, as is a concise summarywith the main points in the argument.Tabloid-style journalism is often popularin the financial markets.

Don’t tell analysts things theyalready know.Focus on angles that are new anddifferent.

Do yDo yDo yDo yDo your prour prour prour prour preeeeeparparparparparaaaaationtiontiontiontionFind out as much as possible aboutanalysts’ current views of the targetcompany. This can be done via a presssearch or by contacting analysts directlyand will help you pitch your approach tothem. For example, stress any existingconcerns analysts may have: if the

management of a company is alreadyfacing criticism, accentuate this in yourreport, if it is connectedwith the issues of concern.Conversely, if themanagement is highlyrespected, your line ofcriticism must be carefullyworded, if it is not to seemnaïve.

You should alsofamiliarise yourself withhow the company’s shareprice has performed overthe previous year or so asthis will tell you how themarket views the stock.Knowing the ups and downs of the shareprice will also give you an idea of howto angle your comments about thecompany (for example, don’t say acompany’s shares are overpriced if theshare price has fallen in value by some50% over the previous months).

TimingTimingTimingTimingTimingThe pattern of corporate reporting andthe analysts’ research timetable hasimplications for any attempt to engageanalysts. It is probably not a good idea,for example, to ask for a meeting in therun-up to a company announcing itsannual results or just afterwards. (Ofcourse, if your campaign has identifiedan immediate “scoop” which will affectthe results, then contacting analysts atthis period could be very effective.)Picking a time that is relatively quiet foranalysts makes it more likely that yourresearch will be read. But for new shareissues and projects, it is vital to get inearly. Once a share issue has beenformally announced, it will be muchharder to influence the outcome –particularly if the lead bank managingthe issue has guaranteed the success ofthe issue by agreeing to buy any unsoldshares.

Some pension fundsnow recognise that

projects whichdamage the

environment orcause social unrest

can affect theperformance of an

investment andhence its returns.


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INSTITUTIONINSTITUTIONINSTITUTIONINSTITUTIONINSTITUTIONALALALALALINVESTINVESTINVESTINVESTINVESTORSORSORSORSORSThe bulk of the world’s investments andcompanies are held by individuals,although most people are not evenaware of their holdings in a company.One reason is that the bulk of shares arenot bought by the individualsthemselves but by various institutionalinvestors acting on their behalf. Anyonewith a pension scheme, for example,will make (or their employer willmake) monthly payments to an insurancecompany or pension fund: the monthlypayments are then invested in thefinancial markets by professional fundmanagers in order to generate sufficientcapital to pay out a pension at somepoint in the future.

Institutional investors have huge sumsof money to invest and consequentlywield enormous power in the financialmarkets. How they respond to anyparticular issue largely decides itsoutcome. If they like the look of a newcompany, it will get the backing itneeds: if not, it won’t. If they decide tosell an existing holding in a company,others are likely to follow. If theysupport a controversial take-over, itwill go through.

As these institutions own shares onbehalf of millions of ordinary citizens(most probably including you, if youlive in a Northern industrial country), itwould seem reasonable to expect themto be accountable to their investors, toreport on how they are investing theirmoney, and to discuss their concernswith them. In practice, however, this isfar from the case.

There are a number of reasons for this.First, most individuals are simplyunaware that it is their money which

institutional investors are investing:consequently, those who may haveconcerns have not demanded a say inhow that money is invested. Second,even when they are aware of the role ofinstitutional investors, many individualshave not been too concerned about howtheir investments are managed, providedthey yield results. And, finally, asprofessionals, institutional investorshave traditionally been very resistant toany interference in their investmentdecisions, assuming that they know bestand disliking any questioning of theirjudgement.

TTTTTypes ofypes ofypes ofypes ofypes of institutional institutional institutional institutional institutionalinininininvvvvvestorestorestorestorestorsssssThere is a wide range of organisationsinvolved in institutional investment, andthe interactions between them can becomplex. One useful distinction isbetween investment institutions and fundmanagers (in some countries, fundmanagers are also referred to as “assetmanagers” or “investment managers”):

Investment institutionsInvestment institutionsInvestment institutionsInvestment institutionsInvestment institutionsThese typically gather funds forinvestment, hold them on behalf ofinvestors, organise payments back toinvestors, and generally deal withadministration and marketing. Examplesinclude pension funds and life insurancecompanies.

Fund manaFund manaFund manaFund manaFund managggggererererer sssssThese are the organisations and peoplethat actually decide which companies tobuy and sell. In some cases, fundmanagers are employed directly by theinvestment institution whose funds they


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are investing – this is typically the casewith life insurance companies. In othercases, they may manage funds on behalfof an investment institution on a contractbasis (usually called a “mandate”).

This distinction between investmentinstitutions and fund managers isimportant because the two organisationshave different goals and motivations andthus different pressure points. We shalldeal with fund managers in the followingPart; here we focus on the maininvestment institutions.

WWWWWhahahahahat art art art art are the maine the maine the maine the maine the maintypes oftypes oftypes oftypes oftypes of in in in in invvvvvestmentestmentestmentestmentestmentinstitutions?institutions?institutions?institutions?institutions?There are three main investmentinstitutions: occupational pension funds,life insurance companies and retailinvestment organisations.

Employer-based pension fundsEmployer-based pension fundsEmployer-based pension fundsEmployer-based pension fundsEmployer-based pension fundsPension funds collect and investemployees’ retirement savings. Mostlarge companies have pension funds, asdo other major employers such asgovernments, municipalities,partnerships (such as accountancy firms)and unions. Sometimes pension funds areorganised on an industry-wide basis by anumber of employers. The pension fundis legally separate from the employer (or“sponsor”), but the employer hassubstantial responsibilities regarding itsmanagement. These include anobligation to make regular payments intothe fund and to underwrite any shortfalls.

Most large pension funds are in the US,the UK and The Netherlands. Pensionfunds are much rarer in the rest ofEurope (although Sweden, Switzerlandand Denmark have fairly large pensionfund assets). The biggest pension fundshave assets worth up to $100 billion ormore in the US, and £10 billion ($14

billion) or more in the UK. The UKpension market had total assets ofaround $1,450 billion at the end 1999;in the rest of Europe, pension funds totalaround $2,200 (about one-third of whichis in Dutch pension funds).

In the US and the UK,pension funds arecontrolled by “trustlaw” – this means thatthey are supervised bytrustees who have alegal duty to ensure thatthe pension fund isproperly run, althoughthey themselves are notinvolved in its day-to-day management.Trustees have traditionally beenappointed by the sponsor, although newlegislation in the UK means that someare appointed by the beneficiaries.

A key feature of trust law is that themoney has to be invested in the bestinterests of the beneficiaries – and thisis usually taken to mean in their bestfinancial interests. The principal duty oftrustees dates back to Victorian times:namely, to invest as a “prudent man”(sic) would if investing on behalf ofothers. (Women were not considered“prudent” in Victorian times, eventhough they were held responsible forhousehold management. Today, there arestill few women pension fund trustees,although many women work on theoperational side.) Trustees can be heldpersonally liable if they take actionswhich are not in the best interests ofbeneficiaries or if they act in animprudent manner and a financial lossresults. Not surprisingly, trustees arevery cautious, often seeking to leavedecisions to their advisors (for example,their fund managers) or simply goingalong with what they deem to be themarket “consensus”.

Many pension funds have argued that the“fiduciary responsibilities” laid down

In temperament, thedirectors of a lifeinsurance company tendto be more willing totake risks than ordinarybusiness people.


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under trust law prevent them fromtaking account of the social, ethical orenvironment implications of theirinvestments. But recent changes to thelaw are likely to make pension fundsmore open to considering social,environmental and ethical issues. In the

UK, pension funds nowhave to disclose theirinvestment policy in a“statement of investmentprinciples” and a recentregulation requires thisstatement to disclose “theextent to which (if any)social, environmentaland ethical issues aretaken into account.”

The new regulation hasencouraged pension fundsto reconsider their past

approach. Most commentators nowagree that there are no significant legalobstacles to the adoption of SRIpolicies. However, major culturalbarriers remain. That said, there is nowa growing recognition that theshareholder-voting rights enjoyed bypension funds are valuable assets ofpension funds and that they should beused actively and responsibly.Individual pension fund holders arealso becoming increasingly criticalabout how their money is beinginvested, adding to the pressure onpension funds to consider the broaderimplications of their investments.Finally, some pension funds nowrecognise that projects which damagethe environment or cause social unrestcan affect the performance of aninvestment and hence its returns. Takingaccount of the environmental and socialconsequences of an investment wouldthus appear to fall within even a limitedinterpretation of the fiduciaryresponsibilities of trustees.

Pension funds are not particularlyhomogenous – they vary in size, ininvestment approach, in maturity (some

have a membership largely made up ofexisting pensioners, whilst others havemembers who are fairly young) and inhow well funded they are relative totheir liabilities. While most pensionfunds use external managers, some of thelarge funds have their own in-housemanagers.

One key distinction between thedifferent pension funds is in sponsortype. Some funds are public sectorfunds, backed by local authorities,municipalities or states, whereas othersare backed by companies. In addition,there are some funds which do not fallinto either category – being backed bypartnerships, industry bodies, tradeunions or charities. The public sectorfunds include some of the largestpension funds in the world, such asCalPERS (the Californian PublicEmployee Retirement System) and thelarge Dutch funds ABP and PGGM (forlocal authority workers and healthworkers respectively). Moreimportantly, the large public sectorfunds tend to be the most active onsocial and environmental issues, andwill probably be the most likely torespond sympathetically to a campaign.

In the UK, the Local GovernmentPension Fund Forum has been active inorganising local authority pension fundsto take an active approach ongovernance issues. The Forum hasworked closely with PensionsInvestment Research Consultants(PIRC), a specialist adviser oncorporate governance, and is oftenprepared to take a stand on social andenvironmental issues.

LifLifLifLifLife insure insure insure insure insurance companiesance companiesance companiesance companiesance companies

Life insurance companies offer a rangeof financial products such as pensions,life insurance and savings products. Forlife and pensions products, theytypically expect regular payments or“premiums” which they invest in the

Fund managers areunder great pressureto maximise returns,not only because thisbenefits profits butbecause highperforming funds winnew business.


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stock market, hoping to make a goodreturn. Some products are managed “onbalance sheet” – that is, the lifeinsurance company itself undertakes topay its customer and invests on its ownbalance sheet to meet this obligation.Other products are managed by aninsurance company on behalf ofcustomers (and thus are effectively offbalance sheet). Further complicationsarise with some of the on-balance-sheetproducts. In some cases, a guaranteedfixed pay-out is provided (with the lifeinsurance company taking all the risksand rewards); in other cases, thecompany shares some of the rewardsabove a certain level (“with profits”)with customers.

As well as pure life insurancecompanies, there are a number of“composite” insurance companies thatprovide both life insurance and generalinsurance (for example, motor insuranceand home insurance). Note that evengeneral insurance companies are fairlymajor investors in the stock market,since they invest their premiums beforepaying out on claims.

Most large UK life insurance companiesare listed on the UK stock exchange, butsome are owned by their members asmutual societies. All have a board ofdirectors. The majority of life insurancecompanies employ in-house fundmanagers, who will often form aseparate department of the company. Thelife insurance industry is consolidatingrapidly worldwide. The biggest lifeinsurance companies have assetsupwards of $100 billion. The UK lifemarket may be worth around £1,000billion (£1,400 billion).While insurance companies are not asconstrained by the law as pension funds,they are under a general obligation toinvest prudently in the interests ofcustomers and shareholders.Historically, they have been rathercautious when it comes to social andenvironmental issues. But there are some

positive changesunderway. Some lifeinsurance companies havebeen involved in theethical investmentindustry for many years(although this hasnormally involved only asmall proportion of theirtotal assets undermanagement).Increasingly, these lifeinsurers are now applyingan activist shareholder approach acrossall their funds, dramatically increasingthe potential for shareholder activism. Anumber of other fund managers, new toSRI, are following suit. Some havesigned up to the United NationsEnvironment Programme’s (UNEP)“Financial Institutions Initiative”, whichhas an asset management sub-group.

For campaigners seeking deeper reformof the industry’s investments, a keypressure point lies in the need for lifeinsurance companies to maintain a highconsumer profile in order to sell theirpolicies. Most life insurance companiesare very brand-conscious, spendinglarge sums of money to promote apositive corporate image. As aconsequence, they are sensitive toadverse publicity.

In the UK, forexample, severalinsurance companieshave improved theirethical investmentperformancefollowing poorratings in Business inthe Environment’sannual Index ofEnvironmentalEngagement, whichreviews the investment portfolios ofmajor UK companies, publishingcomparative tables that rate ethical andenvironmental performance. Those lifeinsurance companies listed on the UK

Many financiers viewcampaigns as a

challenge to theirjudgement: hectoring

them about“sustainability” islikely to trigger a

defensive reaction.

Many pension funds haveargued that the “fiduciaryresponsibilities” laid down

under trust law preventthem from taking account

of the social, ethical orenvironment implications

of their investments.


9 09 09 09 09 0

stock exchange are also likely to besensitive to any evidence that they havefailed to comply with the Exchange’svarious codes of conduct on reporting

and accountability.

Retail investmentRetail investmentRetail investmentRetail investmentRetail investmentorganisationsorganisationsorganisationsorganisationsorganisations

In the UK, the mostcommon form of retailinvestment organisation isthe Unit Trust (or,increasingly, the “OEIC”– that’s an “open ended

investment company” ).

Known as “mutual funds” in the US,unit trusts are effectively collectiveinvestment funds: rather than buyingshares for themselves, members of thepublic purchase “units” in a pooledfund, which is managed by the unit trustcompany.

When purchasing their “units”,members of the public haveconsiderable choice as to the markets inwhich they would like to see their

savings invested,although the detailedchoice of whichcompany’s shares tobuy is left to fundmanagers.

Most retail investmentorganisations have arange of funds onoffer, ranging from therelatively general(“domestic equities”or “balanced”) to thespecific (for instance

“technology” or “US equities”). Indeed,the total number of retail funds runs intothousands worldwide. (It is probablylarger than the total number of listedcompanies.)The UK unit trust market is worthseveral hundred billion pounds, the USsome two trillion dollars.

Who’s Who in theWho’s Who in theWho’s Who in theWho’s Who in theWho’s Who in theinstitutionsinstitutionsinstitutionsinstitutionsinstitutionsPPPPPension fundsension fundsension fundsension fundsension funds

Pension fund trustees are not financialprofessionals; they are generally leadingmembers of the businesses whose fundsare managed by the trust or, in somecases, independent “wise heads” withbackgrounds in industry or localgovernment. Pension fund trustees are,in an almost legendary sense, older,experienced and usually veryconservative. They typically have only alimited amount of time to spend on thepension fund, and so will look to othersfor help and guidance.

A key figure in a pension fund is the“pensions manager”, who handles theadministration of the fund. The pensionmanager’s responsibilities generallyinclude acting as secretary to thetrustees and bringing issues of concernto their attention, in addition toorganising the panels which appointfund managers and consultants. Theinfluence of the pension manager is thusconsiderable: indeed, in most pensionfunds, progress on social andenvironmental issues has generally beendriven by a proactive pension manager.

Pension managers tend to be drawn fromsenior management and are typicallybased in the finance or personneldepartment, although they are notgenerally involved in the “front line” ofbusiness. They usually have a reputationfor being “a safe pair of hands” and willbe methodical and conservative. In somecases, they may be a senior managerwho has been moved sideways into thejob; in others, they are people who havemade a career in pensions (note thatthere are professional qualifications andprofessional bodies for those working inthe industry). Often, pension managersmay have several staff working withthem, usually in administrative roles but

Ultimately, allinvestmentcompanies gaugetheir performanceby bottom-lineprofit.

Given the liabilitiesthat pension fundtrustees risk, theirprimary measure of“success” is tomanage assetsprudently and toavoid being sued.


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Organising a shareholder resolutionOrganising a shareholder resolutionOrganising a shareholder resolutionOrganising a shareholder resolutionOrganising a shareholder resolutionThe The The The The Balfour Beatty campaign in the UKBalfour Beatty campaign in the UKBalfour Beatty campaign in the UKBalfour Beatty campaign in the UKBalfour Beatty campaign in the UK

b yb yb yb yb y

KKKKKaaaaate Gearte Gearte Gearte Gearte Gear yyyyy,,,,, I l isu Dam Campaign, I l isu Dam Campaign, I l isu Dam Campaign, I l isu Dam Campaign, I l isu Dam Campaign, and Hannah Grif and Hannah Grif and Hannah Grif and Hannah Grif and Hannah Grif f ithsfithsfithsfithsfiths,,,,, F F F F Friends ofriends ofriends ofriends ofriends of the Ear the Ear the Ear the Ear the Ear ththththth

In 1997, the UK firm BalfourBeatty became lead civilengineer for the consortium

planning to build the Ilisu damin the Kurdish region ofSoutheast Turkey. Thecompany has applied to theUK and US export creditagencies to back itsparticipation in the proposeddam.Ilisu has recently become oneof the most controversialplanned dam projects in theworld: it would affect up to78,000 people, the majority ofthem Kurds, in an area whichis under State of Emergencyrule; flood an area of over 200square miles, inundating anumber of internationallyimportant archaeological sites,including Hasankeyf, a citydating back 10,000 years; andthreaten relations betweenTurkey and its downstreamneighbours Iraq and Syria overthe water resources of theriver Tigris. An internationalcampaign is targeting both theexport credit agencies – fromeight countries including theUS, UK, Switzerland, Italy andGermany – and the companiesinvolved.

Planning for BalfourPlanning for BalfourPlanning for BalfourPlanning for BalfourPlanning for BalfourBeatty’s 2001 AGMBeatty’s 2001 AGMBeatty’s 2001 AGMBeatty’s 2001 AGMBeatty’s 2001 AGMIn the UK, the Ilisu DamCampaign has organisednumerous protests againstBalfour Beatty’s involvement inIlisu: writing letters, holdingdemonstrations at its offices,and attending the company’s2000 annual general meeting(AGM). For Balfour Beatty’s2001 AGM, the Ilisu DamCampaign and Friends of theEarth undertook a widerstrategy of shareholderactivism, centering on ashareholder resolution.The resolution called on thecompany to adopt theguidelines of the World

Commission on Dams, aninternationally credible body setup with the support of industry,NGOs, government anddevelopment bankrepresentatives. The WCD’sseminal report was published inNovember 2000. The guidelines,if implemented, would rule outthe Ilisu project, preventcompany participation in other“Ilisus” in the future, andimprove wider corporatepractice.Friends of the Earth had writtento Balfour Beatty earlier in theyear, asking the company toadopt the WCD guidelines ascompany policy. The responsefrom the company was aresounding “No” which was whyFOE and other Ilisu campaignersdecided to submit a resolution.From the start, we neverexpected to win the resolution:this would have meant that over50% of shareholders agreedwith us about the problem andabout the exact nature of thesolution. In fact a report byFriends of the EarthInternational points out that nosocial/environmental resolutionhas ever gained majoritysupport. The objective wasrather to send a clear messageto the company that it mustchange its ways, that someinvestors were concerned aboutthe company’s activities, andthat change was both possibleand made good business sense.

TTTTTalking to institutionalalking to institutionalalking to institutionalalking to institutionalalking to institutionalinininininvvvvvestorestorestorestorestorsssssThe first task was to identify anup to date list of majorinstitutional investors in BalfourBeatty. We did this through asearch on a financial database –although institutional investorscould have been identifiedthrough web searches of siteswhich give details of the largestshareholders in profiledcompanies (see p.137).

In the UK, approximately athird of institutional investorsnow have some form ofsocially responsibleinvestment. This made iteasier for us to draw up a listof key investors to approach,as several of those with“Socially ResponsibleInvestment” (SRI) teams alsohad holdings in Balfour Beatty– ranging from below 1% to7%. These we called the “A”list – investors whom wewould meet in person; the “B”list were those investorswithout SRI policies, but withmajor holdings in thecompany, whom we wouldeither meet or inform throughpersonal letters and briefingdocuments.We made appointments withthe “A” list investors, takingalong a draft of our resolution– both so that they could feelsome ownership of theprocess and to solicit adviceon its wording. We alsoprovided documents to backup every argument we made –rather than expecting the SRIteams to do their ownresearch – to convince themof the merit of our resolution.Our main arguments centeredaround the risks to BalfourBeatty’s reputation posed bythe many controversialprojects, including Ilisu, inwhich the company wasinvolved and our opinion thatthe company had insufficientstructures and policies in placeto manage those risks.This emphasis on reputationaland therefore financial risk,rather than moral arguments,was crucial for communicatingour message to investors fortwo reasons. First, it enabledSRI teams to put the issues totheir respective fundmanagers and analysts inlanguage which made sense tothem. Second, the argumentthat the current operatingpolicy is financially riskyenabled us to show investors


9 29 29 29 29 2

that, unless it changed,Balfour Beatty could bejeopardising its future profits– and important considerationgiven that companies arerequired by UK law tomaximise returns for theirshareholders.

A temporA temporA temporA temporA temporararararary gy gy gy gy glitclitclitclitclitchhhhh

We thought that our resolutionwould be eminentlyreasonable in the eyes ofinvestors, as it certainly wasvery reasonable in our eyes.Given this “reasonableness”,we had expected that oneinstitutional investor wouldpropose it – a formal proposalbeing a prerequisite of havingthe resolution tabled for theAGM.We very quickly learned thatthis was too much too soon –that for an investor topropose a resolution, withoutfirst having a long andinvolved dialogue with thecompany, was the equivalentof, as one investor put it,“pressing the nuclear button”.A shareholder resolution, fromthe perspective of institutionalinvestors, is a tool to be usedwhen all other forms ofcommunication and liaisonwith the company have failedto produce a satisfactoryresult.Undeterred, we decided topropose the resolutionourselves, which meant buyinga substantial number of sharesin the company. Under theCompanies’ Act (sections 376and 377), the rules forproposing a resolution statethat one needs either 1/20th

of the votes (in BalfourBeatty’s case representing 20million shares) or 100shareholders with an averageshareholding of £100 each. Wechose the latter option, whichmeant that we could have theresolution endorsed by 99single-share shareholders andone 20,000-share shareholder.A word of caution here: this“average shareholding of£100” means £100 of ordinaryshares (in Balfour Beatty’s casevalued at 50 pence each). Thisvalue does not necessarilycorrespond to the marketprice of the shares (which for

Balfour Beatty was over £1) butconstitutes the set value of thecompany’s shares.We now had two tasks: finding100 shareholders and finding20,000 shares.

Buying sharBuying sharBuying sharBuying sharBuying shareseseseses

Friends of the Earth bought20,000 shares in its name. Inaddition, 500 shares werebought in the name of KateGeary, the Ilisu Dam Campaign’sco-ordinator – to betransferred to individuals lateron. This works out muchcheaper than buying sharesindividually as you only have topay the commission once.Many banks, such as Lloyds TSBand HSBC, have branches with“share shops”, where you cango in and purchase shares in acompany. It is worth checkingwith the local branch first.Others have “share lines”, whichallow you to buy shares overthe telephone. All banks chargea commission on the sale, whichvaries according to the numberof shares bought.To buy 500 shares in BalfourBeatty, we rang Lloyds shareline (0870 6088600). We wantedto buy shares on behalf of theIlisu Dam Campaign – but it wasonly possible for a privateindividual to buy shares so KateGeary completed the process inher name.There are two stages:registering, then purchasing. Toregister, the bank takes bankand personal details then givesa client reference number andquotes the cost of the shares,their commission (in this case£25) and the stamp duty(£2.50). We approved thecharges and were then passedto a broker to complete thedeal. The price of the sharesand of the deal is set from thatmoment – although the form-filling and payment has not yetbeen done. Within the week,we’d received forms to fill inand an invoice for the sharesand charges, which we paid bycheque. It took about six weeksfor the share certificate toarrive.To buy 20,000 shares, Friendsof the Earth went directlythrough a broker. This has the

disadvantage of more paperwork in the form of setting upan account with the broker,but has the advantages of by-passing the bank and of beingable to sell the shares backthrough the broker when theyare no longer required.

HoHoHoHoHow to trw to trw to trw to trw to transfansfansfansfansfer sharer sharer sharer sharer shareseseseses

If you have a block of shares,you should aim to transferthem to individual supporterswell in advance of the AGM –at least three monthsbeforehand. Contact thecompany’s registrar, who willbe listed on the company’sweb-site or annual report, andask for the required numberof “stock transfer forms”. Youwill need the full name, titleand home address of eachtransferee. Fill in the formsaccording to the instructions,writing “L” in section 14 whichdenotes that you are “gifting”the share for free (if youcharge for shares, you may beliable for a £5 stamp duty pershare). Each share must beindividually transferred. Sendthe forms, together with theoriginal share certificate tothe registrar. The transferprocess will take around twoweeks.

PrPrPrPrProposing the roposing the roposing the roposing the roposing the resolutionesolutionesolutionesolutionesolution

We identified over 100 would-be proposers of theresolution. The format thatthe proposal takes is dictatedeither by the company’sarticles of association or bythe requirements of thecompany’s secretary. In ourcase, each proposer had tosubmit their proposal onpaper in the same format.We wrote to every individualproposer, enclosing a copy ofthe resolution with a sectionfor them to sign, date and fillin their share certificatenumber, to be returned byready-stamped, self-addressed envelope. Luckily,114 people returned theirsigned forms in time!We now had enough sharesand endorsements to be ableto propose the resolution.


9 39 39 39 39 3

The Companies Act states thatresolutions must be submittedat least 6 weeks in advance ofthe company’s AGM. However,it was important to liaise withthe company secretary well inadvance of this deadline toensure that everything ransmoothly. There were twomain considerations. The firstwas to make sure that thewording of the resolutioncontained no facts which thecompany could contest. In thiscase, Balfour Beatty wereconcerned about ourresolution’s mention ofcorruption allegations inLesotho against a consortiumof which Balfour Beatty was apart and wanted us to removethis reference. Followingcontact with lawyers inLesotho we clarified thesituation and were able toinclude a slightly amendedreference to the case.The second consideration wasto make sure the resolutionwas submitted in time to becirculated with the company’sannual report and otherinformation for the AGM.Under the Companies Act, theproposer can be obliged topay for all the costs ofsubmitting a resolution (whichwould include printing andpostage costs). However,Balfour Beatty agreed toinclude the resolutiondocument with the annualreport which meant that therewere no extra mailing costs.We paid for the printing of theentire document (includingBalfour Beatty’s counterstatements) and this came to£2,500 for 23,000 copies.Under the Companies Act, aswell as the text of theresolution itself, proposers areallowed to provide a“supporting statement” toexplain to shareholders theargument for supporting it.The resolution and statementmust total under 1000 words.It is worth having a lawyercheck this text, as we did, toensure no fact or argumentcould be considered libelous.Balfour Beatty also submitted astatement against theresolution and this wasincluded in our document,making it an 8-page booklet.If necessary, we could havelimited the contents of this

document to the resolution textand our own statement in orderto save postage and printingcosts.Whether or not you must meetprinting and distribution costsfor your resolution appears tobe at the particular company’swhim – for example, BP coveredall costs of a resolution by theFree Tibet campaign itself.

TTTTTararararargggggeting ineting ineting ineting ineting invvvvvestorestorestorestorestorsssss

In the final weeks leading up tothe AGM, we wrote again to allinvestors – “A” and “B” list –enclosing our final resolutionand a detailed briefing arguingour position. We had honed thecontent of the briefing over thepast couple of months,choosing the arguments andfacts which had seemed of mostinterest and concern toinvestors.We also specifically targeted agroup of major investors wehad not dealt with before: localauthority pension funds. Thesefunds are often invested in arange of FTSE 100 companies,so it is likely that many will haveholdings in the company youare campaigning against. Weused a two-pronged approach:we wrote directly to every localauthority pension fund in thecountry (almost 100), enclosinga briefing and the resolution,and to our own supporters,asking them to send letters totheir local authority, asking thelatter to support our resolution.We also produced a “spoof”annual report – Balfour Beattycounter-report 2000, BalfourBeatty’s annus horribilis – copy-catting the company’s ownannual report. The reporthighlighted key controversialprojects – including the Ilisudam – in which the companywas involved and argued thatBalfour Beatty lacked a coherentstrategy to manage reputationalrisks. We used the report tobrief the media, institutionalinvestors and shareholders.One of the arguments we hadmade in our briefing forinvestors was that Balfour Beattywas involved in a whole rangeof controversial projects – notsimply Ilisu. Indeed, thecampaign was supported by

unions – UCATT (constructionworkers) and RMT (railwayworkers) – the Campaignagainst Tube Privatisation andprotesters against the UK’sfirst toll motorway inBirmingham, in which BalfourBeatty is involved. In order toensure that these groups wereable to present their concernsat the AGM, we transferredshares to representatives fromthe different campaigns.

TTTTThe he he he he AAAAAGMGMGMGMGM

Immediately prior to the AGM,over 100 protesters unfurledbanners and showed spoofshare certificates (reading“Balfour Beatty – One Share in78,000 forced evictions,oppression of the Kurds,environmental destruction andconstruction worker deaths”)outside the hotel where theAGM was held. This photoshoot was covered by majornational media.Shareholders then entered theAGM. The first hour wasdominated by questions on awide range of issues – frombribery and corruption chargesin Lesotho and the UnitedStates, to the company’shuman rights andenvironmental policies, to theBirmingham Northern ReliefRoad and the company’sresponsibility for the Hatfieldtrain crash in the UK, whichsaw four passengers killed.The chair finally brought thissession to a halt after an hourand a half with manyshareholders still wanting toquestion the board over arange of issues.The second session of themeeting was devoted to adebate on the resolution andto concerns over Ilisu. CharlesSecrett, director of Friends ofthe Earth, opened thequestioning. He warned theboard that corporateresponsibility was an issue thatwould not go away, indeedthat it could only become evermore prominent. The only wayfor Balfour Beatty to protectits reputation and itsprofitability in future would befor the company to take realaction over such controversialissues and to support


9 49 49 49 49 4

Resolution 15 by adopting theWCD’s guidelines.Apparently startled by thestrength of the campaignagainst the Ilisu dam, LordWeir, the company chair, toldthe AGM, “If we had knownhow controversial this projectwould be we could have savedourselves a lot of trouble bynot taking part in it . . .”

TTTTThe vhe vhe vhe vhe voteoteoteoteote

When the vote on Resolution15 was announced, it emergedthat 14 million votes had beencast in favour of the resolutionand 75 million votes castagainst.But the story of the vote didnot end there. Later on duringthe day of the AGM, BalfourBeatty announced that therehad been a mistake in thevoting. The abstentions stood,but three institutionalinvestors who had supportedour resolution had made amistake, having accidentallyticked the wrong box on thepolling form. The errors, saidthe company, had emergedfollowing telephone calls fromBalfour Beatty’s companysecretary to the fundmanagers in question. Thevotes of the three institutionalinvestors were thereforechanged.The final results were3,416,218 votes for theresolution and 102,211,464votes against, with anestimated 73,096,424abstentions. The resultcompares with one of themost successful shareholderactions ever in the UK,brought by Greenpeaceagainst BP in 2000, which saw45% abstentions.For the Board to “fail to winthe support of more than 40%of institutional shareholders”,in the words of the FinancialTimes, was a major blow toBalfour Beatty. Institutionalinvestors who abstained sent aclear message to the

company’s directors that all wasnot well. “Abstentions shouldusually be read as shareholderswho sympathise with theresolution but don’t want to gothe whole hog,” commentedPensions Investment ResearchConsultants, which advisedclients to support theresolution. This fits well withour earlier realisation thatsupporting a resolution is alast-ditch method ofengagement for institutionalinvestors.Although the resolution wasdefeated, a strong warning wasdelivered to Balfour Beatty’sboard of directors – over 40%of their shareholders wereunhappy with their currentpolicies on dam-building. Butthis warning was delivered atleast as strongly during theweeks and months leading upto the AGM as Balfour Beattyhad to justify itself to its keyinvestors, all of whom met orcorresponded with the companybefore the AGM.One the day of the AGM,Balfour Beatty put out a pressrelease, stating that thecompany “has committed itselfto taking the WCD principles,criteria and guidelines intoaccount in determining whetherand how it should be involvedin any future hydro-electricprojects”. This is a long wayfrom the company’s responseto FOE’s original letter urgingthat the company adopt theWCD guidelines. How the newcommitment manifests itself inpractice remains to be seen.

Lessons learLessons learLessons learLessons learLessons learnednednednedned

The most important lesson welearned involved timing: weonly began our shareholderstrategy in January for an AGMin May; ideally we would haveprepared for a year. This wouldhave had the advantage ofgiving institutional investors thetime to talk to the company, towork through their ownprocesses of engagementwhich, if the company was not

moving in the right direction,might ultimately result in themfeeling able to support oreven propose a resolution. Tohave had the resolutionbrought by an institutionalinvestor would have increasedthe likelihood of othersbacking it, or at leastabstaining.Our planning succeeded insetting a tight but achievabletimetable: to transfer shares,build support, propose theresolution on time and planfor a successful AGM. Anyoneembarking on a shareholderaction would be well advisedto draw up such a timeline,marking major deadlines tomeet.A further lesson lay in thecontent of the resolutionitself. We tried to keep ourresolution neither too broadnor too narrow. Too broadand there would have beenplenty of room formisrepresentation; too narrowand investors would not havebeen interested – focusing onone project, such as Ilisu,would have been interpretedas attempting to “micro-manage” the company. (Forfurther advice on wordingresolutions, see p.68).Finally, bear in mind that themore you can prepare theground for investors thebetter: by engaging with thecompany and preparingfinancial arguments to back upyour case – with the facts tosupport them – the morelikely it is that you will secureinvestor support for yourresolution. Prior engagementwith the company is alsocritically important forreassuring investors that yourcampaign is sincere in tryingto persuade the company tochange.

Kate Geary and Hannah GriffithsCopies of the Ilisu Dam Campaign’sBalfour Beatty counter-report 2000:Balfour Beatty’s annus horribilis canbe downloaded in pdf format fromwww.ilisu.org.uk . Or write to IlisuDam Campaign, Box 210, 266Banbury Road, Oxford OX2 7DL.


9 59 59 59 59 5

sometimes with specific responsibilitiesfor investments. These staff can be worthcontacting. In some organisations,pension managers are very seniorofficials – within local authorities in theUK, for example, the director of financeor county treasurer takes responsibilityfor pensions.

LifLifLifLifLife insure insure insure insure insurance companiesance companiesance companiesance companiesance companies

Life insurance companies are governedby a board of directors, with a chair andchief executive. The directors are likelyto have extensive business experience,and, in most cases, to have spent much oftheir working life in finance. Individualdirectors will have responsibility forareas such as investments (the ChiefInvestment Officer) and marketing (Headof Marketing).

In temperament, the directors of a lifeinsurance company tend to be lessaggressive than many financiers butmore willing to take risks than ordinarybusiness people. They are typically lessegotistic than, for example, analysts, andmore open to new ideas than middlemanagement. Ultimately, however, theyknow their own minds and haveconfidence in their own judgements. Itgoes without saying that they will bevery busy.

Retail investment organisationsRetail investment organisationsRetail investment organisationsRetail investment organisationsRetail investment organisations

The heads of retail fund investmentorganisations are likely to have a similarprofile to the heads of life insurancecompanies. If there is a difference, itwill be that retail fund managers tend tobe more aggressive, possibly youngerand generally closer to investment banksand analysts. Similarly, but with morepositive implications for campaigners,their business is more volatile than thatof insurance companies, placing themunder greater pressure to maintain theirreputation for financial competence.

WWWWWhahahahahat art art art art are theire theire theire theire theirsuccess fsuccess fsuccess fsuccess fsuccess factoractoractoractoractors?s?s?s?s?PPPPPension fundsension fundsension fundsension fundsension fundsGiven the liabilities that pension fundtrustees risk, their primary measure of“success” is to manage assets prudentlyand to avoid being sued. This tends tomake pension funds more conservativethan other financial institutions.

Prudence apart, there is a desire toensure enhanced returns so thatimproved benefits can be provided, orthe cost to the sponsor reduced. Suchincreased returns, however, need to beachieved without incurring excessiverisk. Other considerations, specifically“doing good”, will be very much atertiary objective.

Efforts to encourage pension funds toinvest more ethically are thus likely tocome to little unless campaigners canreassure trustees and fund managers that“doing good” would not be at theexpense of increased risk or lowerfinancial returns.

Life companies andLife companies andLife companies andLife companies andLife companies andretail investment organisationsretail investment organisationsretail investment organisationsretail investment organisationsretail investment organisations

Life insurance companies and retail fundmanagement institutions are businesses;their ultimate measure of success isprofits and increased shareholder value.Fund managers are under great pressureto maximise returns, not only becausethis benefits profits but because highperforming funds win new business.High returns, however, are only part ofthe picture.

Success is also measured by theincreased volume of sales, which in turnplaces a high value on the ability of lifeinsurance and investment companies tomarket themselves effectively. Thisleads to a concern with image that


9 69 69 69 69 6

campaigners can use to their advantage.

Reducing costs is also an importantconsideration for life insurance andretail investment organisations. Oneresult has been a substantial numbers ofmergers and acquisitions, as companiesattempt to capitalise on availableeconomies-of-scale.A major drawback of such mergers is

Questions to fund manaQuestions to fund manaQuestions to fund manaQuestions to fund manaQuestions to fund managggggererererersssss

that they take up large amounts ofmanagement’s time, in addition tocreating insecurity amongst staff. Forcampaigners, this can mean feweropportunities to engage withmanagement over the impacts of acompany’s investment policy. Not onlyare staff too busy to discuss suchconcerns, but the prospect of losing theirjobs makes them disinclined to do so.

Engagement can be ratherintangible. How canexternal stakeholders

know that fund managersreally are making good ontheir commitments to engagewith the companies theyinvest in? How do they doperformance measurement forengagement?There are four differentcategories within which tomeasure engagement success:inputs, outputs, outcomes,transparency. NGO’s may wishto consider the followingkinds of questions to fundmanagers to test theircommitment to engagement:

Inputs:Inputs:Inputs:Inputs:Inputs:What resources andWhat resources andWhat resources andWhat resources andWhat resources andthinking go into thethinking go into thethinking go into thethinking go into thethinking go into theengagement process?engagement process?engagement process?engagement process?engagement process?

· How much money is spent?· How many staff are

involved in the process?· What levels of qualification

and experience do theyhave?

· Are SRI issues dealt with bya separate unit orintegrated

· into each analyst’s/manager’s brief?

· If there is a separate unit,how are itsrecommendations andfindings used by the restof the house?

· What research is conductedin house? What is bought in?

Outputs:Outputs:Outputs:Outputs:Outputs:WWWWWhahahahahat engt engt engt engt engaaaaagggggement wement wement wement wement wororororork isk isk isk isk iscarcarcarcarcar ried out?ried out?ried out?ried out?ried out?

· Which issues does the fundmanager cover under its SRI

· policy? Does it coverinternational developmentissues as well

· as environment andcorporate governance?

· How many companies arecontacted?

· How intensive are contacts?· How many specific requests

are made for change?· Are any substantial projects

undertaken?· Are investors included in

major debates and initiatives· undertaken by government,

NGOs, trade associations etc?· Are any exceptional

strategies employed, such asAGM

· attendance or shareholderresolutions?

Outcomes:Outcomes:Outcomes:Outcomes:Outcomes:How successful is theHow successful is theHow successful is theHow successful is theHow successful is theengagement process atengagement process atengagement process atengagement process atengagement process atachieving its objectives?achieving its objectives?achieving its objectives?achieving its objectives?achieving its objectives?

· How many companies havechanged following

· engagement?· How substantial are these

changes?· What other signs of change

in the corporate sector are· linked to engagement

activity?· How well substantiated are

claims of engagementsuccess?

· What is the fund manager’smost significant SRI

· achievement over the lastyear?

TTTTTrrrrransparansparansparansparansparencencencencency:y:y:y:y:How clear is theHow clear is theHow clear is theHow clear is theHow clear is thecommunication ofcommunication ofcommunication ofcommunication ofcommunication ofengagement activity?engagement activity?engagement activity?engagement activity?engagement activity?

· How detailed is the fundmanager’s reporting of

· engagement activity?· How frequent?· How well substantiated is it?

This list of questions is reproducedwith permission from Just Pensions:Socially responsible investment andinternational development – a guidefor trustees and fund managers.Just Pensions is a joint project ofWar on Want and TraidcraftExchange. The guide can bedownloaded fromwww.justpensions.orgwww.justpensions.orgwww.justpensions.orgwww.justpensions.orgwww.justpensions.org . Forfurther information contact: JustPensions, 37 Great Guildford Street,London SE1 OES. Email:[email protected] . Tel: 0207620 1111.


9 79 79 79 79 7

FUNDFUNDFUNDFUNDFUNDMANMANMANMANMANAAAAAGERSGERSGERSGERSGERSFund managers are the investment“experts” whose job it is to managemoney for institutional investors andtheir clients. As stated earlier, most lifeinsurance companies and retailinvestment groups, together with somelarge pension funds, employ their own“internal” fund managers to invest theirmoney. Pension funds and foundations,by contrast, generally prefer to use“external” or “independent” fundmanagers. To complicate the picture,some “internal” fund managers may alsomanage money from other institutionalinvestors – acting as both internal andexternal fund managers.

Some fund managers specialise in aparticular market – for example,emerging markets or technology stocks –although most cover all stocks. Theymay also have particular target markets– some primarily focus on individualretail investors, for example, whileothers focus on institutional markets. Theamount of money managed by a fundmanager can vary considerably:specialists may be responsible for lessthan one billion dollars, while the fundmanager of large funds like BarclaysGlobal Investment, Fidelity and CreditSuisse may have several hundred billiondollars at their disposal.

External fund managers are nearlyalways seeking to win new business –for example, by tendering for“mandates” from pension funds andothers. This is a formal process in whichthe pension fund says what it wants, thefund managers say why they think theywould be good at doing it, and thepension fund then selects the fundmanager it thinks would best handle itsinvestments.

Most independent fund managers areparts of banks (whether investmentbanks or commercial banks), althoughthey normally operate as separatedivisions. This can create conflicts ofinterest (for example, if the bank isadvising on a deal concerning acompany the fund manager invests in),although various laws and rules aim tominimise problems. For campaigners,such conflicts of interest present bothobstacles and opportunities. On the onehand, the investment arm of the bankmay be reluctant to support your actionsif doing so would create internal strife.On the other, it may be particularlysensitive to accusations of conflict ofinterest, enhancing the opportunities forhighlighting potential damage to thecompany’s reputation.

In investment terms, the kingpin in thefund manager hierarchy is the ChiefInvestment Officer (CIO), who isresponsible for the overall investmentstrategy of the fund managers within aparticular company. For instance, it isthe CIO who decides what markets andwhat sectors are invested in, with whattype of investment, as well as theprocess and investment style of the fundmanagement organisation. Thesedecisions make a huge difference to thefund’s performance.

The CIO usually reports to a ChiefExecutive Officer (CEO), although theCIO is often a member of the board ofthe fund management organisation aswell, and nearly as powerful as theCEO. Reporting to the CIO are thesection heads responsible for particulartypes of investment, such as head of USequities, head of bonds, head ofemerging markets, and so on. In


9 89 89 89 89 8

addition, an investmentstrategist or chiefeconomist advises oninvestment strategy andeconomics. Individualfund managers in turnreport to the sectionheads. Supporting theindividual fundmanagers will be anumber of analysts (seep.80), although in someorganisations fund

managers conduct some of the analysisthemselves. Finally, “risk managementspecialists” are responsible foranalysing the risks of the variousportfolios and for ensuring that thereare adequate controls on the fund.

WWWWWho arho arho arho arho are thee thee thee thee they?y?y?y?y?Fund managers, particularly seniorones, are typically older and moreestablished in their company thananalysts or investment bankers. Theyare not as ego-driven or as entrenchedin their views as analysts tend to be, butnonetheless are very self-assured andconfident – you couldn’t invest millionson behalf of others if you didn’t believein your decision-making ability. Fundmanagers tend to move from companyto company less frequently thaninvestment bankers; it is not unusual forthe same people to manage the samefund for five years or longer (clientsoften like to see a solid track recordand stability from their fund managers).

Fund managers are paid well – not asmuch as investment bankers or analystsbut nonetheless well – and the toppeople earn millions. Their work loadis less than that of investment bankers –fund managers can usually get home at areasonable hour – but in many respectstheir responsibilities are more onerous.By background, fund managers are often

former analysts or investment bankers.Some fund management organisationsencourage “star personalities” – theNicola Horlicks of the City or theWarren Buffetts in the US – but mostprefer a less flashy, team approach inorder to reduce risks and ensure adegree of oversight and control.

WWWWWhahahahahat art art art art are theire theire theire theire theirsuccess fsuccess fsuccess fsuccess fsuccess factoractoractoractoractors?s?s?s?s?Fund managers and their organisationsare judged by their market“performance” – how much moneythey’ve made for their clients, and howmuch profit and business they’vegenerated. Usually, fund managers aregiven a brief by their companies tomanage their clients’ money against aparticular index, like the FTSE AllShare, the Morgan Stanley CapitalInternational World Index, the Standard& Poor 500 or some other specialistbenchmark. If the funds they manage dobetter than these indexes, then the fundmanager’s star rises. If not, it falls.Companies may also measure theperformance of fund managers againstthat of their peers; given thecompetitiveness of fund managers – andtheir desire to maintain their standingamongst their colleagues – this measureof their performance is perhaps the mostimportant for fund managers themselves.Other considerations also have abearing on the extent to which anindividual fund manager is judged a“success”. Of these, the most importantis the level of risk that fund managersincur when managing their portfolio.Fund managers are not necessarilypraised for having taken big risks tomake big investment returns for theirclients because there’s always thechance the investments could have donevery badly. Investment portfolios aretherefore carefully planned and

Life and pensioncompanies oftenrespond to hints thatnegative publicity mayarise if they ignoreyour issue. They aredriven by theirreputation.


9 99 99 99 99 9

“spread” across companies and marketsto reduce risk.Fund managers report directly to theirlarge institutional clients about what theyhave done with their money. An investorwill want to meet the person in charge ofmanaging his or her money at thequarterly meetings held to discuss theirinvestments, not some “schmoozer” fromthe marketing department. Furthermore,as fund managers invariably have somebad periods, they will be expected toexplain clearly why things have gonewrong and to reassure clients that theyhave been following the strategy theyoutlined when taking on the mandate.Ultimately, all investment companies –fund managers, life companies and unittrusts – gauge their performance bybottom-line profit. Good results generatemore clients, bringing more money toinvest, and consequently more fees. Butthis pursuit of bottom-line profit istempered by other considerations.Companies will ask: What is the cost ofgenerating new business? Are the fundmanagers being paid too much? Is thecompany losing out to competitors whomay be cheaper or working smarter? Arefund managers taking unjustified risks?Is the company’s investment portfoliosecure? Occasionally, they may evenallow themselves a thought as to theirreputation.

CompetitionCompetitionCompetitionCompetitionCompetitionWhile analysts work in an ego-basedenvironment and compete for reputation,fund managers compete for business.The investment decisions made by fundmanagers are highly individual,reflecting the fund mangers’ ownpersonal assessment of the balance ofrisks and rewards: inevitably, fundmanagers get blamed for below-parperformances as much as they getpraised for achieving pre-setbenchmarks. Unsurprisingly, if fundmanagers are able to blame poor results

on external factors,they are quick andhappy enough to doso.

Large institutionalportfolios are usuallyreviewed quarterly,although investmentsare seldom switchedfrom an under-performing fundmanagement organisation after a singlequarter. But if the under-performancecontinues for, say, three years, investorsare almost certain to place the portfolioelsewhere.

Fund manager organisations buy and sellsecurities in their portfolio – usuallyequities, but also bonds or other assets –and measure their results internallyevery day. They also constantly monitorstocks and assess the performance ofindividual companies. Because moststocks are typically held for two to threeyears or more, however, fund managersrarely make more than one majorinvestment decision in any given day.

InfInfInfInfInfororororormamamamamation otion otion otion otion ovvvvverererererloadloadloadloadloadFund managers receive even moreinformation than analysts. In addition tokeeping abreast of the financial press,they are also expected to read and digesta constant stream of market reports frombrokers, analysts, strategists and firmssuch as Reuters and Bloomberg whiochsupply financial market information.One of the first tasks of their day is towork out what they can safely throw intothe bin and what they need to scrutinisemore carefully.

The information received is used tomake “buy”, “sell” and “switch”decisions, often after daily in-housediscussions of the performances ofmarkets and companies. Most fundmanagers – certainly those working forthe bigger investment institutions – enjoyhigh-level (and relatively immediate

It is highly unlikely thatfund managers will be

persuaded to surrenderholdings of blue-chip

stocks.


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The ‘Ethics for USS’ campaignThe ‘Ethics for USS’ campaignThe ‘Ethics for USS’ campaignThe ‘Ethics for USS’ campaignThe ‘Ethics for USS’ campaign

I late 1999, the £22billion UniversitiesSuperannuation Scheme

(USS) – the UK’s third largestoccupational pension fund –announced that it would beadopting a sociallyresponsible investment (SRI)policy, following a three-yearcampaign by student groupsand university staff aroundthe country. USS is thepension fund of 80% ofacademic staff in the UK,including lecturers,technicians and researchers.The fund has 158,000individual members and 290institutional members,including the UK’s 60 oldestuniversities. Despite its hugefunds and the responsibilitiesthese entail, USS previouslyhad no substantive ethicalpolicy guiding its investments.Now USS has a formalcommitment to sociallyresponsible investment (SRI).

DemandsDemandsDemandsDemandsDemands

In August 1997, the studentcampaign group People &Planet, concerned at USS’slack of ethical investmentstandards, launched ‘Ethicsfor USS’, supported by aSteering Committee ofleading academics. At thetime, USS’s top holdingsincluded British Petroleum,Shell, Nestle, AstraZeneca, RioTinto, British Aerospace andBritish American Tobacco. Thecampaign, which is stillongoing, chose not to call forUSS to disinvest immediatelyfrom such companies; rather,it adopted a gradualistapproach, pressing for USS toadopt an active investmentpolicy, based on the values ofits members, with USS usingits shares “to exert pressureon companies to clean uptheir act”.Ethics for USS produced aproposal setting out whatsuch a policy would mean inpractice. It called on USS todevelop and implement a

USS has then collected andsent to the USSManagement Committee.

In the three years since itslaunch, Ethics for USS hasgenerated the written supportof over 4,000 lecturers, theAUT, four Vice-Chancellorsand two governmentdepartments.

USS’s objectionsUSS’s objectionsUSS’s objectionsUSS’s objectionsUSS’s objections

Initially, USS was resistant tochange, constantly throwingup objections even to the ideaof an ethical policy, statingthat it would be illegal,unprofitable and unworkable.It was therefore importantbefore the campaign waslaunched to have establishedUSS’s position and argumentsvia correspondence in orderto challenge them effectively.To do this, the campaign drewon expert legal advice and theexperiences of other groups,including Pensions InvestmentResearch Consultants (PIRC),fund managers NPI and the UKSocial Investment Forum. Legalissues affecting pension fundsare uniform – there was noneed for the campaign toreinvent the wheel, repeatingresearch which others hadalready undertaken.

USS also showed itselfunsophisticated in dealingwith pressure, the media andEthics for USS supporters. Thetone of USS’s responses wasoften patronising; as thenumber of letters from USSmembers increased, itscustomer services departmentresorted to sending outstandard replies, refusing toaddress specific concerns.From this, Ethics for USScorrectly surmised that USSindividual members wereconsidered less important thanits institutional members.Whilst building grassrootssupport remained a vital focusof the campaign, Ethics forUSS quickly responded bytargeting USS institutionalmembers.

comprehensive ethical andenvironmental investmentpolicy; to monitor the activitiesof the companies in which itinvests; and actively toencourage socially responsiblecorporate behaviour. Pressurewould be brought to bear oncompanies through a range oftactics: from dialogue andliaising with other investors tovoting shares or proposingshareholder resolutions.Disinvestment, the ultimateoption, would follow wherecompanies failed to respond toUSS’s shareholder pressure. Thecampaign also insisted on theneed for USS to adoptinstitutional reforms that wouldensure transparency andaccountability to its members,on whose values any USS policyshould be based. Ethics for USSargue that such reforms arenecessary if any real change isto occur.

TTTTTacticsacticsacticsacticsactics

The campaign has adopted fourmain tactics to target key USSstakeholders:

Supporters have engaged indirect lobbying of the USSManagement Committee (itsChair and 12 Directors), viacorrespondence;The campaign has targetedthe bodies from which theUSS Directors are recruited,principally the academics’union – the Association ofUniversity Teachers (AUT);The campaign also directlyapproached individual Vice-Chancellors, who, asemployers, have far moreinfluence than individualmembers; andStudent activists, who makeup the membership ofPeople & Planet, havereached out to lecturers andother USS members,informing them of theissues, building their supportfor the campaign andmobilising them to signSupporters’ Statements andpetitions which Ethics for


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Communicating theCommunicating theCommunicating theCommunicating theCommunicating themessagemessagemessagemessagemessage

The campaign’s success wasgrounded in its ability to reachout to and mobilise lecturers.Members of People & Planet’sstudent network (which covers90% of UK universities) playeda key role in communicatingdirectly with lecturers;lecturers themselves informedtheir peers in their facultiesand common rooms; and localbranches of the AUT reachedout to their members (at oneuniversity, 80 lecturersattending a branch meetingsigned Supporter Statementsin one week). The campaignmessage – that as a £22 billionfund, USS should acknowledgeits ethical responsibilities –proved enormously effective.Nearly 100% of lecturersapproached agreed that thiscentral campaign messagemade sense.Another key lesson was thatthe vast majority of USSmembers knew nothing abouthow their pension money wasbeing invested – and that theywere outraged when theyheard the names and recordsof companies involved.Moreover, they appreciatedbeing informed, regarding thecampaign as “friendly” for thisreason and USS as secretive incomparison. Lecturersresponded particularly wellwhen the campaign linkedissues directly with their areaof expertise – for example,academics engaged in cancerresearch felt their work wasundermined by their pensionfund’s investment in tobaccocompanies. This helped tostimulate USS’s own membersto take action and act as“multipliers” engaging othersin the campaign.The campaign gainedrespectability and regard byattracting “names” to thesupporters’ lists, includingheads of Oxbridge colleges,

famous professors and leadingacademics. Their supportproved key in attracting moresupporters, gaining governmentsupport and forcing USS to takethe campaign seriously.The campaign also successfullymade a business case for SRI,arguing that SRI need not entailnegative impacts on financialreturns; rather, it would reducerisk and therefore ensure thelong-term sustainability of USS’investments.Press interest, includingcoverage in key relevantpublications such as highereducation supplements to thenational dailies, also placed USSin the public eye, furtherbuilding expectations forchange.The campaign was also greatlyhelped by a political contextconducive to SRI. Shortly afterUSS announced their change ofpolicy, new legislation wasintroduced requiring pensionfunds to disclose their SRI policy(see p.29). The campaign playeda significant role in ensuringthat USS responded positivelyto the regulation, and in factensured that USS’ commitmentswent a great deal further thanthe legislation required.

ObstaclesObstaclesObstaclesObstaclesObstacles

The campaign initially found USSexecutive management to bemost resistant to change. It wastherefore more effective totarget USS Directors, using theManagement Committee as themain vehicle for change.USS is not legally accountable toits members on issues of ethicalpolicy. This lack of structure foraccountability meant thatindividual USS members did nothave the right to force change,but could merely persuadethrough pressure. Ethics for USSsupporters still clearly feel thatthey should have a say in whattheir money is supporting andthe campaign will continue to

focus on facilitatinggrassroots’ participation.

USS rUSS rUSS rUSS rUSS respondsespondsespondsespondsespondsInitially, USS made twoconcessions: to publish its top100 investments (out of 2,000)and to “encourage” companiesto produce annual audits in thefields of equal opportunitiesand environmental impacts.USS neglected to define,however, what form this“encouragement” would takeand what monitoring,benchmarks and evaluationwould be put in place – inshort, the concession borderedon meaningless.Ethics for USS thereforecontinued to press for change.In late 1999, USS finallyannounced a formalcommitment to sociallyresponsible investment. In asignificant step, it appointedan in-house SRI specialist, whohas been working both ondeveloping an SRI strategy and– a more subtle art –persuading the fund managersthat SRI is worth pursuing andpresents no threat. Substantialprogress has been made inthis: a new strategy wasadopted in late 2000 whichcommits USS to an “integrated”approach to SRI rather than a“token” or “add-on” approach.USS has initially decided tofocus on one sector – the oiland gas industry. This reflectsa desire “to do a few thingswell”, rather than to do manyindifferently – a position thatEthics for USS shares. USS hasalso indicated that it intends torecruit two further SRIresearchers to give it thecapacity to implement its SRIpolicy, another sign ofcommitment.

Jess Worth and Kate Geary


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contact) with the companies in whichthey invest, although this varies,depending on the size of the fundmanagement organisation and its

location.Consequently, muchof the informationused by fundmanagers to maketheir investmentdecisions comes firsthand from thecompanies (withinthe laws of insidertrading). Suchpersonalised contact

is a major marketing point in theinvestment industry. FidelityInvestments Ltd. – which calls itself thebiggest independent fund manager in theworld with nearly $700 billion undermanagement – says it has “one of thelargest in-house research teams . . . thatscrutinise over 6400 companies andmake over 46,000 company contactseach year”.

Because fund managers are inundatedwith information, campaigners need tobe concise and clear when trying togain their attention. Aim to put your keypoints across in one minute or on onepage of A4.

Style of fundStyle of fundStyle of fundStyle of fundStyle of fundmanamanamanamanamanagggggererererersssssFund managers tend to approach theinvestment market from different angles.Traditionally, fund managers simplychose the stocks they thought would dobest. The bulk of the institutionalinvestment business still operates thisway, although in recent years, there hasbeen growth in the “passive” or “index-linked” funds. Passive fund managersdo not try to compete with the market:instead, they try to match it byidentifying and investing in the sameshares as the FTSE100, the index which

tracks the shares of the leadingcompanies’ in the UK. Passive fundmangers operate on economies-of-scaleand attract clients because the fees theycharge are less than those of more“active” fund managers (1 to 20 basispoints, compared to 15 to 150 basispoints charged by “active” fundmangers. 1 basis point is one-hundredthof one per cent).“Active” fund managers operate verydifferently. They may have a particularinvestment strategy or style. Onecommon strategy (known as “value”investing) is to invest in companies thatlook undervalued (typically because themarket value is low when comparedwith the company’s assets or where thecash flow and dividend yield are highcompared with others in the market).Value investors tend to focus on “oldeconomy” industries, such as extractiveindustries (mining), chemicals andengineering – sectors which also tend tobe of concern to NGOs and activists.A second investment strategy (the“growth” approach) is to invest incompanies which are growing rapidly.Often these are highly valued but paylow dividends. Information technologyand pharmaceutical companies aretypical “growth” favourites.

If possible, it is worth getting an idea ofhow a fund manager approaches his orher investment brief. If you can convincea “growth” investor that a company isnot going to grow, then the fund manageris more likely to reassess theirinvestment. If you can persuade a“value” investor that a company is goingto have to cut its dividends or write-offhalf its net assets, it may help sway thefund manager from buying its shares. Butin most cases, it won’t be possible touse such arguments to sway a passivemanager. It is virtually impossible, forinstance, to persuade passive fundmanagers that a top company is not agood investment, because theirinvestment decisions are linked solely to

Fund managers can belobbied to sell theirinvestments, although itis highly unlikely that theywill be persuaded tosurrender holdings ofblue-chip stocks.


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the share market index. However,passive fund managers, as well as activefund managers, may be prepared toengage with companies and supportshareholder resolutions.

It is worth noting that fund managerswon’t always invest in equity stocks, butwill also invest in cash, money markets,instruments, property and, veryoccasionally, directly in projects.Finding out who has invested in acontroversial project is useful butdifficult.

MerMerMerMerMergggggererererers and cs and cs and cs and cs and changhanghanghanghangeeeeeThe global fund management industry isconsolidating through mergers and take-overs in order to take advantage ofeconomies of scale: it is generallyassumed within the industry that severalbillion dollars can be managed as easilyas several million. That said, there areconcerns that the mammoth fundmanagement organisations which haveemerged may lack flexibility, making itdifficult to move large amounts of moneyaround the marketplace. In addition,mergers often increase the number offund managers, Chief InvestmentOfficers and brand names, resulting (atleast initially) in an organisation ofbewildering complexity. Eventually,restructuring should lead to leaner andcheaper operations, but, in the interim,chaos can reign. It can be difficult as aconsequence for campaigners to identifywho they should target.

Engaging fundEngaging fundEngaging fundEngaging fundEngaging fundmanamanamanamanamanagggggererererers ands ands ands ands andinininininvvvvvestorestorestorestorestorsssssIf the shares in a company areperforming poorly, fund managers havetwo options: sell up or talk to the

company in an effort to bring aboutchange. Fund managers essentially ownthe company – or at least a chunk of it –and can therefore influence the way acompany manages its business.

If there is a strong and purely financialreason why a company is “wobbly”,campaigners are in a good position topersuade fund managers to sell out.Even where the company is in goodfinancial health, however, campaignersmay be able to persuade fund managersto engage directly with companies on anissue of concern,especially if thecompany is in breach ofclearly-definedstandards that, ifcomplied with, wouldnot undermine the valueof the company. A fundmanager will not, forinstance, tell apharmaceuticalcompany to stop testingits products on animalsbut he or she mayadvise it to adopt “bestpractice”. Generallyspeaking, institutionalinvestors are more sympathetic to theidea of engaging with companies thanthey are in selling their shares in them.Engagement between fund managers andthe companies in which they invest cantake a number of forms. Most commonly,fund managers will opt for an informal,off-the-record talk with the company’ssenior executives, discussing the issuesin a non-confrontational manner. Thiscan be effective; but the off-the-recordnature of the conversations and the lackof any independent record of themeetings can also sometimes rendersuch engagement of limited use or,worse, counter-productive. Forexample, if the fund manager isunfamiliar with the details of an issue, itis relatively easy for the company topull the wool over their eyes.

Many executives mayshrug at being called

“unethical” but willrespond and open

themselves up todebate if they are

called “worse” thantheir main rivals.


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A rarer form ofengagementinvolvesinstitutionalinvestors using theirshareholder votingrights to effectchange within acompany. A notableexample is theshareholdercampaign launchedagainst Shell as aresult of concerns

over its human rights and environmentalrecord. It is difficult to gauge theeffectiveness of such actions, however.Shell, for example, was under sustainedpublic pressure from many directions atthe same time and it is difficult toassess the relative influence of theshareholder campaign in pushingthrough operational changes.

The most radical form of engagement isfor a fund management organisation totake a strong stance on, say, social orethical grounds, by calling ashareholder meeting and voting out acompany’s management. To date, no

fund managers haveemployed this“nuclear” option.Fund managers canbe lobbied to selltheir investments,although it is highlyunlikely that theywill be persuaded tosurrender holdingsof blue-chip stocks.Almost every fundmanager in Britainhas invested inShell, BT and GlaxoWellcome, forexample, and it is

difficult to conceive a purely financialargument that would tempt them to sell.

Smaller companies are thus the most

realistic targets for campaigners sincefund managers will be more willing tolet these go. Fund managers may alsoconsider “switching” smaller companystocks – which may be easier to justifythan an aggressive “sell” – providedthey can be given alternatives.

AAAAApprpprpprpprpproacoacoacoacoaching fundhing fundhing fundhing fundhing fundmanamanamanamanamanagggggererererersssssFund managers can usually beapproached in four ways:

Produce a report or letter outliningyour concerns. Distribute it to fundmanagers in the hope that action willfollow;

Lobby fund managers personally;

Use an intermediary to present yourcase;

Launch a media campaign – the lastresort.

If you choose to write a report,remember that it runs the risk of beinglost in the six inches of paper that isdumped on a fund manager’s desk eachmorning. If the covering letter is to thepoint, relevant and concise, it stands abetter chance of prompting a reply, afterwhich a dialogue can be established.Focus on the perceived financial risks ofan investment company and highlight thecompany’s bad business practices. Makethe report concise and clear. And chooseyour timing carefully: fund managers arebusiest in the fortnight before and afterthe end of the calendar quarter and thecalendar year. Your mail-out will gostraight into the bin if it lands on a fundmanager’s desk on, say the first ofJanuary or April.

Fund managers take their investmentdecisions personally. They don’t want tohear that their decisions are bad. Thatsaid, if a lead fund managementorganisation can be convinced of yourissue, it may be prepared to host a

Some ethical investmentorganisations, orgroups involved inmonitoring corporategovernance issues, maybe willing to act asintermediaries in yourdealings with fundmanagers.

Fund managers don’t likeseeing their investmentscriticised. Campaigners canturn this to theiradvantage: fund managerslike to think they’re aheadof the game and mayappreciate prior knowledgeof adverse publicity that isgoing to harm theirinvestment.


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seminar in which other fund managersare invited to hear your concerns. Suchseminars add credibility to a campaignand help publicise your concerns.

Getting fund managers to take up yourissue is key to a successful campaign –once on board, they will be yourstrongest asset in convincing other fundmanagers. The first convert is always thehardest. Once the most appropriate fundmanagement organisation has beenidentified, and a decision taken as tohow and when to approach it, often themost sensible option is to address theChief Investment Officer (CIO). TheCIO is in charge of general investmentstrategy and will be aware of thebusiness implications of the issue youare raising: if interested, the CIO willbrief the right people in the organisationto act, such as a corporate governanceteam. That said, CIOs are busy peoplewith little time on their hands.Some ethical investment organisations,or groups involved in monitoringcorporate governance issues, may bewilling to act as intermediaries in yourdealings with fund managers. PensionInvestment Research Consultancy(PIRC), for example, led the Shellcampaign. If such groups can bepersuaded that an issue is important, theywill know who to talk to and which fundmanagement organisation is most likelyto champion your concerns within theindustry. They can be useful allies.

Pension funds, unit trusts, life insurancecompanies and other retail investmentorganisations can be approacheddirectly, and, again, the best approach isa businesslike one. Life and pensioncompanies often respond to hints thatnegative publicity may arise if theyignore your issue. They are driven bytheir reputation. Pension funds, withtheir fiduciary responsibility, may wantto leave all investment decisions up totheir fund managers. But there are waysaround this. For example, you can

highlight therisks, demandthat they discussthe investmentwith their fundmanagers andseek assurancesthat it is anappropriateinvestment. Unittrusts and pensionand life companies can also bepressured to ask their fund managers toengage with a company in which theyhave a holding. It is much morepowerful weapon to have a fundmanager’s client – say, an insurance orpension company – stand up and saythey’re worried about a particularinvestment than it is for you to do so.

Campaigns tarCampaigns tarCampaigns tarCampaigns tarCampaigns targggggetingetingetingetingetingfund manafund manafund manafund manafund managggggererererersssssIn many cases, it is not possible to makea financial case against a project or acompany. But if a strong moral case canbe made, then amedia campaignagainst the companyand its institutionalinvestors may beproductive.If the issue is lessclear-cut,engagement is likelyto prove a morefruitful course ofaction. If a companyis involved inpractices that areattracting – or couldattract – negativepublicity, investingfund managers aregoing to know about it more quickly thanmost. They don’t like seeing theirinvestments criticised. Campaigners can

Choose your timingcarefully: fund managers

are busiest in the fortnightbefore and after the end of

the calendar quarter andthe calendar year.

Ultimately, all investmentcompanies – fundmanagers, lifecompanies and unittrusts – gauge theirperformance by bottom-line profit. Good resultsgenerate more clients,bringing more money toinvest, and consequentlymore fees.


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turn this to theiradvantage: fundmanagers like tothink they’re aheadof the game and mayappreciate priorknowledge ofadverse publicitythat is going to harmtheir investment.

If fund managers areto act on theinformation,however, you willneed to convince

them that the adverse publicity willhave financial consequences. A minordivision of company X, involved inoperations that are proving disastrousto some local overseas community,won’t be an issue on which to build acampaign aimed at getting fundmanagers to disinvest: but it could beground from which to build a media ora shareholder activism campaign.

Where campaigners opt for a mediacampaign, it is usually fruitless to targetan individual fund manager, who mayoften see him- or herself as part of thesolution rather than the problem. Whathurts and embarrasses companies – bethey investees or investors – is a well-thought-out campaign against theirmarketing divisions where institutionalreputations are constructed andcontrolled.

It’s worth remembering that companiescan withstand all kinds of criticism –but adverse comparison with theircompetitors bites. Many executives, forinstance, may shrug at being called“unethical” but will respond and openthemselves up to debate if they’recalled “worse” than their main rivals.Institutional investors have otherAchilles’ heels; for instance, some lifeinsurers have signed and publishedenvironmental commitments, forinstance under the Financial Institutions

Initiative of the United Nations’Environment Programme (UNEP). Proofthat they have invested in companieswhose practices breach the UNEPinitiative can provide grounds for amedia or shareholder campaign.

PrPrPrPrPracticalities ofacticalities ofacticalities ofacticalities ofacticalities ofrrrrrunning a fundunning a fundunning a fundunning a fundunning a fundmanagement campaignmanagement campaignmanagement campaignmanagement campaignmanagement campaign

There are a number of sources thatpublish information about who owns aparticular company or who has investedheavily in it (see p.135 and p.137). Youwill need to check these out if you are tofind which fund managers to lobby.

You can obtain a full list of shareholdersfrom the authority that regulatescompanies in your country (see p.165) .Often, information can also be gleanedfrom the same sources the fund managersuse: company annual reports and thefinancial pages of the major broadsheetnewspapers.

All companies have to reveal theirmajor shareholders in their annualreport, and most unit trusts and othercollective public investors have topublish their holdings. The financialpages of newspapers also carry resultsof the biggest unit trust deals: these canbe a useful source of the most up-to-dateinformation on whether or not aparticular fund management organisationhas shares in a company. As a rule ofthumb, you can assume that the largerblue-chip stocks – for example, BritishPetroleum, British Telecom and GlaxoWellcome – will figure in most fundmanagement investment portfolios.

For further details on how to researchresearching companies and theirshareholders, see Parts Five (p.119-148) and Six (p.149-174).

What hurts andembarrasses companies– be they investees orinvestors – is a well-thought-out campaignagainst their marketingdivisions whereinstitutional reputationsare constructed andcontrolled.


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THE ETHICALTHE ETHICALTHE ETHICALTHE ETHICALTHE ETHICALINVESTMENTINVESTMENTINVESTMENTINVESTMENTINVESTMENTSECTSECTSECTSECTSECTOROROROROREthical investment, also known as“socially responsible investment” (SRI),“environmental investment” or “greeninvestment”, is investment that takessocial, environmental and ethicalconsiderations into account. There aremany ways ethical investors seek to dothis: excluding companies that fail tomeet certain criteria; engaging withcompanies on aspects of their social andenvironmental performance; andpublicising analysis of howenvironmental and social factors cancontribute to shareholder value.

The importance of ethical investment, orrather ethical investment organisations,to campaigners is that they can form abridgehead for engaging the financialmarkets as a whole. They are likely tobe relatively sympathetic and interested,although their support cannot beguaranteed. They will probablyunderstand the points you are trying tomake more readily than many otherorganisations. While their influence islimited, it is growing. They are thus thelogical starting place for manycampaigners.

TTTTThe ethical niche ethical niche ethical niche ethical niche ethical nicheheheheheEthical investment has long been a smallniche sector, largely irrelevant tomainstream fund management. Ethicalinvestors manage a relatively smallamount of assets compared withmainstream investors – 1-2% of retailinvestment in the UK, for example. Onlya minority of mainstream fund managershave ethical funds.

But there are signs that this is changing.Awareness of, and demand for, ethicalinvestment is growing rapidly – at a rateof some 20-30% a year. Furthermore,ethical investments offer good qualitybusiness, not least because the investorstend to be settled and are not overlyconcerned about financial performance– the best sort of customer from thepoint of view of a financial institution.

As a result, many financial institutionsare starting to become involved inethical investment. Pension funds,charities and other organisations arealso starting to consider sociallyresponsible investment, as they prefer tocall it. Some fund managers are evenrecognising that social andenvironmental issues may impact onshareholder value.

Despite these encouraging trends,however, many mainstream investorsremain dismissive of or hostile toethical investment. For example, thehead of corporate communications atFidelity – the world’s largestindependent investor – gave thefollowing answer to a query about thecompany’s attitude towards ethicalinvestment: “This is not worthdiscussing. Thank you. We don’t doethical investment.”

Ethical inEthical inEthical inEthical inEthical invvvvvestmentestmentestmentestmentestmentorororororggggganisaanisaanisaanisaanisationstionstionstionstionsEthical investment organisations come


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in a range of shapes and sizes, with asmuch variety and potential forconfusion as with mainstream financialinstitutions. The main types of ethicalinvestors are outlined below.

Fund manaFund manaFund manaFund manaFund managggggererererersssss

Ethical fund managers perform the samerole as mainstream fund managers buttake account of social and ethicalcriteria when deciding on theirinvestments. A growing number ofmainstream fund managers now offerethical products. These are generallyhandled by an ethical investment teamwhich forms part of a unit within a fundmanager division. This team will dealin a wide range of ethical investmentproducts (such as mutual funds, unittrusts and life insurance funds), with afocus on servicing retail – that is,individual – investors. There are alsoethical fund managers who deal with

the institutional market, typically “in-house” managers for an institutionalinvestor with an ethical purpose – forexample, the Methodist church in theUK. Although few in number, these fundmanagers will be particularly good atunderstanding how your case mightapply to mainstream investors.

Other types of ethical fund managersinclude independent ethical investmentmanagers, who can be particularlydedicated and are often very helpful,although they may be somewhat isolatedfrom mainstream investors. Finally,there are some private client fundmanagers working with ethical teamswho focus on investment services forrelatively wealthy individuals (“privateclients”, “private banking”). These alsocan be relatively helpful and friendly,although they may not be as influentialas some of the larger ethical fundmanagers.A key distinction is between ethical fundmanagers who do their own ethicalresearch and those who rely on outsideorganisations. For campaigners, themost useful and helpful are likely to bethose with their own in-house research.These tend to be the larger, longer-established, ethical investment teams.They generally have several researchersand considerable in-house expertise.They are worth contacting directly.

But most ethical fund managers (in termsof numbers rather than amountsinvested) use outside researchers toundertake basic research into the socialand environmental performance ofcompanies. Generally, the researchersare drawn from one of the informationservice providers discussed below.Many ethical fund managers, however,will have some in-house specialists whocheck on the external research andconduct some dialogue with companies.These in-house specialists are worthcontacting, but may not be as helpful asthe fund managers who have access totheir own in-house research services.

Ethical investment organisationsEthical investment organisationsEthical investment organisationsEthical investment organisationsEthical investment organisationsoutside Noroutside Noroutside Noroutside Noroutside Nor th th th th th America and EurAmerica and EurAmerica and EurAmerica and EurAmerica and Europeopeopeopeope

Socially Responsible Investment (SRI) has grownrapidly in both Europe and North America inrecent years but represents a tiny fraction of

the market in the South. In Asia, less than US$2.5billion is currently under SRI management.But the sector is predicted to grow substantially inthe near future: in Singapore, an ethical funddevoted to supporting fair employment practicesfor women was launched in 2000, whilst, in Japan,five “eco-funds” and two SRI funds have been setup since 1999. The last decade has also seen theemergence of an active SRI industry in Australia.In 2001, the Hong-based Association forSustainable and Responsible Investment in Asia(ASrIA) launched a web site devoted to SRI in theregion. ASrIA aims “to help financial institutionsdevelop sustainable investment products for theregion, provide SRI training and education, andfoster the provision of high quality information onthe environmental and social activities ofcorporates in Asia.”ASrIA’s website – www.asria.orgwww.asria.orgwww.asria.orgwww.asria.orgwww.asria.org – includes adatabase of SRI activities, searchable by country.


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Research organisationsResearch organisationsResearch organisationsResearch organisationsResearch organisations

These conduct research on social andenvironmental issues for fund managersand others. This research can take theform of a simple list of acceptablecompanies, ratings of companies’performance on certain issues, ordetailed analysis and description of theiractivities. Research organisations shouldbe prepared to listen to your points andcan be very useful in relaying yourconcerns to the ethical fund managers.But note that sometimes your concernsmay not fit into their research agenda.For example, whilst ethical researchinstitutions may look in detail at acompany’s environmental performance,they may not study social justice issues.Or, if they have already given a companya bad mark on a certain issue, they maynot be interested in receiving furtherevidence of the company’s wrongdoing.In the UK, the Ethical InvestmentResearch Service (EIRIS) is the bestknown research organisation but thereare many others (see p.110).

Other organisationsOther organisationsOther organisationsOther organisationsOther organisations

There are a variety of otherorganisations which work in the ethicalinvestment sphere. These include:

Ethical inEthical inEthical inEthical inEthical invvvvvestment netwestment netwestment netwestment netwestment networorororor ksksksksksThese act as a meeting place for ethicalinvestment organisations, advisers andothers. They can be a useful source ofcontacts. The best known are listed inTable 1, p. 110.

Ethical financial adEthical financial adEthical financial adEthical financial adEthical financial adviserviserviserviservisersssssThese advise individuals on ethicalinvestment options – for example, on thechoice of ethical fund managers. If youor someone on your campaign knowssomebody in this area, they can providesome useful introductions. If not,searching out individual financial advisersis a time consuming task: you would bebetter advised to go direct to the ethicalinvestment networks listed above.

Ethical / green venture capitalEthical / green venture capitalEthical / green venture capitalEthical / green venture capitalEthical / green venture capitalfunds, investment banks andfunds, investment banks andfunds, investment banks andfunds, investment banks andfunds, investment banks andstocstocstocstocstockbrkbrkbrkbrkbrokokokokokererererer sssssThese specialise in investing in greenbusiness or projects and structuring greenor ethical investment opportunities.Because they generally focus on thepositive side of ethical investment, theymay be of limited help to a campaigncriticising a company’s activities. Wherethey can be useful is in obtaining positiveexamples of green investmentopportunities. If you want to suggestalternatives to a project or to acompany’s activities, these organisationsmay be able to help you with informationand suggestions, including data onperformance (see Table 19, p.175).

WWWWWho who who who who worororororks in ethicalks in ethicalks in ethicalks in ethicalks in ethicalinininininvvvvvestmentestmentestmentestmentestmentorororororggggganisaanisaanisaanisaanisations?tions?tions?tions?tions?Probably a much wider variety ofpeople than those who work with otherfinancial organisations. Some havefinancial backgrounds, having becomedisillusioned with the mainstream: theycan be particularly useful forcampaigners as they not only understandfinancial markets “from the inside”, butalso have the knowledge and contactsthat can make a real difference to acampaign. Others may have specificexpertise in the environmental or socialspheres. Some have previously workedwith charities or campaigningorganisations or in business. Generally,they have a strong social conscience andare committed: indeed, the majority ofshareholder resolutions in the UK todate have been initiated from within theethical investment community.Campaigners should be aware, however,that those who work in ethicalinvestment are constrained by the natureof their organisations. Furthermore, theSRI community is not homogenous.


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The following organisations work to promote socially responsible investment (SRI). Theyare invaluable sources of research and potential advice on financial market campaigns.

UK Social InUK Social InUK Social InUK Social InUK Social Invvvvvestment Festment Festment Festment Festment Forororororumumumumumwww.uksif.orgwww.uksif.orgwww.uksif.orgwww.uksif.orgwww.uksif.orgHolywell Centre, 1 Phipp Street, London EC24PS.Tel: 020 7749 4880. Email: [email protected] main UK-based network on sociallyresponsible investment. The web site offersprofiles of its members, which include anumber of major banks and researchproviders.

Innovest, USAInnovest, USAInnovest, USAInnovest, USAInnovest, USAwww.innovestgroup.comwww.innovestgroup.comwww.innovestgroup.comwww.innovestgroup.comwww.innovestgroup.com4 Times Square, 3rd Floot, New York, NY10036, USATel: +1 212 421 2000Investment research firm specialising inenvironmental finance and investmentopportunities.

Investor Responsibility Research Centre, USAInvestor Responsibility Research Centre, USAInvestor Responsibility Research Centre, USAInvestor Responsibility Research Centre, USAInvestor Responsibility Research Centre, USAwww.irrc.orgwww.irrc.orgwww.irrc.orgwww.irrc.orgwww.irrc.org1350 Connecticut Ave. NW, Suite 700,Washington DC 20036-1702, USATel: +1 202 833 0700Conducts research on corporate governanceand social responsibility issues. The site’s“On-line Analyst” page allows registeredclients to view over 12,000 companyreports, including environment and SRIprofiles.

Sustainable Investment ResearchSustainable Investment ResearchSustainable Investment ResearchSustainable Investment ResearchSustainable Investment ResearchInterInterInterInterInternananananational,tional,tional,tional,tional, USA USA USA USA USA

www.sirigroup.comwww.sirigroup.comwww.sirigroup.comwww.sirigroup.comwww.sirigroup.comc/o KLD and Co. Inc., 530 Atlantic Avenue,Boston MA 02210, USATel: +1 617 426 5270. Email:[email protected] coalition of eleven research organisations.SiRi group members provide coverage ofmore than 1,500 companies in the majormarkets worldwide, including all of thecompanies listed on the French and IralianStock Exchange.

US Social InUS Social InUS Social InUS Social InUS Social Invvvvvestment Festment Festment Festment Festment Forororororumumumumumwww.socialinvest.orgwww.socialinvest.orgwww.socialinvest.orgwww.socialinvest.orgwww.socialinvest.org1612 K Street NW, Suite 650, Washington DC20006, USATel: +1 202 872 5319. Email:[email protected] membership association consisting ofover 600 professionals and institutions.

Business Ethics RBusiness Ethics RBusiness Ethics RBusiness Ethics RBusiness Ethics Researesearesearesearesearccccch Centrh Centrh Centrh Centrh Centreeeee,,,,, AAAAAustrustrustrustrustraliaaliaaliaaliaaliawww.berc.com.auwww.berc.com.auwww.berc.com.auwww.berc.com.auwww.berc.com.auP.O.Box 5583, West End, QLD 4101, AustraliaTel: +61 7 3846 1025. Email: [email protected] research group based in Brisbane,Australia. Provides information on issues relatedto SRI and company profiles.

Ethical InEthical InEthical InEthical InEthical Invvvvvestment estment estment estment estment AssociaAssociaAssociaAssociaAssociation,tion,tion,tion,tion, AAAAAustrustrustrustrustraliaaliaaliaaliaaliawww.eia.org.auwww.eia.org.auwww.eia.org.auwww.eia.org.auwww.eia.org.auLevel 8, 1 Castlereagh Street, Sydney, NSW 2000,AustraliaTel: +61 2 9214 8411. Email: [email protected] of advisors, fund managers,consultants, community groups and companies.Primary objective is to “promote the concept,practice and growth of ethically, socially andenvironmentally responsible investing inAustralia.”

Social Investment Organization, CanadaSocial Investment Organization, CanadaSocial Investment Organization, CanadaSocial Investment Organization, CanadaSocial Investment Organization, Canadawww.socialinvestment.cawww.socialinvestment.cawww.socialinvestment.cawww.socialinvestment.cawww.socialinvestment.ca658 Danforth Avenue, Suite 409, Toronto, ONM4J 5B9, CanadaTel: +1 416 461 6042. Email: [email protected] is Canada’s only national non-profitorganisation dedicated to the advancementof SRI, with more than 350 members.Membership is open to individuals and NGOs.Many Canadian funds are profiled on its website, which also includes an on-line directoryof financial institutions, researchorganisations and others in Canada interestedin SRI.

Ethical InEthical InEthical InEthical InEthical Invvvvvestment Restment Restment Restment Restment Researesearesearesearesearccccch Serh Serh Serh Serh Ser vicevicevicevicevice,,,,, UK UK UK UK UKwww.eiris.orgwww.eiris.orgwww.eiris.orgwww.eiris.orgwww.eiris.org80-84 Bondway, London SW8 1SF.Tel: 020 7840 5700Set up with the help of UK church groups andcharities, EIRIS “provides the independentresearch into corporate behaviour needed byethical investors.” It concentrates purely onresearch into the ethical credentials (or lackof them) of companies.

PPPPPensions Inensions Inensions Inensions Inensions Invvvvvestment Restment Restment Restment Restment Researesearesearesearesearccccch Consultantsh Consultantsh Consultantsh Consultantsh Consultants,,,,, UK UK UK UK UKwww.pirc.co.ukwww.pirc.co.ukwww.pirc.co.ukwww.pirc.co.ukwww.pirc.co.uk4th Floor, Cityside, 40 Alder Street, LondonE1 1EE.Tel: 020 7247 2323. Email:[email protected] source of advice and research onSRI. Website has useful archive of PIRCreports on corporate governance.

TTTTTaaaaabbbbble 1le 1le 1le 1le 1SociallSociallSociallSociallSocially Ry Ry Ry Ry Responsibesponsibesponsibesponsibesponsible Inle Inle Inle Inle Invvvvvestment (SRI) netwestment (SRI) netwestment (SRI) netwestment (SRI) netwestment (SRI) networororororks and rks and rks and rks and rks and researesearesearesearesearccccch orh orh orh orh orggggganisaanisaanisaanisaanisationstionstionstionstions


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There are differences in views andpriorities within it. Some SRI specialistswill be more supportive of yourcampaign than others.

WWWWWhahahahahat art art art art are their successe their successe their successe their successe their successfffffactoractoractoractoractors?s?s?s?s?Ethical investment specialists combine adesire to succeed in the business sensewith a real desire to change things forthe better. You will work best with themif you can help them achieve both theseends: if they can gain some sort ofadvantage out of your campaign, such aspositive publicity or marketingadvantages, they will be much moreinclined to help you. Conversely, if theyare not investors in the company whoseactivities you are campaigning againstand see your campaign as relativelymarginal for them, they may feel thattheir business priorities lie elsewhereand they cannot take the time to help you,even if personally they are supportive.

Be aware, too, that there is intensecompetition in the ethical investmentindustry, as in the mainstream industry.One feature of this is a reluctance bysome SRI specialists to shareinformation and ideas, both of which areseen as sources of competitiveadvantage – although cooperation isincreasing. Generally, you will be betteroff working with a range of differentethical investment teams, giving equaltreatment to each. Sometimes, however,it may be worth developing a closerelationship with a specific ethicalinvestment organisation. This might bebecause you need more detailed help –for example, on research, or on draftinga shareholder proposal. If so, it is wellworth considering how you can help theorganisation in areas such as marketing –for example, through a willingness toshare media space and publicity.

How can ethicalHow can ethicalHow can ethicalHow can ethicalHow can ethicalinininininvvvvvestorestorestorestorestors help?s help?s help?s help?s help?

Ethical investors can help campaignersin several ways. Most obviously, theylook at companies from social andenvironmental perspectives and willthus be far more interested in what youhave to say than other fund managers.They are likely to understand yourconcerns and be prepared to discussthem more openly. In particularly, theymay be prepared to:

Conduct further research on theirown or to talk to the company and opena channel for discussion;

Help you frame your arguments inways that are likely to influence thefinancial markets. This might includeproviding access to fee-paying financialmarket databases (which are expensivefor campaigners to obtain);

Assist you on technical issues, suchas preparing a shareholder resolution;

Introduce you to others in thefinancial markets;

Make some public statementsexpressing their concern or evensupporting your campaign. But for manyethical investment organisations, makingpublic statements can be problematic, notleast because of their potential to damagerelationships with possible future clients.

Ethical investors are thus very useful asinitial contact points in a campaign andcan help get it underway. On their own,they are unlikely to be able to change acompany’s practices or to stop a project,but they can help you build upmomentum.

Some drSome drSome drSome drSome draaaaawbacwbacwbacwbacwbacks .ks .ks .ks .ks . . . . . . . . . . .Despite the advantages of working withethical investors, there are somecaveats:

They may regard a company that


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you are concernedabout as betterthan others in itssector. If theydisagree with yourresearch, it isworth consideringany counterarguments they

produce: they may well have a point. Ifyou can’t convince them, you areunlikely to convince mainstream fundmanagement organisations.

If you don’t manage to persuade at leastsome ethical investors of the merits ofyour arguments (which would berelatively unusual), it is probably betterto move on rather than to make them afocus for attack – next time they may beyour allies. An exception to this generalrule might be when an ethical investmentorganisation has given your targetcompany a good ethical rating and,despite the evidence you have providedthem, continues to promote it as a leaderin its field – although, in this case, theethical investment organisation is likelyto want to discuss the problem with you.

They just may not have the timeand resources to engage with yourconcerns - or they may not be permittedto undertake advocacy work oncompanies they do not own. Ethical fundmanagers are also trying to do twice asmuch as ordinary fund managers(combining both ethical and financialresearch) and so are pressed for timeand resources. If the company you aretargeting is one that they are unlikely toinvest in anyway, they may not beprepared to spend time discussing howbad the company is. (Conversely, theyare much more likely to be interested ifit is a current investment, or on theirapproved list.)

There is some danger thatinvolving ethical investors could leadmainstream investors to view acampaign as coming from marginal

Ethical investors are auseful, if not essential,stepping stone in buildingup a financial marketscampaign.

players. But as most campaigningorganisations are likely to be regardedas even more marginal than ethicalinvestors, this is rarely a major concern.

WWWWWorororororking with ethicalking with ethicalking with ethicalking with ethicalking with ethicalinininininvvvvvestorestorestorestorestorsssssA fruitful way of drawing ethicalinvestors into a campaign is to sendthem a draft letter outlining yourconcerns at a fairly early stage – beforeyou have completed your research andfinalised your strategy, but after youhave a fairly good idea of the argumentsand points you want to make. Once theletter has been sent, you should activelyfollow it up: try and arrange a meetingto get feedback on the points you madein the letter and on any further action youare planning. Take account of anyinformation or suggestions they mayhave. Although much of this can beachieved by ‘phone or email, suchindirect contact is likely to lead to amore limited discussion than a face-to-face meeting. If you are new to financialmarkets, the experience of going to thefinancial district for a meeting may alsoprovide a revealing insight into theculture you will have to contend with asthe campaign develops.

ConcConcConcConcConclusionlusionlusionlusionlusionEthical investors are a useful, if notessential, stepping stone in building up afinancial markets campaign. They canhelp you understand the best way toapproach the financial markets, provideyou with an initial test bed for ideas,and lend you some support. They are theclosest you will come to finding“friends” in the financial markets, but aswith all friends; don’t presume toomuch.


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BANKSBANKSBANKSBANKSBANKSAND PRAND PRAND PRAND PRAND PROJECTOJECTOJECTOJECTOJECTFINFINFINFINFINANCEANCEANCEANCEANCEBanks are huge organisations whichhave a wide variety of operations andactivities, of which the most important(from the perspective of campaigners) isproject finance. Within the banks, themain actors involved in project financeare:

The board and senior management;Those who organise debt financefor projects;Those who organise and developprojects.

This section looks at banks in general,and their board and senior managementin particular. The next section looks atproject financiers in more detail. Notethat where banks are involved in othercontroversial activities apart fromproject finance, their board is likely tobe involved at a senior level, so theremarks in this section will be relevantto other types of campaign.

Banking: risk andBanking: risk andBanking: risk andBanking: risk andBanking: risk andrrrrreeeeeputaputaputaputaputationtiontiontiontionBanking (or at least commercialbanking) is fundamentally a boringbusiness. You get money in fromdepositors and pay them interest on theirdeposit; you lend the money out toborrowers at a higher interest rate; andyou live comfortably off the “margins”(that is, the difference between the twointerest rates).

Life is made more difficult by the factthat depositors and others require theirbank to provide services, some of which

the bank may be able to charge for, butothers which it has to fund from itsmargins. This means that profits inbanking depend on the size of the bank’smargin, the efficiency of the services itprovides, and the number of borrowerswho default. This last factor is the mostimportant from the point of view ofprofitability: the interest rate margins onborrowing are low, hence it does nottake many defaults for the margins to belost.As a result, banks are fundamentallyvery “risk-averse” and do not want tolose money through risky lending.Emphasising that a proposed project isfar riskier than generally assumed is thuslikely to be highly effective inpersuading a bank to reconsider itsinvolvement in a project. Wherecampaigners have a good case on risk,they should therefore take it directly tothe project finance people (see p.115).Most banks also have large retailoperations – taking deposits fromconsumers, and lending money to them,are both core activities of most banks.The need to attract retail customersmakes banks protective of theirreputation and aware of the potential forbad publicity, thereby creating a secondopportunity for campaigners. Even largeprojects are likely to be relatively minorsources of business for large banks – soif the project generates negativepublicity, the bank may reconsider itsinvolvement. The sooner the bank can beconvinced of this, the less likely it is tobecome or stay involved. If the strongestargument against the proposed


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investment centreson the potential riskto the bank’sreputation or onpoor practice, thenthe bank’s seniormanagement shouldbe targeted.

These commentsrefer to “commercialbanks”. In addition,there are

“investment banks” – often subsidiariesof commercial banks, although in theUS, investment banks are usuallyseparate from commercial banks (adivision that is beginning to breakdown). Investment banks areresponsible for arranging deals andadvising on transactions rather thanlending their own money long-term(they may occasionally invest in theshort-term by underwriting a transactionwhich they later sell on). In the contextof project finance, they are likely to beinvolved in arranging the financingproposals and structuring the deal, butmay not be the ultimate long-termlender. Investment banks will be lesssensitive to their reputation than

commercial banks, asthey have a weakerretail focus. That said,investment banks arevery dynamicorganisations and haveresponded vigorouslyto defend theirreputations in certainkey areas.The senior managementof banks, bothcommercial and

investment, is likely to consist of highlyexperienced and competent people.They are very busy and difficult to gethold of. Like the senior executives ofother large companies, they will covera number of different functions and havedifferent responsibilities – for example,

retail banking or commercial banking –but will all report to a CEO. At leastone director has specific responsibilityfor financial control.

Unlike many individuals in the financialmarkets, the senior management of abank is less “deal driven” and morelikely to see the broader picture,including all the different factors thatcould affect the bank’s profitability. Incontrast to financiers in other sectors,they are judged less on their ownfinancial dealings and more on theoverall performance of the bank.Specifically, their rewards may belinked to the share price and earningsgrowth of the bank as a whole.

Senior bank management are often moreopen than junior staff to considering thewider ramifications of a project, thecriticisms of it, and the consequencesfor the bank of becoming involved. Onereason is that junior management tend tohave a “rule based” attitude to their job:another, that they are often directlyinvolved in the project and committed toseeing it through. It is also worthrecognising that a bank will consist of awide range of individuals with differingviews on your campaign – some may behostile, others may be sympathetic. Takethe time to identify potential allies:don’t assume that the first member ofsenior management you meet expressesthe views of all the group. Much of thetime, bankers will be happy to let theirproject finance departments generatemoney without interference. But if otherparts of the bank start to suffer falloutfrom a controversial project (forexample, if customers withdraw theiraccounts), then an internal debate willrapidly develop.

Getting access toGetting access toGetting access toGetting access toGetting access tosenior managementsenior managementsenior managementsenior managementsenior managementA key issue for campaigners is gaining

Those responsible forproviding the debt for aproject are generallyprofessional bankersand thus tend to focuson the need to minimiserisk in the deal.

Those arranging projectdeals are preoccupiedwith persuading thedifferent parties to reachan agreement – onebanker describes this asbeing harder than“herding cats”.


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access to the bank’s senior management.Possible avenues include:

TTTTThirhirhirhirhird pard pard pard pard par tiestiestiestiesties,,,,, suc suc suc suc such as a ch as a ch as a ch as a ch as a charity orharity orharity orharity orharity orenvironmental organisationenvironmental organisationenvironmental organisationenvironmental organisationenvironmental organisationThe senior managers of banks often siton the board of such groups, or act astheir sponsor or backer, or have contactsthrough consultancy work. (For example,in the UK, the government-sponsoredAdvisory Committee on Business and theEnvironment was for a long time chairedby a banker.)

Specialist units of the bankSpecialist units of the bankSpecialist units of the bankSpecialist units of the bankSpecialist units of the bankMost banks have EnvironmentalManagement and Internal Risk Controlunits. While these are often fairly lowdown the bank’s institutional hierarchy(because they do not earn money for thebank directly) they usually have goodaccess to the board and seniormanagement.

Institutional inInstitutional inInstitutional inInstitutional inInstitutional invvvvvestorestorestorestorestor sssssIf you’re working with a majorinvestment institution, it may be able toraise issues with the board directly (don’tforget banks have shareholders, too) andmay facilitate access for you.

BrBrBrBrBrass!ass!ass!ass!ass!If all the above fail to produce results,you can always try the front door,although expect to be deflected bysecretaries and PR people.

When meeting with senior management,make sure you have prepared your casewell and can present it succinctly andclearly. Generally, it is preferable tocontact senior management before yougo public and start to criticise the bankopenly: it gives them a chance to addressthe issues, and means you still have yourmajor card – adverse publicity – to play.It also means that you avoid creating a“siege mentality”: this encourages themanagement to line up against you androbs you of the opportunity to identifyallies and sympathisers within the bank.Such gains need to be weighed againstthe downside of delaying confrontation –namely, that the bank’s management hasmore time to prepare its response. But if

your case is strong, this may not be amajor consideration.

UnderUnderUnderUnderUnderstanding prstanding prstanding prstanding prstanding projectojectojectojectojectfinancierfinancierfinancierfinancierfinanciersssssProject financiers include a wide rangeof different people with different skills.They can be divided into the followingtwo categories:

Those responsible for structuring thedeal (and often responsible for providingthe equity); and

Those responsible for providing thedebt for a project.

The latter are usually part of a largecommercial bank, working in itsbusiness or commercial lendingdivision. The former may be part of aninvestment bank, a special team within alarge commercial bank or anindependent “boutique” specialising inproject finance.

Those who structure the deal share manyof the characteristics of investmentbankers working in corporate finance,except that their work is less high-profile. They are hard-working andhighly-paid. They will be keen to closea deal but are generally less arrogantand aggressive than many in investmentbanks – project finance involvesworking with many different parties, soit is important that the deal negotiatorshave good social skills.

A constant preoccupation for thosetrying to arrange project deals is theneed to persuade the different parties toreach an agreement – one bankerdescribes this as being harder than“herding cats”. Often the resulting dealis tenuous at best: it can easily unravel ifone party starts to dig their heels in.When this happens, the deal arrangersare likely to react with considerablehostility – they have put a lot of workinto the project and do not want to see it


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collapse. For that reason, it is worthtrying to get in early. If you canconvince them that the project is likelyto prove controversial, they may decideto abandon it rather than investing timein trying to make it work – particularlysince other less problematic deals aresure to come along.

Those responsible for providing thedebt for a project are generallyprofessional bankers and thus tend tofocus on the need to minimise risk in thedeal. They are less well-paid, lesshard-working (although still well-paidand hard-working by most standards)and typically less aggressive than theirdeal structuring colleagues. Theirperformance is judged in part (at leastfor the purposes of year-end bonuses)on the revenues they bring into the bank.Since the banks receive an up-frontarrangement fee for creating lendingfacilities to a project, debt financiersare under pressure to lend money togood deals. These fees may make aparticular line of business appearprofitable, even if long-term risksundermine the project. This creates anincentive to ignore less obvious risksand close the deal.

To counter this, much project lending,particularly if it is large, has to bereferred to an in-house creditcommittee, which will be required togive final approval for a deal. In certaincases, referral may even be made to thebank’s board. Identifying and accessingthe credit committee may be difficult,but if dialogue with the individualproject officer is not going well, it canbe worthwhile escalating the argumentwithin the organisation. You may wellhave been able to identify keyindividuals during your dialogue withthe company. If not, you can always gostraight to the board.

Identifying the individuals involved inproject finance for a specific projectcan be a major challenge – project

finance has a far lower public profilethan most other forms of investmentactivity. There are some directories ofproject finance; otherwise it is worthsearching the press, particularly thespecialist press, for names. Brochuresfor project finance conferences canprovide useful contact lists, as can thepublications of organisations such asdevelopment banks (which are ofteninvolved in the planning and financing ofprojects).

StaStaStaStaStaggggges ofes ofes ofes ofes of pr pr pr pr projectojectojectojectojectfinancefinancefinancefinancefinanceThe financing of a project typically goesthrough a number of stages, each ofwhich offer scope for intervention:

Initial assessment Initial assessment Initial assessment Initial assessment Initial assessmentAs a first step in assessing projects, theproject financiers will meet with theproject developer to see whether theproject makes sense, whether they wantto be involved and whether they are theright people for the deal. This can be themost effective time to intervene since thefinancier has yet to spend much time onthe project and may be prepared to put itin the “too difficult” category. Whilst thismay result in the developer taking theproject to another financier, persuadingone major project financier to walk awayat this stage may be enough to kill theproject, since financiers are generallysceptical of other people’s rejects.

PrPrPrPrPreliminareliminareliminareliminareliminar y stry stry stry stry structuringucturingucturingucturingucturingThe lead financier now starts to analysethe deal and work out the financialstructure, talking to prospective lendersand other investors. This is the time tofocus on the possible investors (projectlenders) as they are not yet committed tothe deal and may be persuaded not tobecome involved A brief analysis whichhighlights the risks may be enough todeter investors. If banks and otherinvestors start to express serious interestin the project, it may be worth starting tocontact the senior management of the


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institutions concerned. If the bankdecides to go ahead, a “heads ofagreement” or summary terms will beprepared for use in the next stage of theproject finance process.

Due diligenceDue diligenceDue diligenceDue diligenceDue diligenceThe deal is now subject to intensescrutiny by lawyers and others, whofocus on the detail. They will look at allthe specific questions which need to beanswered. On social and environmentalissues, a specialist (for example, anengineer) will be called in. Financiers willbe reluctant to question his or heranalysis. There is still some scope tointervene if you have some detailedanalysis, particularly if you canundermine assumptions used by theproject financiers in their assessment ofthe project. (A major component of duediligence is checking in detail the variousassumptions made.) But at this stage, theproject may have acquired substantialmomentum which may be difficult tostop. If your financial arguments are notmaking headway, it is the last opportunityyou may have to raise the matter with thesenior management of the bank andperhaps to organise a media campaign.

Final closureFinal closureFinal closureFinal closureFinal closureThe various agreements are signed andthe finance is released to the developer.At this stage, it’s largely over, at least as

far as stopping the financing is concerned(other avenues for campaigning,however, will still be open). If there is aclear evidence that one of the parties hasmisled the others, there may still bescope to stop the project – but it will bevery difficult.

Campaigners and others often assumethat a deal is more advanced than it is –only when final closure has beenreached is the project actually financed.Don’t be taken in by an announcementfrom a project developer that the projecthas backing from X, Y or Z bank: often,all that has been agreed is a“memorandum of understanding” or“heads of agreement” initiating work onfinancing a project, not an absoluteagreement to provide finance. If indoubt, ask whether the deal has been“closed”. Bear in mind, too, that whilstthe due diligence phase of the projectcycle is a relatively quiet phase – thework is going on in the back room –things speed up once closure nears, so adeal that appears bogged down canquickly become one that is signed,sealed and delivered. Overall, it cantake anything from a couple of months toseveral years (in the worst cases) to puttogether a project finance deal. Atypical timeframe is likely to be severalmonths.


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Mrs Beaton, theVictorian cookerywriter, famously began

her recipe for jugged hare with theadmonition: “First catch yourhare.” Such down-to-earthpracticality is as important forsuccessful lobbying of companiesand markets as it is to successfulcooking. Using markets to exertpressure for social change requiresa clear strategy – which in turnrequires a knowledge of thecompany you are seeking toinfluence, the market in which itoperates, its institutional culture,its weaknesses (and its strengths)and its most vulnerable pressurepoints.

This Part often refers to resourcesavailable on the worldwide web, inlibraries (for example, businessdirectories), in the media andelsewhere. For advice on how touse and access these, refer to PartSix, pp.149-176.


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Before working through the stepsbelow, it is critical that you thinkthrough the reasons why you aretargeting a particular company orsector. This will help you in focusingyour research. For the purposes ofillustration, we have assumed that youare interested in a campaign directedagainst a single company: other targetswould need different approaches, butthe research steps outlined belowwould still apply.

If you are researching a company, it isworth checking whether it is asubsidiary of another company or partof a larger commercial group beforegoing any further. In many cases,information will only be available vialistings for, and resources on, the parentcompany. The best way to check this outis with the directory Who Owns Whom,see p.137.

One step at a timeOne step at a timeOne step at a timeOne step at a timeOne step at a timeStep OneStep OneStep OneStep OneStep OneWhat does the company do?What does the company do?What does the company do?What does the company do?What does the company do?

Aim: To put together a basic pictureof the company

Sources: Annual Reports, companyweb pages

Where to find: Annual reports, seep.126; websites, see p.128

Step one is to build up a basic pictureof the company or sector you areseeking to influence. It is not necessaryat this stage to find out every detailabout the firm, but you will need to geta picture of:

What the company does and where;Its major sources of income;How big it is (number of employees

or ranking in the FTSE).

At this stage, don’t try and plunge intothe company’s key “financials” – Cityjargon for basic financial information,

from turn-over to sales figures and soon. What you are looking for is athumbnail sketch of the company thatwill provide a framework on which tohang further information and give apreliminary idea of lobbying strategies(see Part Three, p.57-76).

If your target is a major constructioncompany involved in a dam project, forexample, the sort of thumbnail sketchyou might aim for could look like this:

“Concrete plc – a construction firminterested in major civil engineeringprojects. Important areas of business,in order of earnings, are rail (40%);roads (30%); hospitals, airports andother civil engineering (25%); andhydro (5%). Its most importantcountries of operation are the UK andthe USA, but it has growing interests inthe Middle East, Africa and Asia. It hashistorically been in two businesses –construction and cables – but has soldoff cables to concentrate onconstruction. It is a publicly limitedcompany or plc, which means that it islisted on the UK Stock Exchange, so itsshareholders will be privateindividuals and large financialinstitutions. It is the Nth largestconstruction firm in Britain and Mth inthe world and employs X thousandpeople.”

This will give you a feel for thecompany You’ll know, for example, thathydro is only a minor part of its business– but you will need to check that thecompany intends to keep it that way.This detail, however, can wait untillater.

Step TwoStep TwoStep TwoStep TwoStep TwoWhat’s the company’s record?What’s the company’s record?What’s the company’s record?What’s the company’s record?What’s the company’s record?

Aim: To find out more about thecompany’s record – constructionfailures, controversial projects,labour relations, environmentalimpact, reputation. To gather


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company statements on theenvironment and its socialresponsibilities.

Sources: Campaign web sites, NGOreports, union sources, press reports,talking to other campaigners.

Where to find: Campaign websitesand reports, see p.135; press reportsand other media sources, see PartSix, especially p.157 (Media).

The next step – particularly given thepossible opening of a campaign basedon the company’s reputation – is togather information on the firm’s recordand its stated environmental anddevelopment policies:

Has it been involved in othercontroversial projects? What were theirsocial and environmental impacts?

Was there any evidence ofcorruption?

Is the company being sued byanyone? If so, for what?

Does the company have anenvironmental policy? Or a communitydevelopment policy?

If so, how do its past activitiesmatch up to it?

Does the project comply with thecompany’s stated policies? If not, inwhat ways does it violate them?

Do the company’s annual reportsgive an accurate picture of its activities –particularly with regard to its impact onthe environment?

Such information should enable you toadd to your initial thumbnail sketch:

“Concrete plc has been involved in anumber of dam projects that haveinvolved human rights abuses, notablythe XYZ Dam. In at least one case,corruption has been alleged. The courtcase is currently being heard: if theprosecution is successful, the companycould face a ban on bidding for futureWorld Bank projects, since the dam inquestion was funded by the Bank. Ithas an appalling safety record and has

been involved in numerous workerdisputes. The environmental impacts ofthe projects in which it has beeninvolved include: the destruction oftropical forests; the flooding ofwetlands; the building of climate-damaging fossil fuel plants; and thebuilding of major road schemes. Thecompany’s environmental policystipulates that it aims to be as open aspossible: but it has failed to release theEnvironmental Impact Assessment(EIA) for the project and has neverundertaken any consultation with thoseaffected by the dam.”

Step ThreeStep ThreeStep ThreeStep ThreeStep ThreeWho owns the company and whatWho owns the company and whatWho owns the company and whatWho owns the company and whatWho owns the company and whatdoes the company own?does the company own?does the company own?does the company own?does the company own?

Aim: To find out who owns thecompany and what subsidiaries thecompany owns. To find out the namesof shareholders and any retail outletsowned by the company.

Sources: Directories and web sites

Where to find: Ownership pattern,see p.135; shareholders, see p.137

The next area to research is thecompany’s ownership structure (whoowns it and what does it own):

Is it a subsidiary of any company?Does it own subsidiaries that might

be amenable to boycott campaigns? Is itconnected, for example, to retail outletsor any other High Street presence;

Who are its shareholders? Are any ofthem well-known High Street names? Doany of them have socially responsibleinvestment policies?

Are any ethical funds investors?

This may reveal some interestingcampaign possibilities. For example:

“Concrete plc’s shareholders includeEarth Funds, a green investment trust,and the Goodlife insurance company, awell-known life insurance firm. The


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company also owns Brand Y, a chain ofwell-known Do-It-Yourself retailers.”

You now know that the company has apoor record, environmentally andsocially; that it owns retail outlets thatcould be amenable to boycotts; and thatsome of its major institutional investorshave ethical screening policies in place.All of this presents the possibility ofexerting pressure on the company viaboycott campaigns or letter writing to its“greener” investors.

SteSteSteSteStep Fp Fp Fp Fp FourourourourourWWWWWhahahahahat’t’t’t’t’s the compans the compans the compans the compans the company’y’y’y’y’s strs strs strs strs straaaaatetetetetegggggy?y?y?y?y?

Aim: To research the company’sbusiness strategy: what are itsenvironmental implications? Does itstack up financially?

Sources: Directories, interviews andweb sites

Where to find: Financial Times, trademagazines, interviews , analystreports, see p.141.

Further research is now needed to startpulling together business strategy andfinancial arguments that might be used, ifappropriate, to persuade investors towithdraw from the company or topressure for change. For example:

Where does it intend to go withhydro? Does it see its hydro divisionexpanding? If so, why?

What financial problems is the sectorexperiencing? How is the companyresponding to these?

Who are its main rivals andcompetitors? How do their recordscompare with the company’s?

All this will add a further layer ofintelligence to your company profile:

“Concrete plc’s annual report suggeststhat it sees hydro as a growing sector.This is confirmed by interviews withdivisional personnel. One reason isthat the company views hydro, which is

currently in the doldrums as a sector,as a green technology which will havea major future as climate changebegins to bite – and possiblelegislation is brought in to curb fossilfuel emissions. It also seesopportunities for major subsidies andfor taking up business abandoned byits rivals in the sector which areincreasingly getting out of damsbecause of adverse publicity andincreasing conflict.”You now have a fairly rounded view ofthe company and its business weakspots. Given the uncertainties over thefuture of dams, for instance, its businessstrategy looks flimsy at best. Thissuggests that an analysis based onquestioning the company’s businessjudgement – combined with areputational campaign, directed againstboth the company and its better-knowninvestors – might be the best wayforward.

Step FiveStep FiveStep FiveStep FiveStep FiveFinding out who to lobbyFinding out who to lobbyFinding out who to lobbyFinding out who to lobbyFinding out who to lobby

Aim: To find out the names of relevantfund managers, analysts, storemanagers, ethical fund managers –those, in effect, whom you intend tolobby.

Sources: Various directories

Where to find: Fund managers, seep.144; analysts, see p.143; localretail outlets, try your ‘phone book;outlets across the UK, use the websitewww.192enquiries.com, or look in thered postal address directories in yourlocal library.

Finally, you need to pull the researchtogether, angling your arguments to thevarious pressure points you haveidentified. When you have done that, youneed to ensure that the arguments youwant to make get to the right people (seep.54).


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BritonBritonBritonBritonBriton’’’’’s Indes Indes Indes Indes Index:x:x:x:x: Financial Institutions Financial Institutions Financial Institutions Financial Institutions Financial InstitutionsPR Newswire Europe Ltd, Communications House,210 Old Street, London, EC1V 9UN. Tel: 020 74908111

Part 1 Banking & Finance; Part 2 Pensions; Part 3Investment Trusts; Part 4 Unit Trusts, CommonInvestment Funds and Open Ended InvestmentCompanies; Part 5 Insurance/AssuranceCompanies; Part 6 Charities; Part 7 Business,Information, Government and RegulatoryOrganisations; Part 8 Personnel Index.

Dun & BrDun & BrDun & BrDun & BrDun & Bradstradstradstradstradstreet Business Reet Business Reet Business Reet Business Reet Business ReeeeegistergistergistergistergisterHomers Farm way, High Wycombe, Bucks HP124UL. Tel: 01494 422000

Credit references on companies. Very briefinformation: company name, type of business,address, telephone, fax, managing director,directors (partners if relevant), companysecretary, sales, profit or loss, net worth, numberof employees, risk indicator. Volumes by region.

BritainBritainBritainBritainBritain’’’’’s s s s s TTTTTop Fop Fop Fop Fop Forororororeign Owned Companieseign Owned Companieseign Owned Companieseign Owned Companieseign Owned CompaniesJordans Limited, 21 St Thomas Street, Bristol BS16JS. Tel: 0117 923 0600

Gives financial profiles of 1,500 companiesranked in order of turnover. Data on eachcompany includes: sales, net tangible assets,pre-tax profits, interest paid, post-tax profits,profitability, profit margins, shareholders’ funds,total borrowing and total borrowings as apercentage of shareholders funds. The directoryalso lists the registered office of each company,its telephone number, a named executive, itsprinciple business activity and its ownership.Twelve tables rank the top 50 companies by keyperformance measures, including : profitability;sales growth; wage rates; indebtedness; liquidity;changes in turnover; pre-tax profits; and nettangible assets. These can prove very helpful inassessing the financial strengths and weaknessesof companies.

BritainBritainBritainBritainBritain’’’’’s s s s s TTTTTop Priop Priop Priop Priop Privvvvvaaaaatelteltelteltely Owned Companiesy Owned Companiesy Owned Companiesy Owned Companiesy Owned CompaniesJordans Limited, 21 St Thomas Street, Bristol BS16JS. Tel: 0117 923 0600

Gives financial profiles of companies ranked inorder of turnover. The data provided is organisedunder the same headings as that in Jordan’s guide

There are numerous business directories now available: most can be obtained through a goodpublic library (see p.151). We have found the following directories particularly useful when

putting together a basic picture of a company. Many of the directories and specialist publicationsstart with a guide to using them – reading this Guide can save a lot of time.

to Britain’s Top Foreign Owned Companies(see above).

KKKKKompass – ompass – ompass – ompass – ompass – VVVVVolume 2:olume 2:olume 2:olume 2:olume 2: Compan Compan Compan Compan Company Infy Infy Infy Infy InfororororormamamamamationtiontiontiontionReed Business Information, Windsor Court, EastGrinstead House, East Grinstead, West SussexRH19 1XD. Tel: 01342 326972

Corporate information on 45,000 leadingcompanies in British industry, includingfinancial information taken from the last threeyears filed accounts, on over 21,000companies. Entries include : basic companydetails; names of directors and seniorexecutives; names of holding companieswhere applicable; annual turnover; productrange; nature of business; principle customers/markets; trade names of branded goods;principle factories; membership of tradeassociations; and details on turnover, pre-taxprofits, fixed assets, current assets, currentliabilities, share capital. Product codesincluded in each entry refer to listings in vol.I, Products & Services. These enable you togain precise information on the products andservices which the company supplies. Vol. IIIgives financial information. Vol. IV lists brandnames.

KKKKKeeeeey British Entery British Entery British Entery British Entery British EnterprisesprisesprisesprisesprisesDun & Bradstreet Ltd, 5th Floor, WestminsterHouse, Portland Street, Manchester M1 3HU.Tel: 0161 455 5119

This has similar information to Kompass,sometimes with more detail and sometimeswith less. Usually gives summary financialinformation, including turnover, profit andnumber of employees, also directors, broadarea of business, sometimes brand names.

FT Business DirectoriesFT Business DirectoriesFT Business DirectoriesFT Business DirectoriesFT Business DirectoriesMaple House, 149 Tottenham Court Road,London W1T 7LB. Tel: 0207 896 2359The Financial Times publishes a series ofcompany guides covering the energy, miningand insurance sectors. Invaluable.

Hemscott Company GuideHemscott Company GuideHemscott Company GuideHemscott Company GuideHemscott Company GuideHemmington Scott Ltd., 26-31 Whiskin Street,London EC1R 0JD. Tel: 0207 278 7769Details on UK listed companies. Often gives


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useful statistical information that you will notfind in the company’s annual report (forexample, geographical breakdown of business).

Hoppenstedt DirectoriesHoppenstedt DirectoriesHoppenstedt DirectoriesHoppenstedt DirectoriesHoppenstedt DirectoriesPublished by ELC International, 109 UxbridgeRoad, Ealing W5 5TL. Tel: 020 8566 2288

Information on 25,000 of Germany’s largestcompanies. Details of ownership, turnover, staff,top- and middle-management.

StandarStandarStandarStandarStandard and Pd and Pd and Pd and Pd and Poor’oor’oor’oor’oor’s Rs Rs Rs Rs Reeeeegister ofgister ofgister ofgister ofgister of Cor Cor Cor Cor Corporporporporporaaaaationstionstionstionstions,,,,,DirDirDirDirDirectorectorectorectorectors and Exs and Exs and Exs and Exs and Executiecutiecutiecutiecutivvvvves – es – es – es – es – VVVVVolume 1:olume 1:olume 1:olume 1:olume 1:CorCorCorCorCor porporporporporaaaaate Listingste Listingste Listingste Listingste Listings

PO Box 1628, Charlottesville, VA 22902, USA.Tel: +1 804 977 1450

Covers 65,000 US corporations and 10,000major non-US companies. Gives addresses,telephone numbers, internet addresses of over75,000 corporations; names, titles and functionsof approximately 437,000 officers, directors andother principles; names of company’s primary

accounting firm, bank and law firm; descriptionof company’s products and services; annualsales figures and number of employees, whereavailable; division names and functions;separate subsidiary listings with reference toparent companies; principal businessaffiliations.

StandarStandarStandarStandarStandard and Pd and Pd and Pd and Pd and Poor’oor’oor’oor’oor’s 500 Guides 500 Guides 500 Guides 500 Guides 500 GuidePublished by McGraw–Hill, 25 Broadway, NewYork, NY 10004, USA

Guide to the top 500 publicly-listed UScompanies – each with an average worth ofsome $10 billion. Every entry includes anappraisal of the company’s performance andvaluation – a useful pointer to the strengthsand weaknesses of the company, as perceivedby Standard and Poor’s financial analysts. Inaddition, entries list: a summary of eachcompany’s business activities, recentdevelopment and sales history; companyaddresses, telephone numbers and names ofkey corporate officers; and earnings anddividends.

round of research if you are to catch that“hare” and begin cooking.

The type of information you will needwill vary considerably from onecampaign to another. In some cases, youwill need to dig deep into the history ofa company; in others, it may be a marketthat needs researching – who the majorplayers are, what their records are, howthe market is changing, and so on.

If your strategy revolves around ashareholder action, for example, youwill need a full list of institutionalshareholders; arguments to put to them;what the analysts say about the company;and the names of potential allies withinthe financial community (for example,ethical funds that might be sympatheticto pushing a shareholder motion).

If you have opted for a boycottcampaign, then you will need to knowmore about where the companyproduces its goods, how it markets them,and its major distributors. In suchinstances, your main need may not be fordetailed market research reports (seep.163).

At this point, you will probably need tospend quite a bit of time in a good publiclibrary (see p.151), checking outdirectories for the names and addressesof fund managers (one letter), analysts(another letter), branch managers of thecompany’s DIY subsidiary (explainingwhy you are calling for a boycott of thestore) and ethical funds with shares inthe company (another letter). See pp.65,66 and 70 for specimen letters whichyou may be able to use.

Step SixStep SixStep SixStep SixStep SixDigging deeperDigging deeperDigging deeperDigging deeperDigging deeper

Aim: To strengthen your arguments,winnow out those that are unlikely toinfluence the financial community andidentify key pressure points

Sources: Libraries, web, interviews

Where to find: Company’s record, seep.128 Market intelligence, see p.163.

Once you have a better idea about thestrategy that will maximise yourinfluence, you will then need a further


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WHERE DOWHERE DOWHERE DOWHERE DOWHERE DOI FIND . . .I FIND . . .I FIND . . .I FIND . . .I FIND . . .

. . . A company’s. . . A company’s. . . A company’s. . . A company’s. . . A company’sannannannannannual rual rual rual rual reeeeeporporporporport?t?t?t?t?If you’re researching a public limitedcompany (plc) – that is, one that’s listedon the Stock Exchange (so you could buyits shares if you wanted to) – rememberthat the company is obliged to producean annual report for investors andpotential investors. Some companies inwhich you can’t buy shares also produceannual reports, especially government-owned ones.

The annual report details: the company’sactivities over the previous year; itsaccounts; a list of directors; and otheruseful information. From this, you willprobably be able to find out where thecompany’s major projects and facilitiesare; what they do; and what its biggestbrands are. You will also be able to gainsome idea of its institutional culture –and how it likes to present itsmanagement. It will also often tell youhow much the directors get paid; howmany employees there are; how thecompany is structured; and so on. A one-sided view, of course, but a useful startto your research, and often an easy wayof answering some questions about thecompany.

If you are new to business research andunfamiliar with the language of annualreports, check out the websitewww.bized.ac.uk/dataserve/extel/notes which provides excellentbackground explanations of key businessterms – for example, what a profit andloss account is; what constitutes profit(from a mainstream businessperspective); and brief explanations ofterms and business theory.

When using a company annual report,bear in mind that the company publishedit specifically to convince investors thatthe company is a good investment. Sothe “positives” (for the company) are


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over-emphasised, as are someenvironmental and corporate governancepolicies, while the negatives are usuallyignored. So, use it with caution. Formore balanced and honest informationon US companies, try the annual reportsthat companies are obliged to file withthe US government, especially theSecurities and Exchange Commission(see p.166-168).Paper copies of the larger companies’latest annual report are generallyavailable free on request from thecompany: either telephone for a copy, orwrite to the company headquarters. If

you do not know their address, the“How do I find” section (p.129)explains how you can find it via the Web(assuming you have access to acomputer).

Many companies now post their annualreports on their web sites, from wherethey can be downloaded or ordered.

There are also websites and otherservices that provide free annual reportsfor selected companies (see Table 3,p.127). You might find back issues ofannual reports in a library, especially abusiness library.

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Company AnnualReports on Line

Financial Times

InvestorCommunicationsBusiness

UK, Europe, Asia

UK

Canada, USA, UK,Europe

Canada, USA

URLURLURLURLURL

www.carol.co.uk/reports/reports.html

Stands for CompanyAnnual Reports On-Line.Enables you to search fora company and see if itsannual report is availableon the web. Sectorscovered include: banks;merchant banks; retail;building/construction;chemicals; engineering;food manufacturers;health care; insurance;investment companies;leisure and hotels; lifeassurance; oil exploration;oil; pharmaceuticals;printing and paper; foodretailers; and water.

CAROL

For the top UK companies.Alternatively telephone020 8770 0770 for postaldelivery of reports.

Home site for severalservices (Financial Times,Wall Street Journal,Barron’s, and the Globeand Mail) offering to mailyou free copies ofcompany annual reports.

www.icbinc.com/www.icbinc.com/cgi-bin/.pl

yahoo.ar.wilink.comYahoo Finance


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. . . A company’s . . . A company’s . . . A company’s . . . A company’s . . . A company’swebsite?website?website?website?website?If you want to go straight to thecompany’s website (assuming it hasone) and don’t know its web address,try guessing. Most businesses have webaddresses with their name sandwichedbetween “www.” and “.com” –“www.companyname.com”, forexample.

If that doesn’t work, you should be ableto find it using an intelligent searchengine, such as Google (see p.154-156for information on search engines).

Failing that, look up the name through aspecialist site such as www.Whois.netwhich provides a searchable databaseof domain names worldwide. For UScompanies, Online Deductive –rbay.com/Spy/spy.htm – is alsohelpful.

Companies’ websites vary in what theycontain, and in how useful they are.Some are simply for marketingpurposes (with pictures of companyproducts and /or ways to buy themonline); others offer little more thancontact details. But many provideinformation that will help you build upyour basic picture of the company. Lookfor sections like:

about uscorporatethe companyinvestor relationsfinancial

Later in your research, you might comeback to the company’s site for moredetail, such as:

company news and pressreleasescompany policieslocations and contact addressesspeeches by company managers(usually in the news section)

Sometimes these will be in the “about”section of the web site, sometimes intheir own sections. Whether the sitecontains this information depends on thecompany.

..... . . . . . . . . . . A basic oA basic oA basic oA basic oA basic ovvvvvererererervievievievieview ofw ofw ofw ofw ofa company?a company?a company?a company?a company?For a basic overview, the two startingpoints are the annual report and thecompany website.

Sometimes you might want somethingeither more concise or more impartial.The directories and websites listed onpp.124 and 129-134 give such anoverview.

. . . A company’s. . . A company’s. . . A company’s. . . A company’s. . . A company’srrrrrecorecorecorecorecord?d?d?d?d?If your campaign is focused on lobbyingethical investment companies,highlighting corporate governance issuesor initiating a consumer boycott of acompany and its products, documentingthe company’s past record will be amajor part of the research work you willneed to undertake. The past record of acompany can also be useful in lobbyinginvestors not to put their money into aproject to be financed or constructed:the company’s past, after all, is the bestguide there is to its future performance.

Many sources of information can betapped to build up a picture of acompany’s past behaviour, particularlywith regard to the environment andhuman rights. The most productive arelikely to be non-governmentalorganisations, many of whom haveplentiful data on companies operating intheir field.

A good start is to search the super-sites


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About.comAbout.comAbout.comAbout.comAbout.comglobalbusiness.about.com

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LatinAmerica

Directory of Latin American business sites byregion and by country. Click on the “Central/South America” tab under the “CompanyDirectories by Region” listing, immediately belowthe main Global Business logo. Countries coveredare: Argentina, Bolivia, Brazil, Chile, Guatemalaand Venezuela.

US-based database. Gives name, email, ‘phone,fax, country and description of products. Nofinancials provided, but the site serves as a usefullead to further information.

Covers US, Japan, China, Taiwan, Singapore, HongKong, Korea , Malaysia, New Zealand and India.Searchable database by country or company. Thecompany pages have an A-Z index of companies.Coverage of some countries is thin – only fivecompanies are listed for India – but of othersmore comprehensive.

Profiles of listed companies – good basic financialdata. Go to “stock quotes, Look Up symbol”.Useful financial glossary.

America’America’America’America’America’s s s s s TTTTTrrrrradeadeadeadeadeSourceSourceSourceSourceSourcewww.atradesource.com

Asia

US

Business Business Business Business Business WWWWWeeeeebbbbbwww.businesswebsource.com

World

UK Links to 100 top UK companies

Click on “socially responsible investment” tab, thenthe “know what you own” entry on the sidebarlisting. This enables you to access information onthe companies that a US mutual fund is investing in.

TTTTTaaaaabbbbble 4le 4le 4le 4le 4RRRRResearesearesearesearesearccccching companies on the hing companies on the hing companies on the hing companies on the hing companies on the WWWWWeeeeeb – b – b – b – b – TTTTTop sitesop sitesop sitesop sitesop sites

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Web sites providing business information proliferate by the day. The following list comprises thosesites that we have found most helpful when trying to gain an initial picture of a company.For quick reference, we have coded the services provided by each site. [A][A][A][A][A] indicates that analystsreports are available, [S] [S] [S] [S] [S] that major shareholders are listed, [AR][AR][AR][AR][AR] that annual reports can be accessedand [KA][KA][KA][KA][KA] that key advisers are listed. All the sites have some free access; those that require paymentfor full access to databases are marked [P].[P].[P].[P].[P].

First Internet search site designed specifically forbusiness users. Covers news, information andcompany websites from 11 different industrialsectors – including banking, chemicals, energy,insurance, pharmaceuticals and transportation.The database is refreshed in its entirety every twoweeks. You can search by company or by one of1,800 classifications, which helps to ensure well-targeted results. Company web pages can also besearched through the site.

US

Offers free company searches – using Hoover’sOn Line database – but its main strength is itsnews coverage and archive of news stories oncompanies. Market Watch.com also has asubscription service offering historical andfinancial data on companies.

BUBL UKBUBL UKBUBL UKBUBL UKBUBL UKhttp://bubl.ac.uk/uk/companies.htm

CalvCalvCalvCalvCalvererererer t Onlinet Onlinet Onlinet Onlinet Onlinewww.calvertgroup.com

CBS MarCBS MarCBS MarCBS MarCBS Mar kkkkketWetWetWetWetWaaaaatctctctctchhhhhwww.marketwatch.com

Bloomberg UKBloomberg UKBloomberg UKBloomberg UKBloomberg UKwww.bloomberg.com

Asia Business Asia Business Asia Business Asia Business Asia Business WWWWWaaaaatctctctctchhhhhwww.asianbusinesswatch.com


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SiteSiteSiteSiteSite CoCoCoCoCovvvvverererereraaaaagggggeeeee CommentsCommentsCommentsCommentsComments SerSerSerSerSer vicevicevicevicevice

CorCorCorCorCor porporporporporaaaaate Infte Infte Infte Infte Infororororor mamamamamationtiontiontiontionwww.corporateinformation.com

One of the best sites available. Offers 15,000research reports on publicly-traded companies (in-depth analysis of sales trends, profitability, stockperformance, financial position, research anddevelopment expenditure, dividends and acomparison with the performance of three othercompanies – you specify the companies); 20,000profiles (brief description of activities, names of topofficials, address, ‘phone number and stock chart);links to over 1,000 other sites that offer corporateinformation; and a search engine that covers300,000 company profiles at other sites. Reportscovering companies in the financial sector will beavailable shortly. Many of the reports are available inFrench and Spanish.

US Exim Bank bills this site as “the starting point forfinancial research on the Internet.” Useful linksincluding to stock exchanges worldwide.

CorCorCorCorCorporporporporporaaaaate Financete Financete Financete Financete FinanceNetwNetwNetwNetwNetwororororor kkkkkwww.corpfinet,com

World

World

US

Dun & BradstreetDun & BradstreetDun & BradstreetDun & BradstreetDun & Bradstreetwww.dnb.com

World

Far East

Now a susbcription service but offers 14-day freetrial. Access to “in-depth company reports touncover inside information on the companies youare tracking”. Provides email updates on companiesyou put on a “watch list”.

Reviews of and links to useful websites withcompany information.

[A],[AR].[KP]

Company SleuthCompany SleuthCompany SleuthCompany SleuthCompany Sleuthwww.companysleuth.com

Dow Jones Businessw Jones Businessw Jones Businessw Jones Businessw Jones BusinessDirDirDirDirDirectorectorectorectorector yyyyyhttp://businessdirectory.dowjones.com

World

Describes its GlobalSeek database of 26 millionreports on companies worldwide as “the most up todate, most definitive database of businessinformation in the world”. You can search thedatabase for free (although you have to register);you pay only for the reports you order. There is alsoa free directory of 1.8 million UK businesses, whichgives basic details such as names, addresses,telephone and fax numbers, email and webaddresses and a contact name. Priced reports whichcan be accessed from the site include: companyreports (US$23.00), which give the company’saddresses, sales, net worth, financial indicators, lineof business, names of directors and officials,operations, company history, number of employeesand facilities; snapshot reports (US$5), which givemuch of the above detail in brief; country riskreports (a subscriber service), which provide 60-page assessments of the perceived economic,political and commercial risks of operating in a givencountry; and supplier evaluation reports (US$89)which rate the record of US suppliers.

Covers Singapore, Malaysia, Hong Kong, Indonesia,Australia, Thailand and the Philippines. For US$35,you can order a detailed report on any of thecompanies in the site’s database. Each researchreport gives: company background, key officials,board of directors, top 20 shareholders, directors’holdings, equity history, segmental information,information on subsidiaries, auditors report and keyfinancials.

FFFFFararararar-East Cor-East Cor-East Cor-East Cor-East Cor porporporporporaaaaatetetetetedatabasedatabasedatabasedatabasedatabasewww.capitaline.com


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SiteSiteSiteSiteSite CoCoCoCoCovvvvverererereraaaaagggggeeeee CommentsCommentsCommentsCommentsComments SerSerSerSerServicevicevicevicevice

Financial TimesFinancial TimesFinancial TimesFinancial TimesFinancial Timeswww.globalarchive.ft.com

Database of company profiles, searchable byindustry and company. Entries give contactdetails, website, management details, productlines, a brief description of the business and keyfinancials.

FFFFFororororor tune 500tune 500tune 500tune 500tune 500www.fortune.com

Links to the home pages of the companies in theFortune 500 list (1,000 companies) with snapshotsof companies and media quotes.

Global RegisterGlobal RegisterGlobal RegisterGlobal RegisterGlobal Registerwww.globalregister.co.nz

HemscottHemscottHemscottHemscottHemscottwww.hemscott.com

Hoover’s On LineHoover’s On LineHoover’s On LineHoover’s On LineHoover’s On Linewww.infocheck.co.uk

One of the best UK services, especially theCompanies A-Z section. Provides excellentsnapshot profiles of British public limitedcompanies–plcs. Free entries include: a briefsummary of key financial data, addresses andnames of directors; major shareholders; the latestcompany balance sheet; a share price graph (3-,5- or 10-year); and key company advisers (theirstockbrokers, auditors, solicitors and financial PRadvisers). More detailed information still,including access to detailed brokers’ forecastsand director’s share dealings, is available only ifyou join Hemscott’s new Internet service –hemscott.NET. Registration is free and you canuse the service alongside any other InternetService Provider (ISP) accounts that you may have.This means that you do not need to change yourexisting email address. However, you will need touse the hemscott.NET account when accessing theHemscott website if you wish to access theirBusiness Plus information. Hemscott.NET chargeslocal call rates. Alternatively, you can subscribe toBusiness Plus for £10 (plus VAT) a month.

World

World

NewZealand

World

World

InvestextInvestextInvestextInvestextInvestextwww.investext.com

World

Provides information about New Zealand publiccompanies. Snapshots list basic financial detailsand company officers. In some cases fuller reportsare available

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[A]For a price, analysts reports from specialists withleading banks and other financial institutions canbe downloaded from this excellent site.

Free company search service. You can search thedatabase by company, industry, subsidiary andsector. The site also offers industry snapshots,with an industry and a news and analysis section,where you can pull up the latest news on a givenindustry or company. The company capsule pagegives details of subsidiaries, the three topcompetitors, news and commentary and thenames of the top company officials. The capsulehas links to other pages, including companyhistories, annual reports (if available on-line) andother sites that offer further information. To digdeeper, you need to subscribe to Hoover’s.Subscribers can access information on acompany’s products and operations (by industrysegment), a full company profile, historical dataon financials and a more complete list ofcompetitors.


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SiteSiteSiteSiteSite CoCoCoCoCovvvvverererereraaaaagggggeeeee CommentsCommentsCommentsCommentsComments SerSerSerSerServicevicevicevicevice

Business News AmericasBusiness News AmericasBusiness News AmericasBusiness News AmericasBusiness News Americaswww.bnamericas.com

Subscriber-based research site, which offers a freetrial for three weeks. Covers ten business sectorsthroughout Latin America, including infrastructuredevelopment, banking, electric power and metals.Information provided through own network of 45journalists and researchers.

Mbendi’s Companies ofMbendi’s Companies ofMbendi’s Companies ofMbendi’s Companies ofMbendi’s Companies ofAf r icaAfr icaAfr icaAfr icaAfr icawww.mbendi.co.za

MorMorMorMorMor ningstarningstarningstarningstarningstarInstitutional SerInstitutional SerInstitutional SerInstitutional SerInstitutional Ser vicesvicesvicesvicesviceswww.morningstar.com

Excellent source of snapshot information on over10,000 US mutual funds, the companies they areinvesting in, their fund managers, news reportsand commentaries. A search on biotechnology inthe news archives yielded 2,053 references,pointing the way to many useful articles on who’sinvesting in genetic engineering. Morningstar’s“snapshots” on individual companies are amongthe best available for free (although you have toregister for some services, such as Morningstar’sown analysis). Links are provided to pages whichgive further snapshots on the industrial sector inwhich the company operates; industry peers;who’s buying shares in the company and who’sselling them; share dealings by company directors;ownership; SEC filings; free (and priced) analysts’reports on the company or fund; and the majormutual funds with holdings in a company. Thesnapshots on individual mutual funds are no lessimpressive, giving details and links to fundmanager profiles, the 25 top holdings, addressesand telephone numbers. Many of the 300,000investment reports on the Morningstar databaseare available for free so long as you register withits Multex Investor service. Registration also givesyou free membership of powersize.com – a searchengine giving “free access to business researchfrom 2,400 newspapers, magazines andnewswires.” There is also a chat room (useful forgetting a debate going on a particular company)Morningstar’s own company analyses are availableonly to “premium members”: membership US$9 amonth – but there is a 30-day free trial period.

Orient Business ExpressOrient Business ExpressOrient Business ExpressOrient Business ExpressOrient Business Expresswww.accessasia.com

Africa

World

Far East

There are few on-line databases that giveinformation on African companies besides SouthAfrican ones. Mbendi’s is one of them. The site isoften difficult to get through to but does offerinformation on 3,700 African companies. Theinformation provided varies from thumbnail contactdetails to fuller profiles.

Database of one million companies located in HongKong, China, Indonesia, Korea, Malaysia, Philippines,Singapore, Taiwan and Thailand . You can search forfree on line – by name, product or SIC code – butsome key information is blocked out unless yousubscribe. The service costs US$95.00 per year, forwhich you get a CD of the database.

LatinAmerica

Quicken.comQuicken.comQuicken.comQuicken.comQuicken.comwww.quicken.com

Click on the investing tab. This takes you to asearch facility where you enter the tciker symbolof the company you are researching (you can lookit up if you don’t know it). A snapshot profile

[A]World


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SerSerSerSerSer viceviceviceviceviceCommentsCommentsCommentsCommentsCommentsCoCoCoCoCovvvvverererereraaaaagggggeeeeeSiteSiteSiteSiteSite

Thomas Register ofThomas Register ofThomas Register ofThomas Register ofThomas Register ofAmerican ManAmerican ManAmerican ManAmerican ManAmerican Manufufufufufacturacturacturacturacturererererer sssss

comes up, with links to news article, analystsreports and critical assessments of the company’srecent financial performance. Invaluable.

World A particularly useful site if you are trying to findout who manufactures a particular product in theUS. European site for European products. Links toregisters for Indian, Brazilian, Mexican and othercountry producers.

www.thomasregister.comwww.tipcoeurope.comwww.thomasindia.com

An Internet service from the UK Government whichoffers brief data on UK suppliers.

World

US

UKTTTTTrrrrr ade UKade UKade UKade UKade UKwww.tradeuk.com

WWWWWall Strall Strall Strall Strall Street Reet Reet Reet Reet ResearesearesearesearesearccccchhhhhNetNetNetNetNetwww.wsrn.com

YYYYYahoo Financeahoo Financeahoo Financeahoo Financeahoo Financebiz.yahoo.com

Covers US companies only, but offers freecompany and sector searches. Describes itself as“the most comprehensive resource for investors onthe Web, mobilizing the best free, for-sale and in-depth information into one comprehensive, easy-to-use site”. Its free “company research” facilityallows access to US Security and ExchangeCommission (SEC) filings (see Part Seven, p.165),over 2,000 company home pages, press releases,charts and statistical analysis. Thousands ofresearch reports, baseline reports andspreadsheets are also on offer.

The site is organised into eight sections whichinclude: company information, which has entriesfor over 17,000 companies; economic research,with links to economic databases such as the USDepartment of Commerce, the World Bank and“the better university sites”; news, enabling accessto The Wall Street Journal, Bloomberg On Line,CNN and others; research publications, whichprovides “links to economic and equity publicationsas well as trade associations and other groups”; andMutual Funds, which provides useful profiles ofmutual funds, including (if you are based in the US)links to CBS MarketWatch, which provides freecopies of fund prospectuses and hence informationon where the funds are placing your money. Ifusers find a company missing, the site recommendsthat they “let us know and we will add it.”

This is another excellent site. Look for companyinformation via the company index or industryindex.

Company coverage is good. Each company pageincludes:– Profile: financial summary; significantdevelopments (financial news on the company – 1paragraph each, going back 2 years); lists of topinstitutional shareholders, mutual fundshareholders; history of analyst upgrades anddowngrades (who, when, why); list of directorsincluding short biography ( 1 paragraph – otherdirectorships), salary (for some directors only),shareholdings and options in the company.

– Research: financial data; balance of ~25 broker

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such as www.essential.org (a web sitehosting about 30 US anti-corporateNGOs, especially MultinationalMonitor at www.essential.org/monitor) and www.oneworld.net(which includes over 500 organisationsfrom around the world, both North andSouth, focused on development,environment and human rights).OneWorld also functions as a magazineand provides profiles on particularissues, plus campaigning guides.

Table 3 (p.129) gives a summary ofsome of the best NGO sites, with theirURLs and postal addresses. The sitesare all useful first ports-of-call – andhave links to NGOs working in specificareas. Give the NGOs a call – or emailthem: they will probably be able to help

SiteSiteSiteSiteSite CoCoCoCoCovvvvverererereraaaaagggggeeeee CommentCommentCommentCommentComment SerSerSerSerSer vicevicevicevicevice

recommendations (whether strong buy, moderatebuy, hold, moderate sell, strong sell) over last 3months (gives you an idea of company’s financialprospects); names of analysts who won acompetition for accuracy in estimating thecompany’s earnings.

– Chart: share price graph, going back over 1 day,5 days, 3 months, 1 year, 2 years, 5 years orlonger – this is useful to see what factors have hadthe greatest impact on the company’s success inthe past.

– News: financial news from financial press andnewswires, up to 3 items per day for largecompany; links to full articles.The main site’s data relates to performance on theNorth American stock exchanges; but you can linkto Yahoo Finance sites for other countries. Thesetend to be less detailed. For the UK, go to http:/http:/http:/http:/http://uk.finance.yahoo.com/uk.finance.yahoo.com/uk.finance.yahoo.com/uk.finance.yahoo.com/uk.finance.yahoo.com, then select an index(eg. FTSE 250), which lists the companiescomprising that index as links to their pages.Content is similar in the news, research and chartsections, but there is less in the profile.

with further details and information (seep.135 for some key NGO sites).

A further source of invaluableinformation is the press. Track whichjournalists are covering any storiescritical of the company – and give thema call.

. . . A company’s. . . A company’s. . . A company’s. . . A company’s. . . A company’senenenenenvirvirvirvirvironmental policonmental policonmental policonmental policonmental policy?y?y?y?y?Many companies, particularly the moresavvy multinationals, now produceannual environmental policies – indeed,such policies are increasingly viewed inthe City as a key indicator against which

Some words of caution.None of these sites is likely to provide you with everything you need to find out. You will often needto try several of them. Although most will give you information on listed companies from the majorindustrial countries, few have coverage of companies listed in developing markets. To findinformation on these, you will generally need to work through contacts on the ground.As web sites develop, they are likely to change their layout - so the navigation descriptions given inthis table may be rendered redundant. But if changes do occur, persevere: a little digging usuallyenables you to find a page that has been moved.


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TTTTTaaaaabbbbble 5le 5le 5le 5le 5WWWWWeeeeebsites with absites with absites with absites with absites with attitudettitudettitudettitudettitude

Business and HumanRightsBusiness and HumanRightsBusiness and HumanRightsBusiness and HumanRightsBusiness and HumanRightswww.business-humanrights.orgwww.business-humanrights.orgwww.business-humanrights.orgwww.business-humanrights.orgwww.business-humanrights.orgSuperb portal. Pages give links to over 200other sites, organised by sector, country,groups, international agreements, lawsuitsagainst companies and shareholder initiatives.

CorCorCorCorCorporporporporporaaaaate te te te te AgAgAgAgAgribribribribribusiness Rusiness Rusiness Rusiness Rusiness Researesearesearesearesearccccch Prh Prh Prh Prh Projectojectojectojectojectwww.ea1.com/CARPwww.ea1.com/CARPwww.ea1.com/CARPwww.ea1.com/CARPwww.ea1.com/CARPMonitors corporate agriculture. Researchreports and an invaluable guide to researchingthe sector (click on “Fact Miners”). Good links.

CorCorCorCorCorporporporporporaaaaate Critic On-linete Critic On-linete Critic On-linete Critic On-linete Critic On-linewww.ethicalconsumer.comwww.ethicalconsumer.comwww.ethicalconsumer.comwww.ethicalconsumer.comwww.ethicalconsumer.comUnit 21, 41 Old Birley Street, Manchester, M15 5RD.Email: [email protected]: 0161 226 2929Database run by the Ethical Consumer ResearchAssociation. A one-off subscription of £60 pluslow on-line charges allows access to over48,000 records on more than 27,000 companies.Company searches undertaken for a modestfee.

CorCorCorCorCorporporporporporaaaaate Eurte Eurte Eurte Eurte Europe Obserope Obserope Obserope Obserope Obser vvvvvaaaaatortortortortor yyyyywww.xs4all.nl/~ceo/www.xs4all.nl/~ceo/www.xs4all.nl/~ceo/www.xs4all.nl/~ceo/www.xs4all.nl/~ceo/First class for background information onindustry lobby groups. Primary focus on Europe.Excellent links to other sites.

CorCorCorCorCorporporporporporaaaaate te te te te WWWWWaaaaatctctctctch UKh UKh UKh UKh UKwww.corporatewatch.org.ukwww.corporatewatch.org.ukwww.corporatewatch.org.ukwww.corporatewatch.org.ukwww.corporatewatch.org.ukEmail: [email protected]: 01865 791 391First rate site. Includes briefings, sector reports,back issues of Corporate Watch magazine andone of the best archives of articles oncompanies and their records.

CorCorCorCorCorporporporporporaaaaate te te te te WWWWWaaaaatctctctctch USh USh USh USh USwww.corpwatch.orgwww.corpwatch.orgwww.corpwatch.orgwww.corpwatch.orgwww.corpwatch.orgPO Box 29344, San Francisco, California, USAEmail: [email protected]: +1 415 561 6568Human rights and environmental justice site.Excellent research guide available.

Critical SharCritical SharCritical SharCritical SharCritical Shareholdereholdereholdereholdereholder s s s s s AssociaAssociaAssociaAssociaAssociationtiontiontiontiononewor ld . compuse rve . com/homepages/onewor ld . compuse rve . com/homepages/onewor ld . compuse rve . com/homepages/onewor ld . compuse rve . com/homepages/onewor ld . compuse rve . com/homepages/Critical_shareholder/Critical_shareholder/Critical_shareholder/Critical_shareholder/Critical_shareholder/Schlackstrasse 16, D-50737, Cologne, GermanyEmail: [email protected]: +49 221 599 5647Site run by coalition of over 30 shareholderactivist groups. Archive on major Germancompanies – from Krupp to Siemens. In German.

EndgEndgEndgEndgEndgame Rame Rame Rame Rame Researesearesearesearesearccccch Serh Serh Serh Serh Ser vicesvicesvicesvicesviceswww.endgame.orgwww.endgame.orgwww.endgame.orgwww.endgame.orgwww.endgame.orgPO Box 95316, Seattle, WA 98145-2316, USATel: +1 206 723 4276Provides A-Z Directory of Transnationals.Profiles environmental and social impacts.

to rate a company’s corporategovernance. As one might expect, thepolicies are generally worthy but rarelycommit companies to anything radical.Nonetheless, they are useful sources ofquotes and policy statements that can beused to argue against a company’sinvolvement, for example, in anenvironmentally-destructive project.

For companies which have beencriticised on environmental grounds,there may be a short statement on thecompany’s web site or in the annualreport. The company may also produce aseparate environmental report each year– ‘phone up and ask for a copy.

Tomorrow magazine, sponsored by theSwedish-Swiss engineering giant, ABB,offers a directory of on-lineenvironmental reports, with coverage ofcompanies in Germany, Japan, US, UK,The Netherlands, South Africa andCanada. The site also has pages devotedto environmental accounting and“environmental performance andshareholder value”. The directory can befound at www.enviroreporting.com .

In the EU, many larger companies aresigning up for the EU-wide EcoManagement and Audit Scheme –EMAS. Under the scheme, a company’senvironmental policy, programmes andmanagement systems must be publiclyavailable and published as part of anenvironmental statement.

Other business standards schemes alsorequire the company’s environmentalpolicy to be publicly available – forexample, in the UK BS7750 and ISO14000/1 (contact British StandardsInstitute, Tel: 020 8996 9000).

. . . Subsidiaries and. . . Subsidiaries and. . . Subsidiaries and. . . Subsidiaries and. . . Subsidiaries andparparparparparents?ents?ents?ents?ents?Tracing who owns a company can behelpful to reveal links with bigger or


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better known companies. This isnecessary if you are choosing to godown the route of a boycott.The most useful source of information isto be found in the directories listed inTable 6 (p.137). Note that none arecomprehensive (there are just too manycompanies). To get a comprehensivelist, you will need to look up subsidiarycompanies individually in a governmentregistry and see who owns them (seep.165). How to do this varies fromcountry to country, but wherever you doit, it’s long-winded and probablyexpensive. We recommend using thedirectories first.

..... . . . . . . . . . . TTTTThe prhe prhe prhe prhe products thaoducts thaoducts thaoducts thaoducts thattttta companya companya companya companya companymanmanmanmanmanufufufufufacturacturacturacturactures?es?es?es?es?When you are considering a boycottagainst a company, finding out its brandsis important – the boycott should bedirected against those that are bestknown.

If you are trying to find out whomanufactures a particular product in theUS and Canada, or wish to match abrand name to a company, consult theThomas Register of AmericanManufacturers. Its website –www.thomasregister.co – has asearchable database which covers156,914 US and Canadian companiesand 135,415 brand names. There are nocharges for access to the information,but you must register. If you can’t find aproduct, you can send an email andThomas will reply by post, email or fax.

For UK products, Kompass (Volume 2:Company Information and Volume 3:Industrial Trade Names) are most useful.They can be obtained from a goodpublic library. For further details, seep.124.

FFFFFriends ofriends ofriends ofriends ofriends of the Ear the Ear the Ear the Ear the Ear th - USth - USth - USth - USth - USwww.foe.orgwww.foe.orgwww.foe.orgwww.foe.orgwww.foe.org1025 Vermont Ave. NW, Washington DC 20005, USAEmail: [email protected]: +1 202 783 7400

FFFFFriends ofriends ofriends ofriends ofriends of the Ear the Ear the Ear the Ear the Ear th–Ength–Ength–Ength–Ength–England and land and land and land and land and WWWWWalesalesalesalesaleswww.foe.co.ukwww.foe.co.ukwww.foe.co.ukwww.foe.co.ukwww.foe.co.uk26, Underwood Street, London N1.Tel: 0207 490 1555Use the search facility to find FOE campaigns onspecific companies, many of which are subject toFOE investor campaigns. Check out the FOE-USsite for one of the best guides available onshareholder activism – www.foe.org/www.foe.org/www.foe.org/www.foe.org/www.foe.org/international/shareholderinternational/shareholderinternational/shareholderinternational/shareholderinternational/shareholder

FFFFFocus on the Corocus on the Corocus on the Corocus on the Corocus on the Corporporporporporaaaaationtiontiontiontionhttp://lists.essential.org/mailman/listinfo/http://lists.essential.org/mailman/listinfo/http://lists.essential.org/mailman/listinfo/http://lists.essential.org/mailman/listinfo/http://lists.essential.org/mailman/listinfo/corp-focuscorp-focuscorp-focuscorp-focuscorp-focusModerated listserve that distributes the weeklyFocus on the Corporation newsletter. Coverageof corporate double standards, human rightsabuses, pollution records, workplace conditions.

InterInterInterInterInternananananational Ritional Ritional Ritional Ritional Rivvvvvererererer s Netws Netws Netws Netws Networororororkkkkkwww.irn.orgwww.irn.orgwww.irn.orgwww.irn.orgwww.irn.org1847 Berkeley Way, CA 94703, USAEmail: [email protected]: +1 510 848 1155All the information you need on dam-buildingcompanies, plus page of links to campaignsinternationally fighting dams.

Multinational Resource CentreMultinational Resource CentreMultinational Resource CentreMultinational Resource CentreMultinational Resource Centrewww.essential.org/mdcwww.essential.org/mdcwww.essential.org/mdcwww.essential.org/mdcwww.essential.org/mdcPO Box 19405, Washington DC 20036, USAEmail: [email protected]: +1 202 387 8030Send in a request and MRC will respond with apackage of information on the history of thecompany, its record, size, ownership structureand major shareholders.

PubPubPubPubPublic Serlic Serlic Serlic Serlic Ser vices Intervices Intervices Intervices Intervices Internananananational – PSItional – PSItional – PSItional – PSItional – PSIwww.world-psi.orgwww.world-psi.orgwww.world-psi.orgwww.world-psi.orgwww.world-psi.orgSite run by international federation of publicsector trade unions. Much of the site – includingits database on companies – is restricted tounion affiliates. Open access to briefings ontransnationals in the water, energy and wastemanagement public service sectors.

Project UndergroundProject UndergroundProject UndergroundProject UndergroundProject Undergroundwww.moles.orgwww.moles.orgwww.moles.orgwww.moles.orgwww.moles.org1946 MLK Jr Way, Berkeley, CA 94704, USAEmail: [email protected]: +1 510 705 8981A key site on the mining and oil industries.

TTTTTrrrrransnaansnaansnaansnaansnationaletionaletionaletionaletionalewww.transnationale.orgwww.transnationale.orgwww.transnationale.orgwww.transnationale.orgwww.transnationale.orgTwo superb A-Z databases – one organised bycompany name, the other by brand name.

ScorecardScorecardScorecardScorecardScorecardwww.scorecard.orgwww.scorecard.orgwww.scorecard.orgwww.scorecard.orgwww.scorecard.orgInformation and action tools on US toxicpollution.


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If you are researching the trade names ofproducts produced by a particularcompany, consult Volume 2 which givesdetails on the trade names used by over45,000 UK companies. If the trade nameis known, but not the company, consultKompass Volume 3 – Industrial TradeNames, which details the companiesbehind over 65,000 registered tradenames. There are different Kompassdirectories for different countries.

Who Owns Whom (see Table 6) mayalso be useful, as it tells you the namesof a company’s subsidiary companieswhich often coincide with the biggerbrand names.

..... . . . . . . . . . . TTTTThe names ofhe names ofhe names ofhe names ofhe names ofinstitutionalinstitutionalinstitutionalinstitutionalinstitutionalsharsharsharsharshareholdereholdereholdereholdereholders in as in as in as in as in acompany?company?company?company?company?The largest shareholders (those holdingmore than 3% of the company) are listedin the company’s annual report and in thedirectories published by Hemscott (seep.124). These can also be retrieved fromthe web via Hemscott’s web site:www.hemscott.com (companies A-Zindex).

The best free source on the web isYahoo Finance (company index:biz.yahoo.com/i/ ), which lists the 20 orso biggest institutional shareholders, thebiggest mutual fund shareholders, andthe holdings of the company’s directors.

If you have access to a supportiveinstitutional investor, ask them to run thecompany name through their Bloombergor CDA/Spectrum databases (most usethese). It will spew out the names andaddresses in a matter of minutes.

CDA Spectrum offer one-time searchesfor a fee of a few hundred pounds. If you

TTTTTaaaaabbbbble 6le 6le 6le 6le 6DirDirDirDirDirectories on companectories on companectories on companectories on companectories on company oy oy oy oy ownerwnerwnerwnerwnershipshipshipshipship

By far the best directory for up-to-dateownership details is:

Who Owns Whom?Who Owns Whom?Who Owns Whom?Who Owns Whom?Who Owns Whom?Dun & Bradstreet, Holmers Farm Way, HighWycombe, Buck HP12 4UL.A multi-volume directory covering Europe,UK and Ireland, North America, Asia, LatinAmerica and Africa (continental volumesorganised by country). For each region, thefirst volume gives a parent company andits address and registration number, thenits direct subsidiaries (the companies itowns completely), then the subsidiaries ofeach of those, and which country eachsubsidiary is registered in. This tells youwhether a company has operations in aparticular country. The second volume isan index of all the subsidiary companies,and tells you what their parent is.

You could also try:

KKKKKompass – ompass – ompass – ompass – ompass – VVVVVolume 3:olume 3:olume 3:olume 3:olume 3: P P P P Parararararents and Subsidiariesents and Subsidiariesents and Subsidiariesents and Subsidiariesents and SubsidiariesReed Business Information, Windsor Court, EastGrinstead House, East Grinstead, West SussexRH19 1XD.Details over 40,000 parent companies inthe UK and 130,000 subsidiaries, showingtheir corporate structure.

StandarStandarStandarStandarStandard and Pd and Pd and Pd and Pd and Poor’oor’oor’oor’oor’s Rs Rs Rs Rs Reeeeegister ofgister ofgister ofgister ofgister of Cor Cor Cor Cor Corporporporporporaaaaationstionstionstionstions,,,,,DirDirDirDirDirectorectorectorectorectors and Exs and Exs and Exs and Exs and Executiecutiecutiecutiecutivvvvves – es – es – es – es – VVVVVolume 1:olume 1:olume 1:olume 1:olume 1: Cor Cor Cor Cor CorporporporporporaaaaateteteteteListings and Listings and Listings and Listings and Listings and VVVVVolume 3:olume 3:olume 3:olume 3:olume 3: Indices Indices Indices Indices Indices.....

Standard and Poor’s, PO Box 1628, Charlottesville,VA 22902, USA.Section 4 of the third volume of Standardand Poor’s Register consists of a cross-reference index which lists subsidiaries,divisions and affiliates in alphabeticalorder and links them to their ultimateparent company listed in Volume 1. Afurther index – the ‘Ultimate Parent Index’ –lists ultimate parent companies inalphabetical order with their subsidiaries,divisions and affiliates, and indicates eachunit’s relationship to its parent company.

BritainBritainBritainBritainBritain’’’’’s s s s s TTTTTop Fop Fop Fop Fop Forororororeign Owned Companieseign Owned Companieseign Owned Companieseign Owned Companieseign Owned CompaniesJordans Limited, 21 St Thomas Street, Bristol BS16JS.Financial profiles of 1,500 companiesranked in order of turnover. An index isprovided which lists the companiesalphabetically under the country ofownership.


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Spotting the kSpotting the kSpotting the kSpotting the kSpotting the keeeeey iny iny iny iny invvvvvestorestorestorestorestorsssss

Getting a list of investors is only the start of aninvestor campaign. Once you have got thelist, you then have to decide which ones are

most worth targeting. Many factors bear on thisdecision – among them, the vulnerability of theinvestor to adverse publicity or a consumerboycott and their record as socially responsibleinvestors.For those unfamiliar with the acronyms andabbreviations of the financial markets, the list itselfcan be bewildering. Some of the names may beknown to you – Barclays Bank, for example – butoften the fund management organisations thathold the shares are not household names. Who,except for the specialist, knows what company liesbehind the 500 Fund? Answer: Barclays Funds Ltd.Experienced campaigners are able to pick out thebest investors to target. Novices, however, will nothave the experience to do this.We would suggest that you approach the list usingthe following steps:1. Check whether any known ethical investmentfunds have shares. A list of such funds can beobtained from www.ethicalinvestment orgwww.ethicalinvestment orgwww.ethicalinvestment orgwww.ethicalinvestment orgwww.ethicalinvestment org. ForUS ethical funds, check outwww.socialfunds.comwww.socialfunds.comwww.socialfunds.comwww.socialfunds.comwww.socialfunds.com .2. To identify the names behind other funds, go towww.trustnet.comwww.trustnet.comwww.trustnet.comwww.trustnet.comwww.trustnet.com. This has a listing of 1,879 UKfunds sorted by fund name.3. Identify any funds that are managed bycompanies that have an active commitment tousing their holdings to promote sociallyresponsible investment – for example, in the UK,Morley Fund Management, Henderson GlobalInvestors (also responsible for NPI funds), Jupiter,Friends Ivory and Sime, and USS. Approachingthese funds should be a major priority – your “A”list.4. Identify others, such as Standard LifeInvestments, Murray Johnstone (which manages the$300 million Calvert World Values fund, one of themost progressive SRI houses in the US) and ScottishEquitable, which have made noises about SRI orwho are members of SRI networks (see p.110).These should form your “B” list of investors tolobby.5. Check for the major banks – Barclays or theBank of Scotland. Several of these have signed upto the UNEP statement on banking and theenvironment (see p.63) or, like the Bank ofScotland, are involved in “discussion on SociallyDirected Banking”. Use these policy initiatives asleverage in your discussions.6. If you want to know whether a US mutual fund isan investor, the Calvert Group (one of the top SRIfirms in the US) has a search facility on its website –www.calvertgroup.comwww.calvertgroup.comwww.calvertgroup.comwww.calvertgroup.comwww.calvertgroup.com – which enables you tofind which US mutual funds are investing in a givencompany. Click on the SRI tab on the home page,then the “Know what you own tab”.

have the money – and can’t find afriendly insider – it is probably worththe cost. The only other way to find outthe names of shareholders is through thegovernment agency where companies areregistered. This can be time-consumingand frustrating.

The company registrars, which aredifferent for different countries, aredescribed below.

UK-registered companiesUK-registered companiesUK-registered companiesUK-registered companiesUK-registered companies

You can get a full list of shareholdersfrom Companies House (see p.166).

The list comes on a microfiche, whichyou will need to view on a specialmachine – your local library should haveone. The list gives the names andaddresses of shareholders, in addition tothe number of shares they hold. For alarge company, the list can be enormous– one major international oil companyhas over a million shareholders. In suchinstances, you may be better off (at leastin terms of time spent) paying the £100or so that it costs to get a targeted list –for example, of pension funds that holdshares in the company – from a fee-paying service. One of the best isThomson Financial First Call. A basicsearch is likely to cost about £100.

Often the real owner of shares is“represented” by a fund manager or“Nominee”, but each nominee entry willhave a code for the client (the person /organisation whose money it is) beforethe number of shares. You can look thesecodes up in the Index of Nominees andBeneficial Owners, which will tell youwho each code stands for. It’s publishedby Fulcrum Research (Tel: 020 72530353) and costs about £300 – get itthrough a business library (see p.153).

US-registered companiesUS-registered companiesUS-registered companiesUS-registered companiesUS-registered companies

To obtain a list of a US corporation’stop 200 or so institutional investors,


139139139139139

check it’s SEC 13-F filing. You may beable to find this via the Web on theEDGAR database (see p.166) but the13-F filings are not often on the web.

If you are based in Washington, go to theBusiness Reading Room of the Libraryof Congress where you can get access tothe SEC/Disclosure database. But asMichelle Chan-Fishel of Friends of theEarth (US) describes, the search doesnot end there: “The 13-F list will bepretty long, so you may want to targetthose institutions which you think maybe more receptive to your message.Many institutions are large assetmanagers and hold stock for theirinstitutional clients in ‘street name’.”For example, “a foundation endowmentmay not be listed as ‘The Jones familyFund’, rather its shares would be under‘Putnam Investment Company’, thefoundation’s asset manager.” 68

If you are filing a shareholder resolution(see p.139), the company is obliged toprovide a list of shareholders so that youcan solicit their vote. You are requiredto sign an affidavit promising that youwill use the list only for this purpose andthat you will not share it with others.

Further information on obtaining USshareholders’ names can be obtainedfrom FOE-US’s Handbook on Socially-Oriented Shareholder Activism, whichis available from the group’s web site –www.foe.org/international/shareholder.

Companies in Asia, Africa and LatinCompanies in Asia, Africa and LatinCompanies in Asia, Africa and LatinCompanies in Asia, Africa and LatinCompanies in Asia, Africa and LatinAmericaAmericaAmericaAmericaAmerica

As in the UK and US, a local contactwilling to do the necessary leg work isprobably necessary.

In most cases, it will be necessary toretrieve the information through thenational agency that regulatescompanies. Some stock exchanges nowhave searchable databases of thecompanies listed on their exchange. In

some cases (Jakarta is an example) thenames of the major shareholders areprovided. Corporate Finance Network –www.corpfinet.com – provides usefullinks to the major stock exchanges of theworld.

..... . . . . . . . . . . Help in launc Help in launc Help in launc Help in launc Help in launching ahing ahing ahing ahing asharsharsharsharshareholder action?eholder action?eholder action?eholder action?eholder action?Shareholder actions – notably specialresolutions at company Annual GeneralMeetings – are well-established in theUS and becoming increasingly commonin the UK.

Two excellent guides to shareholderlobbying are now available. For the UK,we highly recommend CraigMackenzie’s Shareholder ActionHandbook, published by NewConsumer, 52 Elswick Road, Newcastleupon Tyne, NE4 6JH. The guide can bedownloaded fromwww.ethics.fsnet.co.uk .

For the US, consult Friends of the Earth-US’s Handbook on Socially-OrientedShareholder Activism, written byMichelle Chan-Fishel. This is a superbstep-by-step guide. Although US-focused, it offers invaluable insights foractivists outside the US. The handbookis available from www.foe.org/international/shareholder.

. . . What companies a. . . What companies a. . . What companies a. . . What companies a. . . What companies afinancial institution isfinancial institution isfinancial institution isfinancial institution isfinancial institution isinininininvvvvvesting in?esting in?esting in?esting in?esting in?Getting details of an institution’sinvestments is far from easy. The biginstitutions usually have a wide range offunds and most won’t tell you how theyare invested. In such instances, youronly option is to look up the


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shareholders in every possiblecompany – and see if your institution isamong them

Unit trusts and mutual funds, however,are obliged to disclose their holdings.For the former, every three months, fundmanagers produce a report on theirinvestments; if you telephone them, theywill usually send you a copy of thisreport. You can also download manyUS Mutual Fund reports fromwww.edgar-online.com . If your areaof concern is mining, the Mineral FundAdvisory Party Ltd.(www.mineralfunds.com) has adatabase which gives the braod areasthat mutual funds worldwide areinvesting in.

UK companiesUK companiesUK companiesUK companiesUK companiesThere are over 1,000 unit trusts in theUK managed by around 200 companies.Unit Trust Advisory Services monitorthem and will give you detailed reportson their investments. The first report isfree.

US companiesUS companiesUS companiesUS companiesUS companiesFor the US, try Standard & Poor’s 500(see p.124). This lists the maincompanies that US Mutual Funds investin. The Calvert Group – one of theleading SRI firms in the US – has aninvaluable “Know what you own”facility on its webpage(www.calvertgroup.com) that enablesyou to look up a mutual fund and seewhat companies it has shares in.

For US Mutual Funds, you can alsodownload free the prospectuses of themajor funds via CBS’ MarketWatchFund Info Service –cbs.marketwatch.com – provided youhave a mailing address in the US. Forlegal reasons, fund documents cannot besent to those outside the US. The FundClub also delivers (by post, mailed thenext business day) other documentsmade available by the Mutual Fundsthey cover. These may include annualreports.

. . . How well a. . . How well a. . . How well a. . . How well a. . . How well acompancompancompancompancompany is perfy is perfy is perfy is perfy is perfororororormingmingmingmingmingfinancially?financially?financially?financially?financially?Company strategy is usually explainedin the company’s annual report. It isgiven in much more detail in acompany’s quarterly presentation offinancial results, and other strategypresentations to the financial markets.These are often on company websites, inthe “investor relations” section. Youshould always check out this section ofthe company’s website – the companydoesn’t expect people who aren’tinterested in investing to look at it, soyou can often find out things youwouldn’t otherwise come across. Thesepresentations are also reported in tradeand financial press.

Of course, company presentations areintended to “sell” the company’sstrategy – so they need to be treated withcaution. The most accessible source ofmore balanced analysis is the FinancialTimes, especially the ‘Lex’ column.Search the www.ft.com website by:“company name” + “lex”. Also trysearching: “company name” + “analyst”or “results”.

Another option is to look at the brokerrecommendations in the research sectionof the Yahoo Finance website (see Table4, p.129).

If you’re prepared to do a bit of leg-work, look at a company share-pricegraph (for example, on the YahooFinance or Hemscott websites) and seewhether it is on a general upward ordownward trend, both in absolute termsand relative to its sector or relative tothe stock exchange. Check out the newson the days of its sharp peaks andtroughs and steep rises and falls.

If you’re really serious, though, you’llwant to see some analysts’ reports….


141141141141141

..... . . . . . . . . . . AnalAnalAnalAnalAnalysts’ysts’ysts’ysts’ysts’ r r r r reeeeeporporporporports?ts?ts?ts?ts?The best-informed and most detailedanalysis of company strategies andfinancial prospects can be found in thereports of financial analysts.Analysts advise investors on whether tobuy or sell a company; they specialisegenerally in one industrial sector, and itis their job to know that sector, thecompanies and their financialperformance (see Part Four, pp.77-118).

The reports are generally only availableto a firm’s clients – and, unless youknow a sympathetic insider, you willneed to pay a lot of money to get hold ofthem. Occasionally, they get leaked tothe press (in 1999, Deutsche Banks’report announcing that “GMOs areDead” made headline news throughoutthe world – see p.60) but this is rare.

Some reports are available on the web –for a price. Investext(www.investtext.com) and Dialog(www.dialog.com) both offer a free trialperiod – or allow you to buy reports ona one-off basis. Check them out.

The Yahoo Finance website offers somecheaper (and consequently less detailed)reports. There are some very brief freeones, plus others ranging from $5 to $50.Go to yahoo.multexinvestor.com. Youwill need to register (which is free),then click “research” and enter thecompany’s stock market “ticker symbol”– if you don’t know it, find the companythrough “company lookup”.

. . . Who is financing a. . . Who is financing a. . . Who is financing a. . . Who is financing a. . . Who is financing apripripripriprivvvvvaaaaate sectorte sectorte sectorte sectorte sectorinfrinfrinfrinfrinfrastrastrastrastrastructuructuructuructuructure pre pre pre pre project?oject?oject?oject?oject?Private sector infrastructure projects –from roads to dams, power plants to oil

pipelines – are increasingly common.Finding out up-to-date information onwhich companies are involved, and whois backing them, is not easy withoutaccess to specialist fee-payingdatabases.

Such databases offer an impressiveresearch tool. The US–based QuantumLeap project, a joint project of theNational Wildlife Federation andFriends of the Earth US, has access to anindustry database that gives informationon over 9,000 infrastructure projectswhich are currently being financedthrough the private sector or for whichfinance is being sought. The databasegives details on:

the costs of the project;which banks are financing it;which multilateral developmentbank (MDB) is involved;which Export Credit Agency (ECA) isproviding guarantees or loans.

According to Quantum Leap: “Thedatabase provided us with the names ofcommercial banks financing theKumtor mine in Kyrgyzstan, the site ofan egregious cyanide spill. Anothersearch on ‘Dabhol’ provided us withthe current status of financing andbanks involved in the Enron/Dabholpower project in India. A third searchprovided detailed information on thegas pipelines being planned throughoutLatin America.”

The database does not provideinformation on company activities thatare internally financed, nor does it coverforestry activities, unless the projectincludes a capital investment ininfrastructure (for example, a pulp mill).For further details, contact Julie Tannerat the National Wildlife Federation(1400, 16th St., NW, Suite 510,Washington DC 20036, USA). Emailsshould be sent to [email protected] .

A number of commercial andgovernment organisations also providesearchable databases of projects on


142142142142142

their web sites, although the informationprovided is often quite limited. Thosewe have found most useful are listed inTable 7 (p.142). Harvard BusinessSchool also runs a project finance portal– with links to 800 related sites,including several that offer free accessto their databases. The Harvard portalcan be accessed through www.hbs.edu/projfinportal .

The World Bank’s web site contains asearchable database of infrastructureprojects worldwide. This can be usefulif you want to know whether or not theBank is involved, for example, throughits private sector arm, the InternationalFinance Corporation (IFC).

Many projects now backed by officialexport credit agencies (ECAs), few ofwhich publish details of the projectsthey are supporting. You may be able tofind out if your country’s ECA isinvolved through asking your Member ofParliament to submit a parliamentaryquestion. Under pressure from campaigngroups, some ECAs are becoming morewilling to respond to requests forinformation. It is worth telephoning themdirect; ask to speak to the official incharge of the country where the projectis being constructed.

To find the names of the project financeofficers in the world’s major banks,consult Euromoney’s Project FinanceYearbook (Euromoney Publications, 11North Hill, Colchester, Essex CO1 1DZ,UK) or the web site of Project Financejournal (see Box, “Project Finance”,p.20).

. . . What public money. . . What public money. . . What public money. . . What public money. . . What public moneyis bacis bacis bacis bacis backing theking theking theking theking thecompany?company?company?company?company?Many companies rely on public sourcesof funding – particularly government-backed export credits and investment

TTTTTaaaaabbbbble 7le 7le 7le 7le 7InfrInfrInfrInfrInfrastrastrastrastrastructuructuructuructuructure pre pre pre pre project daoject daoject daoject daoject datatatatatabases on the bases on the bases on the bases on the bases on the WWWWWeeeeebbbbb

Project FinanceProject FinanceProject FinanceProject FinanceProject Financewww.projectfinancemagazine.orgIn addition to providing a searchable database ofprojects, the database also gives details of over500 company addresses and 1,500 projectfinanciers. Free trial period.

InfrInfrInfrInfrInfrastrastrastrastrastr uctuructuructuructuructureWeWeWeWeWororororor ldldldldldwww.infrastructureworld.comFree, but you need to register. Main industriescovered are electric power, energy, telecoms,transport and water.

Global InfrGlobal InfrGlobal InfrGlobal InfrGlobal Infrastrastrastrastrastructuructuructuructuructure Pre Pre Pre Pre Projects Daojects Daojects Daojects Daojects Datatatatatabasebasebasebasebasehttp://infoserv2.ita.doc.gov/td/Infrastr.nsfDeveloped by the US Department of Commerce’sInternational Trade Administration to assistcompanies track projects worldwide. Useful forupcoming projects.

Private FinancePrivate FinancePrivate FinancePrivate FinancePrivate Financewww.privatefinance-i.comSearchable database of public/private partnershipprojects

InterInterInterInterInternananananational Finance Cortional Finance Cortional Finance Cortional Finance Cortional Finance Corporporporporporaaaaation Prtion Prtion Prtion Prtion ProjectojectojectojectojectDocument DatabaseDocument DatabaseDocument DatabaseDocument DatabaseDocument Databaseh t tp : / /wb ln0018 .wor ldbank .o rg/ I FCEx t /spiwebsite1.nsf/$$Search?OpenformProjects being backed by the IFC, the privatesector arm of the World Bank.

WWWWWororororor ld Bank Prild Bank Prild Bank Prild Bank Prild Bank Privvvvvaaaaate Pte Pte Pte Pte Pararararar ticipaticipaticipaticipaticipation intion intion intion intion inInfrInfrInfrInfrInfrastrastrastrastrastr uctuructuructuructuructureeeeewww.worldbank.org/html/fpd/privatesector/ppidb.htmRecords contract and investment information forinfrastructure projects that have reached financialclosure since 1984. A charge is made perrequest, but there is a discount for NGOs.

WWWWWororororor ld Bank Prld Bank Prld Bank Prld Bank Prld Bank Project Searoject Searoject Searoject Searoject Searccccchhhhhwww.worldbank.org/sprojectsContains information on more than 9,500 WorldBank projects, from 1947 to the present.

MbendiMbendiMbendiMbendiMbendiwww.mbendi.co.za/afproj.htmSearch any country in Africa.

LaLaLaLaLatin tin tin tin tin American PAmerican PAmerican PAmerican PAmerican Pooooowwwwwer Prer Prer Prer Prer Projects Daojects Daojects Daojects Daojects Datatatatatabasebasebasebasebasewww.latinenergy.com/latinpowerdb.html

Asia InfrAsia InfrAsia InfrAsia InfrAsia Infrastrastrastrastrastructuructuructuructuructure Dae Dae Dae Dae Datatatatatabasebasebasebasebasewww.aidresearch.com


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TTTTTaaaaabbbbble 8le 8le 8le 8le 8PPPPPension fund dirension fund dirension fund dirension fund dirension fund directoriesectoriesectoriesectoriesectories

PPPPPension Funds & ension Funds & ension Funds & ension Funds & ension Funds & TTTTTheir heir heir heir heir AdAdAdAdAdviserviserviserviservisersssssAP Information Services, Roman House, 296Golders Green Road, London, NW11 9PZ.Useful for names of key individuals and contactdetails for the major UK pension funds and theiradvisers, such as investment managers. Also hasan international section which includes major USand European pension funds. Now available onCD-ROM.

NeNeNeNeNew w w w w YYYYYororororork Institute ofk Institute ofk Institute ofk Institute ofk Institute of Finance’ Finance’ Finance’ Finance’ Finance’s Guide to Mutuals Guide to Mutuals Guide to Mutuals Guide to Mutuals Guide to MutualFundsFundsFundsFundsFunds

Author: Kirk Kazanjian. Publisher: Prentice Hall,240 Frisch Court, Paramus, New Jersey 07652, USA.Lists 100 top US mutual funds. Each entry givesthe name of the fund manager, contact details(including a telephone number) and the fund’stop ten holdings. The Guide also contains auseful listing of web sites devoted to mutualfunds.

NelsonNelsonNelsonNelsonNelson’’’’’s Dirs Dirs Dirs Dirs Directorectorectorectorector y ofy ofy ofy ofy of In In In In Invvvvvestment Manaestment Manaestment Manaestment Manaestment Managggggererererers 1999s 1999s 1999s 1999s 1999VVVVVolumes I-IIIolumes I-IIIolumes I-IIIolumes I-IIIolumes I-III

Nelson Information, One Gateway Plaza, PortChester, NY 10573, USA.Useful for global fund managers, especially US.

TTTTThe Eurhe Eurhe Eurhe Eurhe Euromoneomoneomoneomoneomoney Diry Diry Diry Diry Directorectorectorectorectory ofy ofy ofy ofy of Eur Eur Eur Eur European Fundopean Fundopean Fundopean Fundopean FundManagementManagementManagementManagementManagement

Euromoney Publications plc, Nestor House,Playhouse Yard, London, EC4V 5EX.Details of fund managers across Europe.

UK Fund IndustrUK Fund IndustrUK Fund IndustrUK Fund IndustrUK Fund Industry Ry Ry Ry Ry Reeeeevievievievieview & Dirw & Dirw & Dirw & Dirw & Directorectorectorectorectory 1999y 1999y 1999y 1999y 1999Professional and Business Information PublishingLtd, Charterhouse Communications plc, 12-18Paul Street, London, EC2A 4NX.Useful for names of individual company officers(Chief Executive Officer, Chief InvestmentOfficer, and fund managers for each sector).Also profiles the company or group and itsinvestment philosophy.

PIRPIRPIRPIRPIRC Local C Local C Local C Local C Local AAAAAuthority Puthority Puthority Puthority Puthority Pension Fund ension Fund ension Fund ension Fund ension Fund YYYYYearbookearbookearbookearbookearbookEdited by Alan MacDougal.Pensions Investment Research Consultants/ NPI.Cityside, 40 Alder Street, London E1 1EE. Tel: 0207247 2323Invaluable resource tool for anyone seeking toinfluence how pension funds are invested. Inaddition to providing a series of overviewessays on the industry, it lists all the localauthority pension funds in the UK, with detailsof how their funds are managed (in-house orthrough an investment company) and who sitson the key supervisory committees.

guarantees – to underwrite the projectsin which they involved overseas -particularly when the projects are toorisky for private insurance firms to takeon.Such official export credits are suppliedthrough national “Export CreditAgencies” (ECAs). Most countries haveone. Finding out which export creditagency may be backing a project can beproblematic, however, since the ECAsthemselves are secretive anduntransparent. One avenue for NGOs isto contact the Quantum Leap project forresearch assistance (see p.141).Parliamentarians, particularly your ownrepresentative, may also be a usefulmeans of finding out whether publicinstitutions from your own country areinvolved in backing a project. Write toyour own representative and enlist thesupport of sympathetic members of thenational legislature (see p.171). Unlike adatabase search, this route to obtaininginformation enables you to enlistpolitical support for your concerns.

..... . . . . . . . . . . TTTTThe names ofhe names ofhe names ofhe names ofhe names ofcompany analysts?company analysts?company analysts?company analysts?company analysts?Analysts are key to many lobbyingstrategies (see Part Four, p.80).

As with details of shareholders, theeasiest way to find out the names ofanalysts is through a major financialdatabase, such as Bloomberg. Ask asympathetic insider, if you can.

If you do not have access to such adatabase, you will need to do some legwork. The best way to find out the namesof analysts is from the followingdirectories. All are available in the CityBusiness Library, London (see p.153).

NelsonNelsonNelsonNelsonNelson’’’’’s Dirs Dirs Dirs Dirs Directorectorectorectorectory ofy ofy ofy ofy of In In In In InvvvvvestmentestmentestmentestmentestmentResearchResearchResearchResearchResearchVolume I – Research Firms & Indexes, Volume II


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– US Companies,Volume III –International Companies.Nelson Information, OneGateway Plaza, PortChester, New York10573, USA.

Vol I givesinstitutionalresearch firmprofiles, analysts byindustry/research

speciality, analysts and the companiesthey follow.Vol II – US company profiles/analystcoverage.Vol III – International profiles analystcoverage. More detailed than Briton’s,as this gives analysts for a particularcompany.

BritonBritonBritonBritonBriton’’’’’s Indes Indes Indes Indes Index:x:x:x:x: In In In In Invvvvvestment Restment Restment Restment Restment ResearesearesearesearesearccccchhhhhAnalystsAnalystsAnalystsAnalystsAnalystsPR Newswire (Europe) Ltd, CommunicationsHouse, 210 Old Street, London EC1V 9UN. Tel:0207 490 8111

Does not give analysts for eachcompany, only by industry sector.

Using Nelson’s will probably give youfar more analysts’ names than you want(up to 100 for each company). You canselect the most important and bestrecognised ones as they are markedwith an asterisk.

Alternatively, Primark Extel Survey runa competition each year for the bestanalysts in the City, sector by sector.Winners are worth noting, as they tendto be the most important and influentialpeople in the financial markets. Theresults are published; a copy of thereport is held in the City BusinessLibrary, London (see p.153).

If you have access to the fee-payingBloomberg database, the names ofanalysts and the companies they followcan be obtained at the press of a fewbuttons.

You can also find some analysts via theresearch section of the Yahoo Financewebsite (see Table 4, p.129). It listsanalysts who have won a competition

for the accuracy of their estimates of acompany’s future earnings. Theseanalysts don’t tend to be from the big-name merchant banks.

If you can’t get access to any of theseresources, you could try the FinancialTimes: analysts are often quoted on theback page of the “Companies &Markets” section of the paper. This willlead you to some of the influentialanalysts. Just search www.ft.com for thecompany’s name, along with “company’sreport” (the name of the section) or“analyst”.

For those tracking mining companies, aninvaluable resource is Follow theMining Money, a toolkit written by theWestern Mining Activist Network. Thereport has a comprehensive listing ofNorth American analysts who havecommented on the mining industry. It isavailable from Western Organization ofResource Councils (WORC), 2401Montana Avenue, #301 Billings, MT59101, USA. WORC’s web address is:www.worc.org

..... . . . . . . . . . . TTTTThe names ofhe names ofhe names ofhe names ofhe names of fund fund fund fund fundmanamanamanamanamanagggggererererers?s?s?s?s?Getting the names of individual fundmanagers takes time, but is critical ifyour concerns are to be addressed to theright investment manager.

You will need to search through severalDirectories, since the funds don’t allappear in one place.

You should also ring the company tocheck that the fund manager is still there– and hasn’t moved to another group.

We have found the directories listed inTable 7 (see p.143) most useful whenresearching the names of fund managers.Euromoney’s comprehensive directoryof European fund managers is now

Getting the names ofindividual fund managerstakes time, but is critical ifyour concerns are to beaddressed to the rightinvestment manager.


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TTTTTaaaaabbbbble 9le 9le 9le 9le 9Directories giving details of companyDirectories giving details of companyDirectories giving details of companyDirectories giving details of companyDirectories giving details of company

officialsofficialsofficialsofficialsofficials

available on its website –www.euromoneyfunds.com. Thecompany offers a free trial period.

..... . . . . . . . . . . TTTTThe names ofhe names ofhe names ofhe names ofhe names ofcompancompancompancompancompany ady ady ady ady adviserviserviserviservisers?s?s?s?s?UK and US companiesUK and US companiesUK and US companiesUK and US companiesUK and US companiesThe most accessible source ofinformation is the Hemscott website(www.hemscott.com), on which eachcompany page has a list of companyadvisers, including bankers, financialadvisers, brokers, auditors, solicitorsand financial advisers.

For more comprehensive lists, useCrawford’s Directory of CityConnections (AP Information Services,Roman House, 296 Golders GreenRoad, London, NW11 9PZ, UK).Published every year, it is available inLondon’s City Business Library (seep.153), where you can also use a CD ofthe Directory, which includes asubstantial amount of information thatdoesn’t appear in the book due to a lackof space. The Directory givesinformation on major companies in theUK and the advisers that act for them –stockbrokers, financial advisers, pensionfund investment managers, auditors,solicitors, insurance advisers, financialpublic relations consultants, pensionfund consultants and actuaries,investment trust managers, unit trustmanagers and substantial shareholders.

For US companies, the Securities andExchange Commission’s EDGARdatabase – www.freeedgar.com – isagain a useful (if not always perfect)reference, particularly for informationon a company’s bank financiers. Find the10-k form for the company (see p.166):at the end, you can find copies of loanagreements between the company andbank syndicates. The form also lists thename of the loan officer of the bank. Thedata is sometimes a few years’ old but

the loans are still probably still ineffect.

..... . . . . . . . . . . TTTTThe names ofhe names ofhe names ofhe names ofhe names of a a a a acompancompancompancompancompany’y’y’y’y’s dirs dirs dirs dirs directorectorectorectorectors?s?s?s?s?There are many reasons why it is usefulto know the names – and thebackgrounds – of the principal officialsand directors in a company. Is themanager a long-standing insider? A“company” man or woman? If they havecivic appointments outside the company,might they be more open to change? Ifthey have come to the company fromanother company, what was their recordthere?

WWWWWho’ho’ho’ho’ho’s s s s s WWWWWho in ho in ho in ho in ho in WWWWWororororor ld Coalld Coalld Coalld Coalld CoalFinancial Times Business, Maple House, 149Tottenham Court Road, London W1P 9LL.Provides contact and biographical details forover 2,500 senior personnel in the coalindustry.

WWWWWho’ho’ho’ho’ho’s s s s s WWWWWho in Eurho in Eurho in Eurho in Eurho in European Business and Industropean Business and Industropean Business and Industropean Business and Industropean Business and IndustryyyyyWho’s Who Edition GmbH, Starnberger Weg 62,D-82205, Germany. Tel: +49 8105 390653Contains biographies of “top managers” inEuropean business and industry. The Directorylists the respective manager’s name, title, placeand date of birth, marital status, presentposition, education, career, publications,honours, memberships, and recreationalactivities.

WWWWWho’ho’ho’ho’ho’s s s s s WWWWWho in ho in ho in ho in ho in WWWWWororororor ld Miningld Miningld Miningld Miningld MiningFinancial Times Business, Maple House, 149Tottenham Court Road, London W1P 9LL.Provides contact and biographical details forover 3,500 senior personnel in the industry.

StandarStandarStandarStandarStandard and Pd and Pd and Pd and Pd and Poor’oor’oor’oor’oor’s Rs Rs Rs Rs Reeeeegister ofgister ofgister ofgister ofgister of Cor Cor Cor Cor Corporporporporporaaaaationstionstionstionstions,,,,,VVVVVolume 2 :olume 2 :olume 2 :olume 2 :olume 2 : Dir Dir Dir Dir Directorectorectorectorectors and Exs and Exs and Exs and Exs and Executiecutiecutiecutiecutivvvvveseseseses

Standard and Poor’s, PO Box 1628, Charlottesville,VA 22902, USA.List of over 72,000 directors, trustees andpartners. Provides principal business affiliationswith titles and business address. Whereobtainable, home addresses and emailaddresses are included.


146146146146146

Or again: Are there rivalries betweendifferent sections within a company?The bigger companies get, the lesshomogenous they are in outlook andpriorities. If two divisions are atloggerheads over policy, you may beable to make considerable gains byplaying one off against another. Gettingto know something of the background ofcompany officials is one route intothese internal conflicts. Somecompanies list the heads of theirdifferent divisions in their annualreports. It is often worth writing to themall to inform them that the activities ofone of their colleague’s divisions isunder scrutiny.Knowledge of the directorships andother positions held by directors of acompany can help to broaden acampaign. For example, a director maybe a leading light in, say, the Prince ofWales Business Trust. A letter to theTrust explaining the director’sinvolvement in a controversial projectmay help open up a new front.

The annual report or interim report tellsyou who the directors are at the time ofthe report’s publication (as willprobably the company website):changes since then may be in theFinancial Times (although not alwaysin the online version) or the trade press.The annual reports will also often tellyou how much the directors get paid(they call it remuneration – be awarethat packages include share options andother benefits such as a company carand medical insurance), and will give aone-paragraph biography for eachdirector. Some salaries, companyshareholdings and short biographies canalso be obtained from the “profile”section of the Yahoo Finance website(see Table 4, p.129).

There are also versions of Who’s Whofor particular industries – look in abusiness library. These books will givea short biography of each entrant: placeof birth, parents, education, career,

family status, club/society membership,leisure activities and so on. The highest-profile directors of large companiesmay have full-length (sometimes book-length) biographies written about them.Try searching library catalogues (seep.151).

More information on directors may beobtained from the press (bothmainstream and trade press) – forexample, in interviews and profiles. Trysearching the web sites of trade journals(see p.159) with the director’s name(and possibly the company’s name, too)and “interview” or “profile” as thesearch terms. The trade press updatespersonnel changes in their industry andoften also publishes brief biographicalinformation. Try “appointments” or“people” as search terms.

UK companiesUK companiesUK companiesUK companiesUK companiesIn the UK, the names and addresses ofall company directors must be filed bylaw with Companies House and can beobtained for a search fee of £1 percompany. All directors have to file thenames of other directorships held.Disqualified directors are also listed atCompanies House (see p.165). Recently,some campaigners have targeteddirectors at their homes: this has led tocalls for directors’ addresses to beexcluded from the publicly-availablecompany records (see Box, “HuntingdonLife Sciences”, p.27).

Directories giving details of companyofficials are listed in Table 9, p.110.

US CompaniesUS CompaniesUS CompaniesUS CompaniesUS Companies

The quickest way to find information ondirectors of US companies is to consultthe Securities Exchange Commission’sEDGAR database –www.freeedgar.com . Find the DEFform, which supplies the name, age andbackground of directors, together withother company affiliations andtransactions with realted parties.


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TTTTTaaaaabbbbble 10le 10le 10le 10le 10

ImporImporImporImporImpor terterterterters and es and es and es and es and exporxporxporxporxpor terterterterters –s –s –s –s –WWWWWeeeeeb sites and dirb sites and dirb sites and dirb sites and dirb sites and directoriesectoriesectoriesectoriesectories

UK EXPORTERSUK EXPORTERSUK EXPORTERSUK EXPORTERSUK EXPORTERS

CorCorCorCorCor porporporporporaaaaate Infte Infte Infte Infte Infororororor mamamamamationtiontiontiontionwww.corporateinformation.comProvides detailed information about over90,000 British exporters. Data include name,address, products, trade names, number ofemployees, whether the company is publicor private, the names of its chief executivesand other information as well. A very goodsite and free to use.

TTTTThe Dirhe Dirhe Dirhe Dirhe Directorectorectorectorector y ofy ofy ofy ofy of UK Impor UK Impor UK Impor UK Impor UK Impor tertertertertersssssVol 1: A-Z Listings, Vol. 2: Country of OriginIndex.Newman Books, Newman Data Services, 32Vauxhall Bridge Road, London SW1V 2SS.Volume 1 arranges all importing companiesalphabetically, with each entry listing anaddress, telephone number, contact name,the types of goods imported and the maincountries from which they are imported.Volume 2 provides indexes arranged by:country of origin; product (divided by typeof product imported); and import frequency.

IMPORIMPORIMPORIMPORIMPORT/EXPORT/EXPORT/EXPORT/EXPORT/EXPORT T T T T ASSOCIAASSOCIAASSOCIAASSOCIAASSOCIATIONSTIONSTIONSTIONSTIONS

British ImporBritish ImporBritish ImporBritish ImporBritish Impor terterterterter s s s s s AssociaAssociaAssociaAssociaAssociationtiontiontiontionwww.britishimporters.orgwww.britishimporters.orgwww.britishimporters.orgwww.britishimporters.orgwww.britishimporters.org

American ImporAmerican ImporAmerican ImporAmerican ImporAmerican Impor terterterterter s s s s s AssociaAssociaAssociaAssociaAssociationtiontiontiontionwww.americanimporters.orgwww.americanimporters.orgwww.americanimporters.orgwww.americanimporters.orgwww.americanimporters.org

Canadian Canadian Canadian Canadian Canadian AssociaAssociaAssociaAssociaAssociation oftion oftion oftion oftion of Impor Impor Impor Impor Impor terterterterters &s &s &s &s &ExporExporExporExporExpor terterterterter sssss

www.importers.ca/www.importers.ca/www.importers.ca/www.importers.ca/www.importers.ca/

PRPRPRPRPRODUCTION & RETODUCTION & RETODUCTION & RETODUCTION & RETODUCTION & RETAILAILAILAILAIL

TTTTThomas Rhomas Rhomas Rhomas Rhomas Reeeeegister ofgister ofgister ofgister ofgister of American ManAmerican ManAmerican ManAmerican ManAmerican Manufufufufufacturacturacturacturacturerererererssssswww.thomasregister.comwww.thomasregister.comwww.thomasregister.comwww.thomasregister.comwww.thomasregister.comA particularly useful site if you are trying tofind out who manufactures a particularproduct in the US and Canada, or wish tomatch a brand name to a company. Thedatabase covers 156,914 companies and135,415 brand names. There are no chargesfor access the information, but you must

register. If you can’t find a product, you cansend an email and Thomas will reply by post,email or fax,“depending on the informationyou provide”.

HooHooHooHooHoovvvvvererererers Handbook ofs Handbook ofs Handbook ofs Handbook ofs Handbook of American BusinessAmerican BusinessAmerican BusinessAmerican BusinessAmerican BusinessHoovers Inc., 1033 La Posada Drive, Suite 250,Austin, Texas 78752, USAOverview of major US companies. Givesaddresses, subsidiaries, products and keycompetitors.

KKKKKompass – ompass – ompass – ompass – ompass – VVVVVolume 1:olume 1:olume 1:olume 1:olume 1: Pr Pr Pr Pr Products and Seroducts and Seroducts and Seroducts and Seroducts and Ser vicesvicesvicesvicesvicesReed Business Information, Windsor Court, EastGrinstead House, East Grinstead, West SussexRH19 1XD.Gives details of over 44,000 differentproducts and services offered by UKindustrial companies. (Other volumes do thesame for other countries). Identifies whatcompanies are producing what goods andselling them in the UK. Breaks down suppliersinto manufacturers or direct providers;wholesalers, merchants or indirect providers;manufacturers without own works in the UK;distributors; exporters and importers.

TTTTThe Fhe Fhe Fhe Fhe Food ood ood ood ood TTTTTrrrrrades Dirades Dirades Dirades Dirades Directorectorectorectorectory ofy ofy ofy ofy of the UK and the UK and the UK and the UK and the UK andEuropeEuropeEuropeEuropeEuropeNewman Books, Newman Data Services, 32Vauxhall Bridge Road, London SW1V 2SS.If you are trying to find out who retails aparticular foodstuff – industrially-farmedshrimp, for example – this is an invaluablesource of information. The index allows youto search by products and brand names andthe entries give basic contact details, keypersonnel, parent company, associatedcompanies and subsidiaries.

SECTORAL DIRECTORIESSECTORAL DIRECTORIESSECTORAL DIRECTORIESSECTORAL DIRECTORIESSECTORAL DIRECTORIES

The Soya BluebookThe Soya BluebookThe Soya BluebookThe Soya BluebookThe Soya BluebookPublished by Soyatech (www.soyatech.comwww.soyatech.comwww.soyatech.comwww.soyatech.comwww.soyatech.com)“The annual directory of the world oilseedindustry”. Companies listed by commodity(soyabean, rapeseed, maize, cotton, palm)and by country, with symbol indicatingcommodities, activities (import / export /processing) contact address and person’sname. Also trade and production statistics,trade association contacts for all countriesand other reference information.


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..... . . . . . . . . . . Impor Impor Impor Impor Importerterterterters ands ands ands ands andeeeeexporxporxporxporxpor terterterterters?s?s?s?s?Finding out who is importing aparticular commodity into a country (orexporting to one) is generally vital ifone’s strategy revolves aroundpuncturing demand for a product by, forexample, boycotting certain goods orthreatening to boycott them. Talking toimporters and explaining the problemssurrounding the production of the goodsthey are buying and selling can alsoprove effective in turning markets in amore sustainable direction.Start by checking out whether yourcountry is a major export destinationfrom the country of production you’reinterested in. For example, for the foodand agricultural industries, the USDepartment of Agriculture producesexcellent figures on world trade flowsbetween all countries and for allcommodities. Or for oil, gas and coal,use the BP Statistical Review of WorldEnergy (www.bp.com/bpstats/).Many sectors produce directories ofimporters to help companies findcontacts for doing business. Some ofthese directories are listed below, or inthe sectoral research section of PartSeven (see p.177). Alternatively, youcould approach the trade orprofessional associations for the sectoryou are researching, and ask theirlibrary or information service whatdirectories are available.

You may also be able to get advicefrom the importer and exporterassociations, some of which are listedbelow. Failing all that, you could lookat what happens either side of theinternational transaction: production inthe source country, or retail in thedestination country. For information onproducers, some business directoriesgive geographical breakdowns of

where companies’ markets are, as dosome company annual reports (seep.126), and some government filings(see p.165). For information onretailers, market research reports (seep.163) are probably your best bet,although some sectoral directories maybe helpful.

We have undertaken research in this areamainly on two issues – the import oftropical shrimp (a major cause ofmangrove destruction and an industryassociated with human rights and labourabuses) and the import of geneticallymodified crops such as soya – so the listof directories reflects a focus on thefood industry.

Table 10 (p.147) gives some usefulgeneral directories of importers andexporters for the UK and North America(all sectors).

..... . . . . . . . . . . WWWWWhahahahahat rt rt rt rt researesearesearesearesearccccch ah ah ah ah acompany is funding?company is funding?company is funding?company is funding?company is funding?Knowing what research a company isfunding can be useful for a number ofreasons:

the research itself may beproblematic for social or environmentalreasons;

the amount spent in a given area is astrong indication of the company’s futuredirection or its commitment, for example,to environmentally-sustainableproduction methods; and

where academic researchers are usedto counter critics of the company’sproducts or activities, it is important toknow what research links they may havewith the company.

For the US, two databases areparticularly useful :www.ssw.umich.edu/grantetc/corps.html and www.fdncenter.org/grantmaker/gws_corp/corp.html .


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FurFurFurFurFurtherthertherthertherrrrrresearesearesearesearesearccccch –h –h –h –h –Skills andSkills andSkills andSkills andSkills andrrrrresouresouresouresouresourcescescescesces


150150150150150

WWWWWherherherherhere to ge to ge to ge to ge to go fo fo fo fo forororororinfinfinfinfinfororororormamamamamationtiontiontiontion

R esearching companiesand business sectors isoften portrayed as a

highly specialist affair. It is actuallymuch easier than many peoplethink. Anyone can find out about acompany with a little time andimagination. Obviously, it’s easier tofind out about a large companythan a small one, and a localcompany than a distant one. Thesmaller and further they get, themore you will have to use youringenuity.

This section gives details of where togo for information. It starts with thelibraries in the UK where you canresearch companies and businesses.It also provides a brief introductionto researching companies on theWeb; which search engines haveproved most useful in our work; howto phrase your web searches to getthe best results; and where to findnon-English search engines. Thesection also includes a guide togovernment, industry, media andNGO sources of information, andinformation on sectors.


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LIBRARIESLIBRARIESLIBRARIESLIBRARIESLIBRARIES

Uses ofUses ofUses ofUses ofUses of libr libr libr libr librariesariesariesariesariesLibraries can be used to find all paper-based sources, including:

business directories;company and other reports;mainstream, financial and tradepress;biographies of officials;guides;information on governments andlaws;telephone and address directories;reference sources, such as listingsof publications or usefulassociations.

Some libraries also have electronicresources, such as CD-ROMs andsubscription online services.

Choosing yChoosing yChoosing yChoosing yChoosing your librour librour librour librour librarararararyyyyyThere are five different types of library:

1.1.1.1.1. Local libr Local libr Local libr Local libr Local librariesariesariesariesaries

These provide fairly basic coverage,but the periodicals sections can beuseful. In the UK, the main countylibraries (usually in each county town)generally have up-to-date businessdirectories in their business section. Ifyour target company is based locally,local history books and local papersmay be useful. If a directory or otherreference book is not available throughyour local public library, ask thelibrarian to get a copy through the inter-library loan service – in the UK, thelibrary is obliged to try to get the bookfor you if it is held in the national publiclibrary system, although they may chargeyou for doing so. Generally, librarians

are very helpful in this – most see it as avital part of the service they provide.Few local libraries in the UK have theircatalogues on the web; but if you arelooking for a newspaper or journal, theMagNet website – www.earl.org.uk/magnet – catalogues these for manylibraries across the country (it coversover 40 library authorities, such ascounty councils, borough councils andunitary authorities). You can search it bygeographical region.

2.2.2.2.2. Uni Uni Uni Uni Univvvvvererererersity librsity librsity librsity librsity librariesariesariesariesaries

Try the business studies section, or otherrelevant subject sections (for achemicals company, look in thechemistry section; for a constructioncompany, look in engineering).University libraries also provide goodgeneral reference sources, good mediacoverage (including trade journals), andabstracts databases – if they let you usethem. Universities vary in how willingthey are to give access to non-universitymembers.

3.3.3.3.3. Na Na Na Na National librtional librtional librtional librtional librariesariesariesariesariesThese are generally the best non-specialist libraries, and have extensivecollections (especially of bookspublished in the library’s own country).They are usually located in the capitalcity. In Britain, there are six copyrightlibraries (see Table 11, p.153). By law,all these libraries are entitled to receivea copy of every publication published inthe UK. The best is the British Libraryin London, which is obliged to take acopy of all UK publications (the otherscan choose to opt out). They also haveextensive foreign collections.To use copyright libraries, you willneed to be registered as a reader: this


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Basic skills and techniquesBasic skills and techniquesBasic skills and techniquesBasic skills and techniquesBasic skills and techniques

If you have never researcheda company or marketbefore, you might well

think that there is littleinformation readily availableto the public. Much of it is,indeed, commerciallyconfidential – and companiesgo to considerable lengths tokeep it that way. But enter alibrary or begin searching theWeb and the problem soonbecomes less one of “How doI find out about this or thatcompany?” and more one of“How do I make sense of allthis information?” Confrontedby shelves of reference booksand pages of web sites, it iseasy to feel overwhelmed –and even easier to get lost inthe material which you willquickly manage to unearth.So, before setting out to“catch your hare”, it isworthwhile bearing in mind afew golden rules of research.Corporate Watch, a UK-basedresearch group, has producedan invaluable DIY Guide onresearching companies, whichbegins with some excellentadvice for would-beresearchers:

Know what you wantKnow what you wantKnow what you wantKnow what you wantKnow what you wantBe clear about what kind ofinformation you need for yourcampaign. Beware ofinformation addiction – if youdon’t know exactly what youwant, you can spend hourspicking up reams of“information”, which is all veryinteresting, but in the end no

real use. Maybe even write itdown. List possible researchavenues, plan your time,prioritise and continually re-evaluate progress as you work –to avoid spending all your timegetting over-absorbed in onesource of information.

Don’t be afraid to askDon’t be afraid to askDon’t be afraid to askDon’t be afraid to askDon’t be afraid to asksomeone elsesomeone elsesomeone elsesomeone elsesomeone elseThere are very few companies –or sectors in the world – thatdon’t have some group alreadytracking them. At the start ofyour research, you should scopewhat other researchers andcampaigners have already donethat could be helpful and couldavoid duplication of work.

Look for leadsLook for leadsLook for leadsLook for leadsLook for leadsThroughout your research, looknot just for information itselfbut also for potential furthersources, whether publications,websites and contacts. Askinterviewees for any contactsthey’ve got; follow all linksfrom useful websites; alwayslook through bibliographies andreference lists in the back ofpublications. Look at the sourceof all your information andfollow it (for instance, if thesource was a newspaper ormagazine article, talk to thejournalists, find out where theygot their information.) A lot ofgood stories begin with arumour – “Have you heard thatABC plc does this?” Alwaysfollow these rumours: “Wheredid you hear that?”

Note all referencesNote all referencesNote all referencesNote all referencesNote all referencesThis really is essential. Buy a

note book and use it to logwhere you got yourinformation from – jot downweb site addresses andtelephone numbers inparticular. If later in yourinvestigations you come todoubt some of yourinformation (for example, ifyou get conflicting facts), youneed to be able to check outits reliability. Also, being ableto go back to your sourcesmay give you new leads. Theauthor of The CorporateWatch DIY Research Guide sayshe “goes so far as to logeverything I do during aresearch project, including allnames, ‘phone numbers, anddetails of where I get eachpiece of information. And I’vefrequently been very glad Ido. I also keep photocopiesof all useful paper sources,and printouts of web pages.”There isn’t one single way todo research – as you goalong, you will evolve yourown short cuts, favouritedirectories and web sites, andways of getting information.For example, you willprobably build up your ownweb bookmarks of sites youhave found useful.

SourceSourceSourceSourceSourceHow to research companies –Corporate Watch DIY guide. Theguide can be downloaded fromwww.corporatewatch.org.uk/www.corporatewatch.org.uk/www.corporatewatch.org.uk/www.corporatewatch.org.uk/www.corporatewatch.org.uk/publications/publications/publications/publications/publications/diy_research.htmldiy_research.htmldiy_research.htmldiy_research.htmldiy_research.html

entails filling in a form and convincingthe library’s administration that youwould not be able to find the materialsyou need elsewhere. A letter ofrecommendation from an academicdefinitely helps.

The Bodleian in Oxford and the BritishLibrary in London (and possibly theothers) keep most of their collections instack storage. This means you need togo beforehand to order them up from the

stack, and then come back when they’vearrived; at the British Library, this cantake a couple of days.

4.4.4.4.4. Business libr Business libr Business libr Business libr Business librariesariesariesariesaries

Business libraries are specificallydesigned to meet business needs, sohave excellent collections of businessdirectories, trade journals, companyreports, market guides and otherresources. Almost as useful, however,


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are business studies libraries inuniversities and business sections ofpublic libraries.

Both London and New York have adedicated business library – the CityBusiness Library in London (see Table11, p.153) and the Brooklyn BusinessLibrary in New York(www.brooklynpubliclibrary.org/business/business.htm).

Other business libraries are listed inEuromonitor’s World Directory ofBusiness Information Libraries –although to use this, you’ll need to find alibrary which stocks it. It is held in theBritish Library’s business section, so ifyou have contacts in London, ask them tolook it up for you.

5.5.5.5.5. Specialist libr Specialist libr Specialist libr Specialist libr Specialist librariesariesariesariesariesMany interest groups have speciallibraries. Some trade associations andprofessional institutes (see p.163) haveexcellent libraries on their industries.You may need to be a member to usethem, or you might have to pay for aday’s visit.Other specialist libraries in the UKinclude the library of the National MotorMuseum in Beaulieu (Hampshire) on theauto industry, and the Private FinanceInitiative library in the Treasury – theUK government’s finance department.(See also sectoral research sources, PartSeven, p.177)

HoHoHoHoHow to use librw to use librw to use librw to use librw to use librariesariesariesariesariesStart by asking library assistants whichbook is best for your purposes –librarians are usually keen to help. Orsearch the catalogue by subjectkeywords or by author or publisher (forexample, a company or trade associationmay publish many useful reports). Theremay also be books about the company orits industry. Browsing can yield results –but be careful of getting sidetracked.


UK bUK bUK bUK bUK business and copusiness and copusiness and copusiness and copusiness and copyright libryright libryright libryright libryright librariesariesariesariesaries

City Business LibrCity Business LibrCity Business LibrCity Business LibrCity Business Librarararararyyyyy1 Brewers’ Hall Garden, London EC2V 5BX(nearest tube: Moorgate. The library is betweenLondon Wall and Aldermanbury Square)Open: Monday to Friday 9.30am - 5.00pmExcellent, with a wide range of business directories,some 750 periodicals, 90 daily papers and otherinteresting sources. Its periodicals are cataloguedon the web (along with those at various otherlibraries). The library also offers a fee-basedresearch service.

WWWWWestminster Restminster Restminster Restminster Restminster Refefefefeferererererence Librence Librence Librence Librence Librararararar yyyyy35 St Martin’s Street, London WC2H 7HP (nearesttubes: Leicester Square, Piccadilly Circus and CharingCross).

TTTTTrrrrrade Pade Pade Pade Pade Pararararar tnertnertnertnertners UK Infs UK Infs UK Infs UK Infs UK Infororororormamamamamation Centrtion Centrtion Centrtion Centrtion CentreeeeeRoom 134, Kingsgate House, 66-74 Victoria Street,London SW1E 6SW (nearest tube: Victoria)www.tradepartners.gov.uk/www.tradepartners.gov.uk/www.tradepartners.gov.uk/www.tradepartners.gov.uk/www.tradepartners.gov.uk/information_centre/home/welcome/information_centre/home/welcome/information_centre/home/welcome/information_centre/home/welcome/information_centre/home/welcome/

DeDeDeDeDeparparparparpar tment oftment oftment oftment oftment of TTTTTrrrrrade and Industrade and Industrade and Industrade and Industrade and Industry Libry Libry Libry Libry Librararararar yyyyy1 Victoria Street, London SW1 0ET (nearest tube:Westminster or St James Park)Students must have an appointment and proof ofidentity

British LibrBritish LibrBritish LibrBritish LibrBritish Librararararar yyyyy96 Euston Road, London NW1 2DB(nearest tube: Kings Cross).Catalogue: www.blpc.bl.ukwww.blpc.bl.ukwww.blpc.bl.ukwww.blpc.bl.ukwww.blpc.bl.ukHas a Science, Technology & Business ReadingRoom, plus extensive bookstack. The businessresources in the Science and Business reading roomare on “open shelf” – so you don’t have to waitwhilst books are bought up from the basement. Areader’s ticket is required.

Bodleian LibrBodleian LibrBodleian LibrBodleian LibrBodleian Librararararar y (Oxfy (Oxfy (Oxfy (Oxfy (Oxfororororord Unid Unid Unid Unid Univvvvvererererer sity)sity)sity)sity)sity)Broad Street, Oxford OX1Catalogue: www.bodley.ox.ac.uk/elec-res.htmlwww.bodley.ox.ac.uk/elec-res.htmlwww.bodley.ox.ac.uk/elec-res.htmlwww.bodley.ox.ac.uk/elec-res.htmlwww.bodley.ox.ac.uk/elec-res.html

NaNaNaNaNational Librtional Librtional Librtional Librtional Librararararary ofy ofy ofy ofy of WWWWWalesalesalesalesalesAberystwyth, Ceredigion SY23 3BUCatalogue: geacweb.11gc.org.uk:8000geacweb.11gc.org.uk:8000geacweb.11gc.org.uk:8000geacweb.11gc.org.uk:8000geacweb.11gc.org.uk:8000

NaNaNaNaNational Librtional Librtional Librtional Librtional Librararararar y ofy ofy ofy ofy of Scotland Scotland Scotland Scotland ScotlandGeorge IV Bridge, Edinburgh EH1 1EW.Catalogue: http://main_cat.nls.okhttp://main_cat.nls.okhttp://main_cat.nls.okhttp://main_cat.nls.okhttp://main_cat.nls.ok

CambridgCambridgCambridgCambridgCambridge Unie Unie Unie Unie Univvvvvererererer sity Librsity Librsity Librsity Librsity Librararararar yyyyyWest Road, Cambridge CB3 9DR.Catalogue: www.libcam.ac.uk/Catalogues/www.libcam.ac.uk/Catalogues/www.libcam.ac.uk/Catalogues/www.libcam.ac.uk/Catalogues/www.libcam.ac.uk/Catalogues/OPACOPACOPACOPACOPAC


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THE WEBTHE WEBTHE WEBTHE WEBTHE WEBThe web is becoming an increasinglypowerful tool for research, especiallyfor those who live in the US and othercountries where local telephone callsare not charged.

For those living in the South, however,computers may not be readily availableand, even where they are, on-lineresearch can be expensive andfrustrating, particularly wheretelephone connections are unreliable.

Southern groups without access tocomputers or the resources to undertakeintensive web searches might beadvised to contact partners in the Northto request their support.

TTTTThe danghe danghe danghe danghe dangererererersssssExtra care is needed recording whatyou do with websites, as it’s easy to getlost when “surfing” and forget how yougot there – so noting sources iscritically important. Always note theweb page address (its “URL”) and thedate viewed.

In addition, websites are not enduringlike paper publications – they getchanged and updated from time to time.For this reason, it’s good to print out thepage (make sure the URL is printedwith it – sometimes it isn’t in full if it’stoo long); or to save it on your harddrive and note the URL; or to takecomprehensive notes on everything thatmight be useful.

The other danger – even more than withlibraries – is of getting swamped withinformation. It is very easy to spendmany hours surfing without realising it.

SearSearSearSearSearccccch enginesh enginesh enginesh enginesh enginesBy far the most important tool is yoursearch engine. There are literally

thousands of search engines available,which vary widely, so it’s important touse a good one (and one which suitsyou). Bear in mind that different searchengines “think” differently:consequently, they rank pages indifferent orders, and search in differentways, so it’s sometimes worth tryingmore than one. Some of our favouritesare listed below.

TTTTTypes ofypes ofypes ofypes ofypes of sear sear sear sear searccccchhhhhYou should always read the “searchtips” on how the logic of the searchengine works – this tells you how toenter your search terms.

There are basically three types ofsearch:

1. Random searches1. Random searches1. Random searches1. Random searches1. Random searchesThis involves putting in keyword searchterms and searching the whole web. It isprobably the least fruitful type of search,and it will give you all sorts of webpages, only some of which are of use.But if you’re starting from scratch, it canbe good way of getting some initialinformation and some leads. Judicioususe of keywords can help here – such asthe company name with “pollution” or“prosecution” or “protest”. You willoften get thousands of results. Improveyour searches by using intelligent searchengines or by using Boolean operators(“and”, “or”, “not”) or understanding thelogic your search engine is working to;by using less general words (forexample, the name of a project in whicha company is involved, rather than justthe company’s name); or, if looking for aproject, by using a search engine with an“exact phrase” option.

2. Specific searches2. Specific searches2. Specific searches2. Specific searches2. Specific searchesIf you are looking for a specific report,


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TTTTTried and tested enginesried and tested enginesried and tested enginesried and tested enginesried and tested engines

A number of “portals” offer pages withexcellent reviews of search engines, suchas Business Information on the Internet –

www.dis.strath.ac.uk/businesswww.dis.strath.ac.uk/businesswww.dis.strath.ac.uk/businesswww.dis.strath.ac.uk/businesswww.dis.strath.ac.uk/business. These canbe extremely helpful in pointing you to asearch engine that is most suited to yourneeds. Our favourite search engines are:

GoogleGoogleGoogleGoogleGooglewww.google.comwww.google.comwww.google.comwww.google.comwww.google.comOne of the most “intelligent” in how it rankspages for usefulness – judging pages byhow close your search terms are to eachother, and by how many other sites link tothat page. We find that Google always tendsto get what we really want very high in itslist.It also has two other excellent features:

It holds a “cache” of each page it hasregistered. In other words, if a web pagehas changed (as they often do), Google willshow you how the page looked whenGoogle indexed it.

It allows you to just search a specific site.Write “site:www.[domain name]” after yoursearch terms, and it will just search thatdomain name. Alternatively, use the“advanced search”.Google also allows phrase searching, andBoolean operators (“and”, “or”, “not”). Thesefeatures are explained in the “search tips”and made easy to use on the “advancedsearch” page. In each search result, Googlehas a “similar pages” link, which takes you toother pages containing many of the samewords. Use this if you found a page thatmeets your needs, and you want more likeit. Google works in many differentlanguages.

HotbotHotbotHotbotHotbotHotbotwww.HotBot.comwww.HotBot.comwww.HotBot.comwww.HotBot.comwww.HotBot.comHotbot has many of the same features asGoogle, including Boolean operators, phrasesearch, site search and some languages. It isless intelligent than Google, however, anddoesn’t have the cache or “similar pages”functions. But it does have three usefulfeatures in its advanced search whichGoogle lacks:

It can restrict results to pages modifiedafter, on or before a certain date;

It can search for results containing wordsstemming from some of your search terms(for example, with search term “finance”, itwill also find pages containing “financial”) oruse wildcards;

It can search only for pages linking to aparticular type of web medium (for example,images, video, audio, pdf). Some companies,for example, web-cast their quarterlyfinancial presentations to analysts, and thisfunction could be used to find such audio orvideo content.

DebriefingDebriefingDebriefingDebriefingDebriefingwww.debriefing.comwww.debriefing.comwww.debriefing.comwww.debriefing.comwww.debriefing.comOne of the best search engines that we havecome across. Fast (20 results on “BalfourBeatty” in 0.871 seconds) and with searchresults that are relevant. Described by“Business Information on the Internet” as“Australian metasearch engine that seems . . .to avoid sites which count as ‘noise’ for abusiness search.” The only drawback thatBusiness Information identified was that “itdoes not group by site so you may find allthe selected hits come from the company’sown company sites”. Also has a Frenchversion.

PinstripePinstripePinstripePinstripePinstripewww.pinstripe.opentext.comwww.pinstripe.opentext.comwww.pinstripe.opentext.comwww.pinstripe.opentext.comwww.pinstripe.opentext.comSpecialises in “crawling” business-orientedweb sites, with the database updated everytwo weeks. Sites include businesses on theFortune 1000, Global 500 and Forbes 500lists, as well as sites with content aboutbusiness issues. According to“Searchenginewatch”, “The idea is that thisfocused database will present results moresuited for business users.” Searches can berequested across all sites in the database orjust among sites that belong in particularcategories called “slices.” These categoriesinclude topics such as “Construction” or“Retail Trade.” It is also possible to search forspecific people using the “WhoWhere”facility. All specialty services are available viaa navigation bar at the top of the screen.

NorNorNorNorNor thertherthertherthern Lightn Lightn Lightn Lightn Lightwww.northernlight.comwww.northernlight.comwww.northernlight.comwww.northernlight.comwww.northernlight.comHas particular appeal for researchers becauseit offers access to online versions ofpublished articles. Its Special Collection –over four million full-text articles fromnewspapers, magazines, trade journals, andother sources – provides full citations (andeven abstracts) for free: the full text of thearticle, however, costs $1 to $4. “BusinessInformation on the Internet” rates NorthernLight’s free database as being “good forsearching US government sites”. In addition,Northern Light operates the priced“govsearch” service for US government sites.


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publication or dataset, the Web can beone of the quickest ways of accessing it.If you know the name of the report, orits author, try a specific search – justenter the name of the report.

3. Site searches3. Site searches3. Site searches3. Site searches3. Site searchesSome search engines allow you tosearch specific websites or domains forparticular words or phrases. This canbe fantastically useful, especially forbig sites containing lots of informationand resources, or when a site’s ownbuilt-in search engine isn’t very good.For example, the excellentMultinational Monitor website has apoor search engine – but a site searchof the essential.org domain, using theGoogle search engine, gets much betterresults.

EngEngEngEngEnglish isnlish isnlish isnlish isnlish isn’’’’’tttttthe only language inthe only language inthe only language inthe only language inthe only language inthe wthe wthe wthe wthe worororororld .ld .ld .ld .ld . . . . . . . . . . .Some of the best known search enginesonly trawl English-language baseddatabases. But with Google, ourfavourite search engine, you can set theinterface to be in one of 26 languages –from Chinese (simplified) to Chinese(traditional), Danish, Dutch, English,Finnish, French, German, Italian,Japanese, Korean, Spanish andSwedish. It can display its interface in15 different languages. Use theadvanced search page or consultGoogle’s “Frequently AskedQuestions” page.

Hundreds of other search engines existin other languages. Search enginecolossus – www.searchenginecolossus– provides an international directory ofmore than 1,000 search enginesorganised by country. It can be searchedin the language of the country covered.Beaucoup – www.beaucoup.com – isanother useful megasite, listing more

than 1,200 search engines from aroundthe world.

Filtering softwFiltering softwFiltering softwFiltering softwFiltering softwararararareeeeeYou might consider using a programmeto search several engines at once. Forexample, Copernic filters out duplicatesand downloads the results so that youcan browse them off-line. This meansthat you don’t have to spend valuabletime waiting for each page of yoursearch results to download before youcan read it on screen. You can get thebasic Copernic software off theirwebsite for free fromwww.copernic.com . The latest version,which includes more search engines,costs US $75.

Other tecOther tecOther tecOther tecOther techniqueshniqueshniqueshniqueshniquesMore effective use of the web comeswith practice. But there are two maintechniques for research:

1.1.1.1.1. F F F F Folloolloolloolloollowing linkswing linkswing linkswing linkswing linksMost sites have a links page, and theseare usually worth following (although beselective). Use the “back” key to returnto the site from where you branched off.

2.2.2.2.2. Bookmar Bookmar Bookmar Bookmar BookmarkingkingkingkingkingSome sites are repeatedly useful, suchas financial sites, media sites or searchengines, and as a researcher you willwant to keep coming back to them. Keepa well-organised set of bookmarks forthese.

FFFFFrrrrree trialsee trialsee trialsee trialsee trialsMany of the best business and mediasites on the web charge for theinformation they provide, usually bysubscription, but sometimes by itemdownloaded. Since they are targeted atbusiness, the prices tend to be high. Butalmost all will give you a free trial. Useit wisely.


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THE MEDIATHE MEDIATHE MEDIATHE MEDIATHE MEDIA

3.3.3.3.3. AlterAlterAlterAlterAlternananananatititititivvvvve/campaign mediae/campaign mediae/campaign mediae/campaign mediae/campaign media

This is where you will find criticism ofcompanies by others who’ve done worklike yours. It’s a source not just ofinformation but also of contacts.

Media on the Media on the Media on the Media on the Media on the WWWWWeeeeebbbbbThese days many of the mainnewspapers, and some broadcast media,

TTTTTaaaaabbbbble 13:le 13:le 13:le 13:le 13: Guides and por Guides and por Guides and por Guides and por Guides and por talstalstalstalstals

If you want more ideas on using the web forcompany research, a number of “Guides” tobusiness research using the Internet can now be

downloaded for free: most consist of listings ofuseful sites, but some go further and includehelpful advice on Web-based research. Our advicewould be to download the pages and print themout; that way, you have a paper copy to consult.The following sites have proved particularlyhelpful in filtering out those sites that have less tooffer.

Business InfBusiness InfBusiness InfBusiness InfBusiness Infororororormamamamamation Sourtion Sourtion Sourtion Sourtion Sources on the Interces on the Interces on the Interces on the Interces on the Internetnetnetnetnetwww.dis.strath.ac.uk/businesswww.dis.strath.ac.uk/businesswww.dis.strath.ac.uk/businesswww.dis.strath.ac.uk/businesswww.dis.strath.ac.uk/businessOne of the very best general directories ofinternet business resources, the site has beenrun since 1994 by Sheila Webber, a lecturer atthe Department of Information Science at theUniversity of Strathclyde (Livingstone Tower,Glasgow G1 1XH.) The site, which is checkedroughly every few months, includes pages onsearch engines, sources of advice on searchtechniques, and reviews of hundreds ofbusiness sites.

CEO ExpressCEO ExpressCEO ExpressCEO ExpressCEO Expresswww.ceoexpress.comwww.ceoexpress.comwww.ceoexpress.comwww.ceoexpress.comwww.ceoexpress.com“Designed by a busy executive for busyexecutives”. Click on the tabs across the top ofthe home page to go to specific pages for“Daily news and information” or “Businessresearch”, where you will find links to a host ofuseful sites. For example, “The Daily News”page has links to Business Week, Barrons,Singapore Business Times, Fortune, Forbes andStrategy and Business.

The media are invaluable sources ofnews and historical information on bothcompanies and the sectors in which theyoperate. It’s difficult to beat theFinancial Times for broad andcomprehensible, yet serious andengaged, company information. If you’reinvolved in corporate campaigning, it’sworth reading the FT regularly. The frontof the “Companies and markets” sectionhas an index of the companies coveredin that issue – so you can quickly checkwhether yours is covered.

Other media sources that are most usefulfor researching companies fall into threecategories:

1. Mainstream media1. Mainstream media1. Mainstream media1. Mainstream media1. Mainstream media

Primarily, the broadsheet nationaldailies (for various countries), but alsoweeklies and broadcast media. Localnewspapers can also be useful in areaswhere a company has operations,especially for small and localcompanies.

2.2.2.2.2. TTTTTrrrrrade and financial prade and financial prade and financial prade and financial prade and financial pressessessessess

The trade press consists of magazinespublished for people working inparticular industries and businesssectors. As a result, articles in the tradepress give you far more detailed andspecialised information on companiesthan those in the mainstream media. Forexample, a construction journal willoften tell you what projects a company ischasing or which contracts it has beenawarded; where the sector is heading;what issues people in the sector thinkare important; and so on. It is worthregularly reading at least one tradejournal for the industry on which you’recampaigning.


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are archived on the web: access is oftenfree. Some key, web-based UK mediasources are listed in Table 15, p.160.These archives allow you to search bykey words such as company names,names of directors, names of projects,and key words such as “prosecuted”,“pollution” or “protest”.

You should always read the website’ssearch tips or help page to see how bestto frame your search terms – forexample, whether to write exactphrases or to use Boolean operators orwhether you can use “wildcards”. Somedatabases allow you to sort your resultsby relevance; some let you narrowdown your search by only scanning inthe headlines.

CD-RCD-RCD-RCD-RCD-ROMsOMsOMsOMsOMsMany newspapers and magazines nowmake their archives available on CD-ROMs, which can be found in publiclibraries. If you’re based near such alibrary, using these CD-ROMs may bebetter than using the web, as you cansearch several publications at once.

One of the best is FT McCarthy, whichcontains around 40 titles, including allthe UK broadsheets; the mainnewspaper from each of several majorindustrialised countries; and two UKlocal papers (Birmingham Post andYorkshire Times). There is a copy in theCity Business Library, London (seep.153).

Another good CD-ROM-based archive,although less commonly available, isdialog@carl, which contains many USstate newspapers, plus others fromelsewhere in the world (for example,Asia and Latin America). Try auniversity library for this.

You can also obtain some magazines onCD-ROM, such as New Scientist andthe Times Higher EducationSupplement.

For more specialist material, academicabstracts databases (giving one- or two-paragraph summaries of articles) can beuseful, especially in vocational subjects.These are found in university libraries,although often they require passwordaccess. Try applying for a reader’sticket, or maybe ask a friendly student.

Indexes –Indexes –Indexes –Indexes –Indexes –TTTTThe old-fhe old-fhe old-fhe old-fhe old-fashioned washioned washioned washioned washioned waaaaayyyyyIf you can’t get access to the Web orCD-ROM access, you can use indexes.In the UK, most major newspaperspublish monthly indexes, amalgamatedat the end of each year: you may findthese indexes in a library. Mostimportantly, the indexes will go backmuch further than electronic archives(most media websites only go back toabout 1997/98).

Also available are the indexes whichcover several publications – such as theResearch Index, published by BusinessSurveys Ltd, which covers most of themajor newspapers and magazines,including some trade journals, or the 6-monthly Clover Newspaper Index,which covers the four main UKbroadsheets, plus the Financial Times,The European and the Economist; italso has a company data supplement.Neither of these are comprehensive –for example, they don’t index everysingle article in the papers and journalswhich they cover.

Trade journals often have an index in thefirst issue of the year, covering theprevious year – you could call theeditorial office to ask whether this is thecase. When old editions are bound, anindex is often inserted.

A few alternative media have indexes,although this is more rare.Libraries don’t generally hold more thana couple of years of back issues due to


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limited space. For older newspapers, trythe British Library’s Newspaper Library(Colindale Avenue, London NW9 5HE)or a copyright library.

And failing that –And failing that –And failing that –And failing that –And failing that –the harthe harthe harthe harthe hard wd wd wd wd waaaaayyyyyFor some publications, there are neitherelectronic versions nor indexesavailable – including local papers, somecountries’ national papers, and manytrade and alternative papers. You couldtry calling up the editorial team, whomay be helpful in telling you where tofind a story, or who might search theiroffice archive.

But in most cases, you’ll just have to setaside plenty of time and work your waythrough a pile of journals. Most journalshave contents pages, so you can often getaway with just reading this for eachissue. The contents page often doesn’tcover the news section, so you may wantto skim through this, too. It gets easierwith practice – you learn to scanheadlines; first paragraphs usually give agood sense of whether an article’s likelyto be useful. With practice, you becomeable to scan pages quickly to pick up thevisual shape of words (for example,company names), rather than actuallyreading every word on the page.

Finding trFinding trFinding trFinding trFinding trade jourade jourade jourade jourade journalsnalsnalsnalsnalsEvery industry sector has a large numberof trade journals, of differing degrees ofobscurity. Sometimes, the best way tofind a useful one is to go to a business oruniversity library and browse.Alternatively, try searching the librarycatalogue by subject.

There are only a small number ofcompanies which publish trade journals.Most list the journals they publish ontheir websites, or alternatively you can

‘phone them up, to see what they publishon the industry you’re interested in.Some of these companies are listedbelow.

Most trade associations andprofessional institutes (see “IndustrySources”, p.163) will publish amagazine, journal or newsletter; whilesome just report on the associationitself, others will include generalindustry news.

Another option is to look in Ulrich’sDirectory of Periodicals (published byRR Bowker, 121 Chanlon Road, NewProvidence, NJ 07974, USA), which isa massive listing (5 volumes) of all theperiodicals published in the world,organised by subject. It also tells you

TTTTTaaaaabbbbble 14:le 14:le 14:le 14:le 14: TTTTTrrrrrade jourade jourade jourade jourade journal pubnal pubnal pubnal pubnal publisherlisherlisherlisherlishersssss

The main UK trade journal publishers are:

Reed Business PublishingReed Business PublishingReed Business PublishingReed Business PublishingReed Business Publishingwww.reedbusiness.comwww.reedbusiness.comwww.reedbusiness.comwww.reedbusiness.comwww.reedbusiness.comThe biggest publisher of trade journals, withmany titles.

FT BusinessFT BusinessFT BusinessFT BusinessFT Businesswww.ftbusiness.comwww.ftbusiness.comwww.ftbusiness.comwww.ftbusiness.comwww.ftbusiness.comSpecialist journals on the financial and energysectors.

EMAP Business CommunicationsEMAP Business CommunicationsEMAP Business CommunicationsEMAP Business CommunicationsEMAP Business Communicationswww.emap.comwww.emap.comwww.emap.comwww.emap.comwww.emap.comLarge range of titles; sectors covered include:advertising, automotive, communications,construction and cicil engineering, health care,local government, materials, media, oil and gas,and retail.

HaHaHaHaHaymarymarymarymarymarkkkkket Gret Gret Gret Gret Groupoupoupoupoupwww.haymarketpublishing.co.ukwww.haymarketpublishing.co.ukwww.haymarketpublishing.co.ukwww.haymarketpublishing.co.ukwww.haymarketpublishing.co.ukVarious, including Management Today,Campaign, PR Week and others.

William Reed PublishingWilliam Reed PublishingWilliam Reed PublishingWilliam Reed PublishingWilliam Reed Publishingwww.william-reed.netwww.william-reed.netwww.william-reed.netwww.william-reed.netwww.william-reed.netMainly food and retailing industries.

Hemming GroupHemming GroupHemming GroupHemming GroupHemming Groupwww.h-info.co.ukwww.h-info.co.ukwww.h-info.co.ukwww.h-info.co.ukwww.h-info.co.ukVarious, including Surveyor, International TradeToday and others.


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possibly handle. Narrow it down byselecting the most useful-sounding titles.The directory is also available tosubscribers on the Web –www.ulrichsweb.com . A free trialperiod is offered.

Once you’ve got the title of the journalyou want, browse the on-line cataloguesof copyright, business, university andrelevant specialist libraries and see ifthey hold copies (see “Libraries”,p.151).

AlterAlterAlterAlterAlternananananatititititivvvvve mediae mediae mediae mediae mediaFew alternative media have electronicversions – exceptions includeMultinational Monitor(www.essential.org/monitor/ ) andCorporate Watch(www.corporatewatch.org.uk) orindexes (exceptions are ENDS Report,one of the best journals available onpollution-related issues, and EthicalConsumer).

The best way to search the alternativemedia is via the Ethical ConsumerResearch Association’s CorporateCritic – at www.ethicalconsumer.org/ECnewsite/pages/corp_critic.htm.This is essentially a database ofabstracts, covering all the mainalternative media (over 50publications).

When you type in a search term, it givesyou a list of articles, indicatingcompanies involved, date and nature ofthe criticism (in 15 categories, includingenvironmental pollution, worker rightsand irresponsible marketing).

You can then select from the list, anddownload abstracts, which include fullsource details and a one-paragraphdescription of the article. You then needto get the article yourself, or pay ECRAto send it to you (about £2). A one-offlifetime subscription costs £60; getting

The GuardianThe GuardianThe GuardianThe GuardianThe Guardianhttp://www.guardianunlimited.co.uk/http://www.guardianunlimited.co.uk/http://www.guardianunlimited.co.uk/http://www.guardianunlimited.co.uk/http://www.guardianunlimited.co.uk/Select “search the archive” from pull-down menuat top of page. Archive goes back to September1998 (Guardian and Observer). Allows Booleanoperators.

BBC NewsBBC NewsBBC NewsBBC NewsBBC Newshttp://news.bbc.co.uk/http://news.bbc.co.uk/http://news.bbc.co.uk/http://news.bbc.co.uk/http://news.bbc.co.uk/Click <advanced search options> in top right ofpage. Taken from the BBC’s World Service, sohas good international coverage and generallyquite good depth. Goes back to November 1997.Allows Boolean operators and wildcards in itsadvanced search option.

Financial TimesFinancial TimesFinancial TimesFinancial TimesFinancial Timeshttp://globalarchive.ft.com/globalarchive/http://globalarchive.ft.com/globalarchive/http://globalarchive.ft.com/globalarchive/http://globalarchive.ft.com/globalarchive/http://globalarchive.ft.com/globalarchive/This site has recently been upgraded, and allowsyou to search over 2,000 publications, includingnewspapers from around the world and a goodselection of trade journals. This will often giveyou too many results to be useful; you can narrowdown the range of publications (includingsearching only the FT), and you can select a precisedate range. You view headlines of the articles itfinds 10 at a time, then select the ones you wantand retrieve them. The interface is somewhatclumsy, and often it will tell you it is unable toperform a particular search. Usually simply clickingthe “back” button and doing exactly the sameagain is successful. The search terms are notbrilliant, in that Boolean operators are not allowed(although it does have an “exact phrase” option);but it remains one of the best free resourcesavailable.

DailDailDailDailDaily y y y y TTTTTeleeleeleeleelegggggrrrrraaaaaphphphphphwww.telegraph.co.ukwww.telegraph.co.ukwww.telegraph.co.ukwww.telegraph.co.ukwww.telegraph.co.ukClick <search> at top of page. Goes back to1994. Doesn’t have Boolean operators. Can searchon a particular date, or more usefully a month oryear. It lists all articles that match any of yoursearch terms, starting with those that match allof them – these score 100%. This search facility ismore opaque than some others.

The TimesThe TimesThe TimesThe TimesThe Timeswww.thetimes.co.ukwww.thetimes.co.ukwww.thetimes.co.ukwww.thetimes.co.ukwww.thetimes.co.ukClick <search> at bottom of page. Can searchback to October 1999. Can specify a date range.Allows the ‘AND’ Boolean operator. Also has anunsearchable archive back to January 1996 (youneed to specify exact date).

which country they’re published in. Youshould be able to find it in the referencesection of a library. The directory willgive you some really obscure journals,probably far more than you can

TTTTTaaaaabbbbble 15:le 15:le 15:le 15:le 15: UK Pr UK Pr UK Pr UK Pr UK Press daess daess daess daess datatatatatabases on the bases on the bases on the bases on the bases on the WWWWWeeeeebbbbb


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the initial list is free, but you have to pay£0.75 per abstract you download.

PrPrPrPrPress daess daess daess daess datatatatatabasesbasesbasesbasesbasesThe most powerful press resources ofall are online press databases (for theUK press, see Table 15, p.160),allowing you to search electronicallyvast chunks of the media – for a fee.

There is one free such service – theglobal archive of the Financial Times(www.ft.com). This can be very useful,although it is rather inferior to payingservices.

The best online database we have foundis Reuters Business Briefing –www.briefing.reuters.com. It coversover 6,000 publications in 10 differentlanguages, including all major nationalpress from around the world, some localpress and an excellent collection oftrade press. The search options are verysophisticated, allowing Booleanoperators (“and”, “or”, “not”), includingbracketing; it also allows “wildcards”.

You can specify an exact date range,countries you want to search in andpublications you want to search (orpublications grouped by the industrysector they cover). You can also narrowdown your search by specifying howearly in an article a search term shouldappear, or whether it should appear inthe same sentence or in the sameparagraph.

The downside is that it is veryexpensive – a minimum of £6,000 for ayear (+ VAT), for 20 hours per monthonline time. But they do give a two-week free trial – call sales on Tel: 0207542 5455.

The other downside is “informationoverload”, as you can retrieve vastnumbers of articles. You need to chooseyour search terms well: if it returnsmore than about 200 headlines, try tonarrow your search more. Another trickis to minimise your online time – printout all retrieved headlines, save alldownloaded articles, then log out andread them off-line.


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COMPCOMPCOMPCOMPCOMPANY ANY ANY ANY ANY ANDANDANDANDANDINDUSTRINDUSTRINDUSTRINDUSTRINDUSTRYYYYYSOURSOURSOURSOURSOURCESCESCESCESCES

industry; services includeinformation, professionalqualifications and accreditation,conferences, training and others.

3.3.3.3.3. TTTTTrrrrrade jourade jourade jourade jourade journalsnalsnalsnalsnalsMagazines which focus on aparticular industry. For a listing oftrade journal publishers, see p.159.

4.4.4.4.4. Mar Mar Mar Mar Markkkkket ret ret ret ret researesearesearesearesearccccchhhhhGuides to how a sector works,including: the main companiesinvolved and their market shares;breakdown of the importance ofdifferent chunks of the markets;future prospects; major issues facingthe sector and so on. As such, theycan be extremely useful in getting toknow an industry and thecompetitive positions of itscompanies.

5. Directories and websites5. Directories and websites5. Directories and websites5. Directories and websites5. Directories and websitesThese range from simple listings ofcontact details for companies in asector to quite detailed guides,which may also give: information onwhat goods and services companiesprovide; financial details; marketshares; breakdown of companies’markets by geographical area orbusiness activity; directors; advisersand service providers; companyhistories; and current issues. In fact,directories and websites are such animportant source of information thatwe have given them their ownsection, see p.151 and p.154.

6.6.6.6.6. TTTTTrrrrrade associaade associaade associaade associaade associations andtions andtions andtions andtions and

Information is playing an increasinglykey role in business, and each industrysector has its own sources ofinformation which people in theindustry rely on from day to day. Manyof these are accessible to the corporateresearcher, too.

The six main industry-derived sourcesof information on companies andbusiness sectors are listed below,followed by details on where to go forinformation. For listings on specificsectors, see Part Seven, p.177.

1.1.1.1.1. Compan Compan Compan Compan Company anny anny anny anny annual rual rual rual rual reeeeeporporporporpor ts andts andts andts andts andwebsiteswebsiteswebsiteswebsiteswebsitesThese are an invaluable source of basicinformation on a company – from thecompany’s point of view. To find outhow to access them, see p.126.

2.2.2.2.2. TTTTTrrrrrade associaade associaade associaade associaade associationstionstionstionstionsThese are organisations whosemembers are the companies in anindustry; they exist to serve theirmembers through information provision,technical advice, setting of industrystandards, lobbying, publiccommunications and other services. Allindustries have at least one tradeassociation, as do some small andobscure sectors of industries; there arealso associations for companies withinterest in a particular issue ofrelevance to their industry.

3. Professional institutes3. Professional institutes3. Professional institutes3. Professional institutes3. Professional institutesIn contrast, these organisations’members are the people who work in an


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professional institutesprofessional institutesprofessional institutesprofessional institutesprofessional institutes

Many industry bodies have libraries,which can be invaluable for theirspecialist focus – assuming you canpersuade them to let you in. Some willcharge you for use of their library. Theorganisations often also haveinformation services, whereby you can‘phone up for statistics, market data orother information they have to hand –although they will generally charge youif you need more of their time than justspeaking on the ‘phone. Perhaps mostusefully, you can ask these informationdepartments for advice on how to doyour research, pointers to goodwebsites, directories, journals andlibraries. Trade association employeesgenerally have an excellent knowledgeof their industry (see “Interviews”,p.173). Many trade associations alsopublish their own journals andnewsletters.

In the case of professional institutes, youmight even consider joining. Of course,institutes vary in the toughness of theirmembership criteria, but it has beendone. Some offer reduced membershiprates for students.

You can find the trade association andprofessional institute for the industryyou’re tracking by using listings eitheron the web or in directories in thereference section of most libraries.Directories tend to have subject indexesin the back.

MarMarMarMarMarkkkkket ret ret ret ret researesearesearesearesearccccchhhhhMarket research companies tend topublish reports regularly, often monthly,covering a different sector or sectorseach time. Some are published in journalformat and then bound – in which caseyou need to look through the index of themost recent, which will point youtowards the issue you need. Others comeas whole reports on particular sectors,

updated at intervals of a few years.

Buying market research reports tends tobe prohibitively expensive; manylibraries, however, have marketresearch sections, which are well worthbrowsing. The British Library’s (in thebusiness section) is especially good.Even local libraries often hold marketresearch in their business section, butthe reports they hold tend to deal withless industrialised, less capital-intensive sectors since they are there to

TTTTTaaaaabbbbble 16:le 16:le 16:le 16:le 16: TTTTTrrrrrade associaade associaade associaade associaade associationstionstionstionstions

For UK and US trade associations, the followingweb sites and directories are particularly

helpful:

TTTTTrrrrrade ade ade ade ade AssociaAssociaAssociaAssociaAssociation Ftion Ftion Ftion Ftion Forororororumumumumumwww.martex.co.uk/taf/index.htmwww.martex.co.uk/taf/index.htmwww.martex.co.uk/taf/index.htmwww.martex.co.uk/taf/index.htmwww.martex.co.uk/taf/index.htmSearch by UK industry or by association name

TTTTTrrrrrade ade ade ade ade AssociaAssociaAssociaAssociaAssociations and Prtions and Prtions and Prtions and Prtions and Profofofofofessional Bodies ofessional Bodies ofessional Bodies ofessional Bodies ofessional Bodies ofthe United Kingdomthe United Kingdomthe United Kingdomthe United Kingdomthe United Kingdom

Graham & Whiteside, 5-6 Francis Grove, LondonSW19 4DT. Tel: 0208 947 1011

DirDirDirDirDirectorectorectorectorectory ofy ofy ofy ofy of British British British British British AssociaAssociaAssociaAssociaAssociationstionstionstionstionsCBD Research, Chancery House, 15 Wickham Road,Beckenham, Kent. Tel: 0208 650 7745

Gateway to AssociationsGateway to AssociationsGateway to AssociationsGateway to AssociationsGateway to Associationshttp://info.asaenet.org/gateway/http://info.asaenet.org/gateway/http://info.asaenet.org/gateway/http://info.asaenet.org/gateway/http://info.asaenet.org/gateway/OnlineAssocSlist.htmlOnlineAssocSlist.htmlOnlineAssocSlist.htmlOnlineAssocSlist.htmlOnlineAssocSlist.htmlSearch by US industry, state or city; it’s worthalso trying various search terms in the searchbox for the organisation’s name.

International directories inevitably are lesscomprehensive. But try:

Encyclopedia of AssociationsEncyclopedia of AssociationsEncyclopedia of AssociationsEncyclopedia of AssociationsEncyclopedia of AssociationsGale Group, 27500 Drake Road, Farmington Hills,MI, USA.In 3 volumes

WWWWWororororor ld Guide to ld Guide to ld Guide to ld Guide to ld Guide to TTTTTrrrrrade ade ade ade ade AssociaAssociaAssociaAssociaAssociationstionstionstionstionsKG Saur, Ortlerstrasse 8, D-81373 Munich,Germany.

DirDirDirDirDirectorectorectorectorectory ofy ofy ofy ofy of Eur Eur Eur Eur European Industropean Industropean Industropean Industropean Industry and y and y and y and y and TTTTTrrrrradeadeadeadeadeAssociationsAssociationsAssociationsAssociationsAssociations

CBD Research, Chancery House, 15 Wickham Road,Beckenham, Kent. Tel: 0208 650 7745


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help local businesses. The marketresearch reports most commonly heldby UK libraries are those published byKeynote (see below). Photocopying ofmarket research is generally prohibitedunder copyright.

Many publishers of market research listtheir titles on their websites, includingcontents pages in some cases – althoughyou’ll still have to find the reports in alibrary once you’ve got their titles.For the UK, two important publishersare Keynote – www.keynote.co.uk –and Mintel – www.mintel.co.uk . Bothcover British markets. Mintel alsopublishes useful industrial reports, aswell as market intelligence reports.For coverage outside the UK, check outMarket Research Europe and MarketResearch International –www.marketresearch.com and http://db2-rev.ecnext.com/. These cover bothinternational markets and marketswithin individual countries.Euromonitor – www.euromonitor.com– also reports on both international and

country-specific markets.Market research is also carried out bytrade associations, banks and otherservice companies (this, too, is usuallyexpensive – although you can trylibraries).Some governments carry out marketresearch (for example, the USDepartment of Agriculture, see“Sectoral Resources”, p.175), althoughthis tends not to list company names butto discuss markets and countriesgenerally. These reports are usuallyavailable free online.

One fairly good government resource isStrategis – http://strategis.ic.gc.ca/SSG/bi18355e.html. This is a websiteof Industry Canada (the trade andindustry ministry), which searches USDepartment of Commerce marketresearch reports. You can select acountry or region and sector, and it givesyou a list of reports available. Marketassessment and competitive situationreports tend to be the most useful. Bothgive qualitative descriptions of markets.


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GOGOGOGOGOVERNMENTVERNMENTVERNMENTVERNMENTVERNMENTSOURSOURSOURSOURSOURCESCESCESCESCESWhile companies are often quitesecretive about their business, theculture of government and the publicsector (at least in Europe and NorthAmerica) is often much more open.

A number of government departmentshave regular dealings with companiesand hold useful information. Theseinclude:

CompanCompanCompanCompanCompany ry ry ry ry reeeeegistrgistrgistrgistrgistrarararararsssssThe government agencies wherecompanies legally are obliged to submittheir documents of incorporation, annualaccounts, directorships and corporategovernance information. They areusually connected with the governmenttrade or enterprise department.

RRRRReeeeegulagulagulagulagulatortortortortorsssssThe government agencies which track,monitor and enforce standards ofcorporate behaviour – for example, onenvironmental impact, workplace safetyand anti-competitiveness.

Sponsoring deSponsoring deSponsoring deSponsoring deSponsoring deparparparparpar tmentstmentstmentstmentstmentsThe government departments whichwork most closely with particularindustries, providing them with theirmain route into government, consultingwith them on new legislation andsupporting inter-companycommunication. Obvious examples aregovernment departments coveringagriculture, energy, finance and health.Trade and industry departments tend tobe the catch-all for most other industries;in the UK, the Department of theEnvironment is also the sponsoringdepartment for the construction industry.For the researcher, these departmentscan be used much like trade associations

– for advice, information, publicationsand libraries.

StaStaStaStaStatistics detistics detistics detistics detistics deparparparparpar tmentstmentstmentstmentstmentsAll governments have statisticaldepartments, producing data especiallyon their own countries, but also on tradeand markets.

PPPPPararararar liamentliamentliamentliamentliamentIn theory at least, governments areaccountable to the bodies of electedrepresentatives. While in practice theelected bodies themselves haverelatively little power, their monitoringrole is generally carried out seriously(in OECD countries, at least), and assuch they are a useful source ofinformation.

QuangosQuangosQuangosQuangosQuangosPublic sector bodies, which areanswerable to particular governmentdepartments. There are three types:advisory committees, nationalisedindustries and executive agencies(including regulators, funding agenciesand the like). Some quangos can beuseful for information on the industrythey relate to. The UK has severalhundred, listed at www.cabinet-office.gov.uk/quango/

Using companyUsing companyUsing companyUsing companyUsing companyrrrrreeeeegistrgistrgistrgistrgistrarararararsssssIn the UK, companies register atCompanies House, which is anexecutive agency of the Department ofTrade and Industry. Various informationis recorded, including lists ofshareholders; annual accounts; details ofspecial financial transactions; lists ofdirectors (and their home addresses andother directorships); and, in some cases,a short text report on the company’sactivities (with the accounts).

Companies House will only give you


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information on companies registered inthe UK – but not on overseas parents orsubsidiaries. (In contrast to SEC, wherethe 20-F and 6-K forms are required byforeign companies with operations orsubsidiaries in the US). But the filingrequirements apply to all companies,regardless of their size or type. Smallerand private companies tend to give lessinformation than larger and public ones.

You will need to know the company’sprecise registered name. While you canchoose at Companies House from analphabetical list, this does not tell youthe name of a company’s parentcompany or its various subsidiaries. Werecommend looking these up in adirectory such as Who Owns Whombeforehand (see p.137).

Companies House has branches inBirmingham, Glasgow, Leeds, London,Manchester, Cardiff and Edinburgh. It isopen Monday to Friday, 9am to 5pm.The general enquiries telephone numberis 02920 380 301. The staff will showyou how the computer terminals work.To print out all directors and their homeaddresses cost £1. Other documentscost £2.50, plus 10p per sheet (or £3.50maximum). You can get a full set ofrecords on microfiche for £5, but youwill have to wait overnight for this.Microfiche reader-machines can befound in most libraries. CompaniesHouse will also post you information,but there is an extra charge for this.

Alternatively, you can use CompaniesHouse on the web at www.companies-house.gov.uk . This service isavailable Monday to Friday, 7am to10pm UK time. Click on <companyinformation>, then <company names +address index + chargeabledocuments>. Write the name of thecompany you’re interested in, and youwill be taken to the relevant place on analphabetical list. Select the company byclicking on the number on the left-handside of the screen. Click the <order>button, and you will be shown the

available documents on that company.These are generally the latest annualaccounts (£4), the latest annual return(£4) and the directors’ report (£2.50). Inour view, the accounts tend to be themost useful, and sometimes the annualreturn. If you get stuck, there is a <help>button at each stage of the search andorder process.

EuropeEuropeEuropeEuropeEuropeThere is a list of contact details of someof the other European counties’ companyregistrars on the European BusinessRegister (EBR) site at www.ebr.org/partner.htm – covering 12 countries(but not UK). If you are based in one ofthese countries, you can use the EBRservice via your own country’s registrarto access information held by the otherEBR members.

United StatesUnited StatesUnited StatesUnited StatesUnited StatesIn the US, all companies with over $10million of assets and over 500shareholders (or more precisely, holdersof a particular type of share) are legallyobliged to register with the Securitiesand Exchange Commission (SEC). Theyhave to give quite substantial (anduseful) information, and most of it isavailable for free over the web. (Thisapplies to records filed since May 1996,when electronic filing becamecompulsory for all publicly-tradedcompanies, following intensive lobbyingby consumer activist Jamie Love).

In fact, SEC filings rate as one of the topsources for the corporate researcher.

The official website to access thismaterial is EDGAR –www.freeedgar.com . While it’s nowfairly easy to get into the database andenter search terms, the results tend to bequite bewildering. There are manydifferent types of forms filed at SEC,and EDGAR lists them by their formcodes: you have to look up separatelywhat these all mean. But once you know


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your way around, it’s an extremelypowerful resource. A full list anddescription of the various forms is givenat www.sec.gov/info/edgar/forms.htm .The most useful ones are:

10-K10-K10-K10-K10-KThe company’s annual report. This islegally required to include the followinginformation:

description of the company’s businessareas, both financial data (covering 5years) and narrative, including “directionof travel”, geographical breakdown andbreakdown by business segments;

location and general character of theprincipal plants, mines and other assets;

details of all court proceedings thecompany is involved in, those which arepending, or even are “known to becontemplated”, both civil and criminal –in particular, environmental or anti-trustcases against the company;

full and balanced discussion bycompany managers of the financial stateof the company;

assessments of market risk;list of directors, executives and main

managers (and salaries of executives).

The requirements are described in detailat www4.law.cornell.edu/cfr/17p229.htm

10-Q10-Q10-Q10-Q10-QThe quarterly (less-detailed) update to10-K

8-K8-K8-K8-K8-KThe occasional update to 10-K whenimportant details change or events occur.(An SB suffix to any of these indicates asmall-business version of the same).

13-F13-F13-F13-F13-FList of holdings in the company by thetop institutional investors. These can bein alphabetical order – which is obviouslyless convenient (or more tedious) than inorder of size of holding. Be careful asmany institutions are large assetmanagers and hold stock for theirinstitutional clients in “street name”.

20-F20-F20-F20-F20-FAnnual report for foreign companies.

40-F40-F40-F40-F40-FAnnual report for Canadian companies.

Using SEC disclosure requirements to challenge companiesUsing SEC disclosure requirements to challenge companiesUsing SEC disclosure requirements to challenge companiesUsing SEC disclosure requirements to challenge companiesUsing SEC disclosure requirements to challenge companies

The US Securities andExchange Commission(SEC), not only provides

useful information oncompanies (see p.167), it isalso a means to challengecompanies. Under the SECregulations, companies areobliged to disclose anymaterial information – fromnew legislation that mightimpinge upon the company’smarkets to court proceedingsagainst the company – thatmight affect shareholdervalue.

Where campaigners find thatthe company has failed todisclose such risks, they canchallenge the company’s SECfiling by writing to Mr. RichardWalker, Director, Division of

Enforcement, Securities andExchange Commission, 450 5thStreet N.W., Washington, DC.20549-0801.

Friends of the Earth, in May2000, challenged the AnnualReport filed by the US parentcompany of the ScottsCompany (UK) Ltd, whichextracts peat from fourpeatlands in the UK.

The three largest of these sites(Thorne Moor, Hatfield Moorand Wedholme Flow) are shortlyto receive formal designation asprotected areas (Special Areasof Conservation) under the EU’sHabitats Directive. As a result,Scotts’ peat extraction activitieswould almost certainly behalted. Scotts is alleged to have

strenuously resisted the newregulation.Scotts’ SEC filings sinceAugust 2000 make no specificreference to UK regulations,nor to the Habitats Directive.In a letter to the SEC, FOEargued that the company’s“failure to disclose risksassociated with new andsignificant regulation of itspeat extraction activities inthe UK” represents “a materialomission” that violates SECrules and “deprivesshareholders of informationneeded to appraise the qualityof management”.FOE is pressing the SEC toinvestigate Scotts’ allegeddisclosure failure and “toenforce its rules”.


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6-K6-K6-K6-K6-KUpdate to annual report for foreigncompanies (equivalent to 8-K for UScompanies).

An alternative to the EDGAR site iswww.secinfo.com, an independent (non-SEC) site containing information fromSEC filings, which claims to be betterthan EDGAR. In some cases, it listsmore documents under a company (or atleast, makes it easier to find them), andhelpfully reminds you what each of theform-codes means. The hardest part,however, is getting in there. From thehomepage, enter a search term (usually acompany name), and it will match thiswith possible entries. Select thecompany you’re interested in, and in thenext screen, if possible, take it as aregistrant (rather than just as a groupmember). This gives you a list of filings– click on the company name. Finally,you get a list of documents. Select theone you’re interested in.

Finding yFinding yFinding yFinding yFinding your wour wour wour wour waaaaayyyyyarararararound gound gound gound gound gooooovvvvvererererernmentnmentnmentnmentnment

Making sense of the governmentmachine, and making use of itsresources, has become considerablyeasier with the arrival of the Web.

Many governments tend to have generalhomepages for all parts of government,from which you can access the separatewebsites of the various departments andagencies. A good starting point is themain entry point into the UK governmentwww.open.gov.uk . (Ironically, one ofits best pages is the <Explore USGovernment web sites> link.)

For the UK, there’s alsowww.ukstate.com – this is much lesscomprehensive, and less logicallystructured, than www.open.gov.uk, andhas more of a magazine-type format. It’s

Regulators only deal with their own countries –they do not comment on what acompany does abroad. There are, of course,

many regulators in each country. Here are a fewwhich can be useful information sources:

Health and Safety Executive (UK)Health and Safety Executive (UK)Health and Safety Executive (UK)Health and Safety Executive (UK)Health and Safety Executive (UK)www.hse.gov.ukwww.hse.gov.ukwww.hse.gov.ukwww.hse.gov.ukwww.hse.gov.ukAlthough HSE has generally tended to preferconstructive engagement with offendingcompanies rather than prosecution, in 1999 itbegan listing its prosecutions on the web atwww.hse-databases.co.uk/prosecutions/www.hse-databases.co.uk/prosecutions/www.hse-databases.co.uk/prosecutions/www.hse-databases.co.uk/prosecutions/www.hse-databases.co.uk/prosecutions/

Environment Agency (UK)Environment Agency (UK)Environment Agency (UK)Environment Agency (UK)Environment Agency (UK)www.environment-agency.gov.ukwww.environment-agency.gov.ukwww.environment-agency.gov.ukwww.environment-agency.gov.ukwww.environment-agency.gov.ukThe EA, too, has recently adopted a policy ofpublishing company names – this time of bothsaints and sinners. See the 1999 report(published July 2000) at www.environment-www.environment-www.environment-www.environment-www.environment-agency.gov.uk/envinfo/spotlight/agency.gov.uk/envinfo/spotlight/agency.gov.uk/envinfo/spotlight/agency.gov.uk/envinfo/spotlight/agency.gov.uk/envinfo/spotlight/spotrep.pdf.spotrep.pdf.spotrep.pdf.spotrep.pdf.spotrep.pdf. Prosecutions are also press-released by the agency.

OccupaOccupaOccupaOccupaOccupational Health and Saftional Health and Saftional Health and Saftional Health and Saftional Health and Safety ety ety ety ety AdministrAdministrAdministrAdministrAdministraaaaationtiontiontiontion(USA)(USA)(USA)(USA)(USA)

www.osha.govwww.osha.govwww.osha.govwww.osha.govwww.osha.govThe website has a page of data on inspectionscarried out by the OSHA, and recordedaccidents, which you can search by companyname (“establishment”) or by industry (using theSIC (standard industrial classification) code –there is a link to help you find the SIC youwant). Accidents have short descriptions ofwhat happened. Search results are presented ina table, including a column for the number ofviolations discovered; but there is no qualitativeinformation, and no description of offences(beyond broad categories), so it can besomewhat opaque. Perhaps the best way to useit is as a starting point, to find out whenviolations occurred, and then to searchelsewhere for more detail on these.

European Commission Competition RegulationEuropean Commission Competition RegulationEuropean Commission Competition RegulationEuropean Commission Competition RegulationEuropean Commission Competition Regulationhttp://europa.eu.int/comm/competition/http://europa.eu.int/comm/competition/http://europa.eu.int/comm/competition/http://europa.eu.int/comm/competition/http://europa.eu.int/comm/competition/The most useful part is the mergers section,which studies market share and market powerof companies involved in major mergers. If acompany you are interested in has beeninvolved in a recent merger or acquisition, thissite can give you useful market intelligence onthat company, in those markets relevant to themerger. Click the <cases> link, and search bycompany name. Also of possible use is the anti-trust cases section, although there’s not asimilar easy way to search this.


RRRRReeeeegulagulagulagulagulatortortortortory ay ay ay ay agggggencies on the encies on the encies on the encies on the encies on the WWWWWeeeeebbbbb


169169169169169

good if you find www.open.gov.uk toobig or bewildering, and so can be moreuser-friendly, but it won’t give you thesame level of detail. The Cabinet Office(www.cabinet-office.gov.uk) is thedepartment which overseas the rest ofgovernment, and has some guides whichmay help you understand how it allworks.

For the US, a guide to the government ispublished by the National TechnicalInformation Service, part of the USDepartment of Commerce. US BusinessAdvisor (www.business.gov) is a guideto the US government for companies.Especially handy is the <agencies andgateways> button, which gives a betterlisting than the fedworld site. You mayalso find useful www.whitehouse.gov

Another way into US Government is theFederal Web Locator (www.infoctr.edu/fwl/), produced by The Center forInformation Law and Policy, or the USFederal Government Agencies Directory(www.lib.lsu.edu/gov/fedgov.html). Andif you still need guidance, or can’t findwhat you’re looking for, try Greg Notess’book, Government Information on theInternet (published by Bernan, LanhamMD) or see www.notess.com/write/gioti/), which has over 4,800 entries.

RRRRReeeeegulagulagulagulagulatortortortortorsssssRegulators exist to ensure that companiescomply with the law, and also toimprove companies’ standards (inparticular, in relation to their externalcosts). This may be done through:

a requirement for the regulator’sapproval for a course of action by acompany – for example, mergers andacquisitions in competition regulation;

control of licences, quotas andallowances – for example, in pollutionregulation (licences to release chemicalsinto the environment) and agriculturalseed regulation;

on-going monitoring of the industry –

for example, regulation of utilitymonopolies.

On top of these ongoing roles, mostregulators have a power to investigatereported breaches of the rules, and toprosecute offenders. But manyregulators now prefer to workconstructively with companies toachieve improvements, rather than topunish law breaking; so treat withcaution any apparent clean bill of health.Still, most will prosecute in seriouscases.

All of this can give you a useful insightinto a company’s record – and somefacts to use in your arguments.Regulators often require the companieswhich they regulate to publish operatingand financial information, which youmay find also useful.

Getting infGetting infGetting infGetting infGetting infororororormamamamamationtiontiontiontionfrfrfrfrfrom gom gom gom gom gooooovvvvvererererernmentnmentnmentnmentnmentdededededeparparparparpar tments andtments andtments andtments andtments andquangosquangosquangosquangosquangosGovernment departments and agenciesare an often neglected source ofinformation. In particular, individualstaff members know a huge amountabout their specialist industry – and aregenerally far more willing to talk andadvise you than those working in theindustry itself. It’s well worth getting onthe ‘phone to them.

The best way to find these people in theUK is from the Civil Service Yearbook,published annually by the CabinetOffice, which should be in thegovernment or reference section of anygood local library. Alternatively, youcould try the “about” section of thedepartment’s website, or its annualreport, or published departmentalguides.


170170170170170

Many government departments have“public inquiry units”, whose role isspecifically to answer your questions,and help you make use of thedepartment. They will either answeryour questions themselves, or tell youwho the departmental expert is.

Government departments also havelibraries, which may or may not beaccessible to the public. These holdmany of the specialist journals andpublications on an industry that youwon’t find elsewhere.

Sponsoring departments serve acoordinating role for their industries, sopublish some industry guides which youmay find useful.

Trade, industry and commercedepartments, and also export agencies,provide guides for exporters, whichmay give useful information on foreigncountries and their markets. In somecases, they also give detailed risk andeconomic analysis on projects,including investment details, in theagriculture, chemicals, construction,mining and water supply sectors.

Examples are the UK Department ofTrade and Industry, the US Departmentof Commerce and the US OverseasPrivate Investment Corporation.

Sometimes, the government issues pressreleases relating to an industry. All UKgovernment press releases are availablevia the Central Office of Information.Go to www.nds.coi.gov.uk/coi/coipress.nsf , which you can search bydepartment / organisation, date andkeywords.As well as regulators, quangos includefunding agencies (for example, researchcouncils) and advisory committees(many of whose discussions will be onsubjects of interest to the corporateresearcher). There are over 800 in theUK, listed with contact details atwww.cabinet-office.gov.uk/quango/.Some quangos have extensive websitesof their own; some have reports on thesites of their coordinating departments;others you will have to ‘phone to gettheir publications. Being “quasi-autonomous”, quangos can be moresecretive than direct parts ofgovernment.


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PPPPPARLIAMENTSARLIAMENTSARLIAMENTSARLIAMENTSARLIAMENTSrepresentative to ask questions of agovernment department, either formallyin parliament, or via personal letter.Whereas many government departmentswill not respond to your letters, it isyour representative’s job to make sure areply gets to you.

Members of parliaments who are notyour representative but who aresympathetic to your issue may also bewilling to help. You can then ask themeither to put a question to a department,or to provide you with information fromthe parliamentary library or from theother extensive resources available tothem.

Find sympathetic members by searchingparliamentary debates to see who hasspoken on your issue. UK Members ofParliament (MPs) are listed, togetherwith some details on their interests, atwww.parliament.uk/commons/cminfo.htm . The names of USCongressional representatives can befound at www.house.gov/house/MemberWWW.html .

In the UK, Members of Parliament arealso entitled to put private motions,called early day motions (EDMs).Although these don’t feed directly intothe legislative process, they are a usefulgauge of support, and can be used topublicise an issue. They are also a goodway of identifying sympatheticmembers. EDMs and their signatoriesare listed at http://edm.ais.co.uk/

Several parliaments also have their ownresearch services. In the US, the resultsof congressional investigations arepublished: these can be extremelyvaluable sources of information. Thereports can be obtained from theCongressional Information Service –www.cispubs.com .

The published notes of parliamentarydebates consume reams and reams ofpaper. In the UK, Hansard (the officialrecord of the UK parliament’sproceedings) includes debates in theHouse of Commons and the House ofLords; verbal and written questions toministers and their answers; andcommittee discussions. These can nowbe accessed on the web, atwww.parliament.the-stationery-office.co.uk/pa/cm/cmhansrd.htm .

There is a good search page atwww.parliament.the-stationery-office.co.uk/cgi-bin/empower?DB=ukparl , where you cansearch the whole record, or just bits ofit. For example, if you are looking for aparliamentary question, you can specifydate ranges or the name of the MP whoasked it.

Most parliaments have a number ofcommittees specialising on particularissues, or monitoring the policies andactions of particular departments. Thesecommittees carry out investigations,usually by calling for submissions fromcompanies, organisations andindividuals, and then cross-examiningthem. Witnesses from industry are oftensubjected to intense questioning andtheir answers can be more revealingthan, say, newspaper interviews.

Many countries now make the reports ofparliamentary committees available onthe Web. The UK House of Commons’select committees are listed atwww.parliament.uk/commons/selcom/cmsel.htm . US Congress committeesare listed at www.house.gov/house/CommitteeWWW.html .

Individual members of parliament alsoundertake research on their own behalf.You can ask your own elected


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STSTSTSTSTAAAAATISTICAL SOURTISTICAL SOURTISTICAL SOURTISTICAL SOURTISTICAL SOURCESCESCESCESCES

TTTTThe he he he he WWWWWororororor ld Bankld Bankld Bankld Bankld Bankwww.worldbank.orgwww.worldbank.orgwww.worldbank.orgwww.worldbank.orgwww.worldbank.orgThis is one of the most-used and accessible sourcesof national statistics for countries around the world.The areas of data covered for each country tend to bedevelopment-focused, whether economics and tradeor social development (for example, health). Financialinstitutions – and for that matter most mainstreamorganisations – consider the World Bank to be theauthority on development. Using its figures can bepersuasive, but be careful if you’re trying to get anaccurate picture for yourself, since the figures arefrequently disputed by those with grassrootsknowledge. The site also offers sectoral statistics ofall sorts, development indicators, and narratives onmany of the issues covered (although again, bear inmind the political bias).

CIA CIA CIA CIA CIA WWWWWororororor ld Fld Fld Fld Fld Fact Bookact Bookact Bookact Bookact Bookht tp ://www.c ia .gov/c ia/publ i ca t ions/ht tp ://www.c ia .gov/c ia/publ i ca t ions/ht tp ://www.c ia .gov/c ia/publ i ca t ions/ht tp ://www.c ia .gov/c ia/publ i ca t ions/ht tp ://www.c ia .gov/c ia/publ i ca t ions/factbook/factbook/factbook/factbook/factbook/Provides systematic basic information about mostcountries of the world, including data and maps (nogreat level of detail).

TTTTTaaaaabbbbble 18le 18le 18le 18le 18StaStaStaStaStatistics sourtistics sourtistics sourtistics sourtistics sources on the ces on the ces on the ces on the ces on the WWWWWeeeeebbbbb

DOSFDOSFDOSFDOSFDOSFAN ElectrAN ElectrAN ElectrAN ElectrAN Electronic Ronic Ronic Ronic Ronic Resouresouresouresouresources Librces Librces Librces Librces Librararararary .y .y .y .y .dosfan.lib.uic.edu/ERC/index.htmldosfan.lib.uic.edu/ERC/index.htmldosfan.lib.uic.edu/ERC/index.htmldosfan.lib.uic.edu/ERC/index.htmldosfan.lib.uic.edu/ERC/index.htmlArchive of US government reports, mainly from theState Department

NaNaNaNaNational Stational Stational Stational Stational Statistics (ftistics (ftistics (ftistics (ftistics (fororororormermermermermer llllly Ofy Ofy Ofy Ofy Office ffice ffice ffice ffice for Naor Naor Naor Naor NationaltionaltionaltionaltionalStatistics)Statistics)Statistics)Statistics)Statistics)

www.statistics.gov.ukwww.statistics.gov.ukwww.statistics.gov.ukwww.statistics.gov.ukwww.statistics.gov.ukUseful source of UK government figures on health,labour markets, business, the economy anddemography. The best way in is through the“statbase” section.

FT500FT500FT500FT500FT500www.ft.com/ft500/www.ft.com/ft500/www.ft.com/ft500/www.ft.com/ft500/www.ft.com/ft500/Annual ranking of the 500 largest companies in theworld, with sub rankings for Europe, US, Japan andthe UK. Also ranks the largest 100 companies inEastern Europe, Canada, Latin America and Asia-Pacific; the largest 30-50 in Africa and in the MiddleEast; and various individual OECD countries. Givesdetails of market capitalisation, turnover, profit andemployees, plus commentary.

listing in Strathclyde’s University’sBusiness Information on the Internetportal invaluable – http://personal.drs.strath.ac.business/Bear in mind that official statisticsreflect the political agendas of thosewho collected them, as much as anyother source of “facts and figures”.Peoples’ movements, for example,frequently dispute the World Bank’slofty descriptions of their economiesand local livelihoods – Lesotho, forexample, was once famously describedby the Bank as a “subsistenceagricultural economy”, when, in fact,few people are engaged in agricultureand the bulk of household incomescomes from wages earned in the minesof South Africa.

How many times have you been writinga campaign report, and found yourselfmissing a key statistic? The Web siteslisted in Table 16 (below) can helprelieve some of this frustration.

For statistics on particular companies,industries and markets, see also oursections on sector-specific researchresources (p.175), market research(p.162), and general directories andwebsites (p.124 and p.127).

A number of sites also provide pageswith links to statistical informationrelevant to their specialist area. TheProject Finance portal run by HarvardBusiness School, for example, is wellworth a visit – www.hbs.edu/projfinportal/. We have also found the


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VERBVERBVERBVERBVERBAL SOURAL SOURAL SOURAL SOURAL SOURCESCESCESCESCES

journalist: ring the company organisingthe meeting (they tend to be publicrelations’ firms) and ask if you canwrite it up on a freelance basis for apublication you’ve made an arrangementwith beforehand.

To find out where conferences on aparticular sector are being held, a goodsite to consult is Trade Show Central –www.tscentral.com – which provides asearchable database of 50,000 tradeshows, seminars and conferences. In theUK, the Financial Times advertisesbusiness conferences and runs its ownconference service. It is worth keepingan eye on the advertisements and ringingup if there is a conference on yoursubject. The trade press for the sectoryou’re interested in will also advertiseupcoming conferences.

NeNeNeNeNews gws gws gws gws grrrrroupsoupsoupsoupsoupsUseful information can also be gleanedon investor concerns about specificcompanies by logging in to thenewsgroup discussions hosted bywww.deja.com. The site allows you tosearch for a particular company orproduct – and links you to theappropriate discussion groups. There isalso scope for publicising your concernsthrough such newsgroups.

InterInterInterInterIntervievievievieviewswswswswsMuch can be found out by telephone –“phone a friend” is often the best advicewhen starting out on researching acompany. It does not take long beforeyou find you are in touch with otherswho are also looking into the firm.

While the bulk of research on companiesand industrial sectors has to be donethrough the “donkey work” of trawlinglibraries and the web, if you are new toworking on a sector, company or issue,it’s easy to go wrong. You might, forexample, (quite reasonably) jump towrong conclusions early on, and hangthe rest of your further information andanalysis on a misleading framework.

Often this problem can be resolved bytalking to someone who really knows thesubject – especially someone whoworks in the company or sector you areresearching. What’s more, talking topeople can give you access toinformation you’d never otherwise havefound, including information whichhasn’t been published at all. Forexample, company reports andinformation garnered from directoriesand business web sites are unlikely toreveal a great deal about companystrategies. To get an insight into how acompany – or group of companies – isthinking, you need to talk to those in theknow.

ConfConfConfConfConferererererencesencesencesencesencesOne useful source of “inside”information is the business conference.Those attending such conferences tend toassume that everyone else attending themis “on-side”; the presentations – and thetalk in the bar – are often candid aboutthe problems an industry is facing andthe strategies for overcoming thedifficulties which have been identified.

Most conferences are open to anyonewho has the money – but they are notcheap (typically £750 or more for a two-day meeting). One way in is as a


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Interviewing your target company,either directly or by telephone, shouldusually be saved until the end of yourresearch – at that stage you will have amuch clearer idea of what you still needto know, and how to find it out fromthem. Indeed, it makes strategic sense toget as far as you can with your researchbefore alerting the company you areinvestigating: that way, you can makethe most of any interview you might begranted – you won’t need to spend timegoing over the basics and you are morelikely to pick up on any “economieswith the truth”.

When conducting interviews, thefollowing guidelines may be helpful:

PrPrPrPrPreeeeeparparparparpare fe fe fe fe for yor yor yor yor your interour interour interour interour intervievievievieviewswswswswsBrush up your jargon and backgroundknowledge; work out three or fourdifferent ways in which you cansqueeze out the information you require,and anticipate possible responses.Decide beforehand whether you’regoing to leave your source friendly orhostile to you after the interview.

Bear in mind that companiesBear in mind that companiesBear in mind that companiesBear in mind that companiesBear in mind that companiescontain many peoplecontain many peoplecontain many peoplecontain many peoplecontain many peopleIf one is unhelpful, you can always trysomeone else. Looking at the company’swebsite beforehand, or talking to thereceptionist, may give you an idea as tohow the company is structured and whoyou want to speak to. Getting direct linenumbers is always useful.

Be polite and friendlyBe polite and friendlyBe polite and friendlyBe polite and friendlyBe polite and friendlyYou should aim to put the person you’respeaking to at their ease, rather thanmaking them nervous and cautious about

telling you anything. Throwing in a fewgeneral questions can help with this.

Make your questions open-Make your questions open-Make your questions open-Make your questions open-Make your questions open-endedendedendedendedendedOpen-ended questions allow the subjectto tell you more – and you may get someunexpected answers. Look for leads (forexample, other people) as well asanswers. What the subject doesn’t wantto talk about is often as important aswhat they do want to discuss.

Know when to stopKnow when to stopKnow when to stopKnow when to stopKnow when to stopIf your subject offers to send you auseful document, by post, fax or email,then end the interview there. Best towait until you’ve actually received whatthey send, and then telephone again withmore questions.

Document yDocument yDocument yDocument yDocument your interour interour interour interour intervievievievieviewswswswswsAlways document your interviews,including time, place, who you spoke toand their position, major points andquotes. Do this during or immediatelyafter your interviews – things can beforgotten extremely quickly.

Respect “off the record”Respect “off the record”Respect “off the record”Respect “off the record”Respect “off the record”commentscommentscommentscommentscommentsRespect “off the record” comments (anduse them only as leads) – otherwise youdamage your own reputation and otherpeoples’ chances of getting informationin the future. But the convention is thatthe person being interviewed makes itclear what is and what is not “off therecord” before making any comments,rather than after the game has been givenaway. Don’t offer to keep something offthe record – leave this to your subject.


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TTTTTaaaaabbbbble 19:le 19:le 19:le 19:le 19: Ethical In Ethical In Ethical In Ethical In Ethical Invvvvvestorestorestorestorestorsssss

Financial InstitutionsFinancial InstitutionsFinancial InstitutionsFinancial InstitutionsFinancial Institutions

Many of the market players discussed inPart Four (see p.77) are themselvessources of potential insight intocompanies and the sectors in which theyoperate.

Where you are able to develop aworking relationship with a fund mangeror analyst, she or or he will often bewilling to brief you as to the latest viewson a company within the City and, in

particular, its perceived strengths andweaknesses.

Those working within the ethicalinvestment sector (see pp.107-112) aremost likely to prove helpful in thisregard. In addition to thesociallyresponsible investment networksand research organisations listed inTable 1 (p.110), those listed below arewell worth approaching for advice.

United KingdomUnited KingdomUnited KingdomUnited KingdomUnited Kingdom

AEGON Asset Management (ScottishAEGON Asset Management (ScottishAEGON Asset Management (ScottishAEGON Asset Management (ScottishAEGON Asset Management (ScottishEquitable)Equitable)Equitable)Equitable)Equitable)

AEGON House, 3 Lochside Avenue,Edinburgh EH12 9SA, Scotland.Tel: 0131 549 3401 Fax: 0131 304 3460 Email: [email protected]: Charles Henderson

UK subsidiary of AEGON, one of the world’slargest insurers. Manage fund for ScottishEquitable, including ethical funds. Increasinginterest at a group in socially responsibleinvesting.

FFFFFriendsriendsriendsriendsriends,,,,, Iv Iv Iv Iv Ivororororor y & Simey & Simey & Simey & Simey & Sime100 Wood Street, London EC2V 7AN.Tel: 020 7506 1100 Fax: 020 7600 4180 Email: [email protected]: Neil Osborne

Fund Managers for the Friends ProvidentLife Insurance Company. Manage the largestEthical Fund in the UK, and also operate andengagement policy across all the groupsfunds (some £40 billion)

HenderHenderHenderHenderHenderson Global Inson Global Inson Global Inson Global Inson Global Invvvvvestorestorestorestorestors (NPI)s (NPI)s (NPI)s (NPI)s (NPI)4 Broadgate, London EC2M 2DATel: 020 7410 3110 Fax: 020 7956 9191Email: [email protected]: James GuiseppiPart of the AMP Group (Australia fundmanager), managing most of the groupsfunds outside Australia. Manage the NPIGlobal Care group of funds.

Jupiter Environmental ResearchJupiter Environmental ResearchJupiter Environmental ResearchJupiter Environmental ResearchJupiter Environmental Research1 Grosvenor Place, London SW1X 7JJTel: 020 7412 0703 Fax: 020 7412 0705 Email: [email protected]: Emma Howard BoydOwned by Commerzbank, Jupiter are a fundmanager specialising in the retail market.

MorMorMorMorMor leleleleley Fund Manay Fund Manay Fund Manay Fund Manay Fund Managggggement (Norwicement (Norwicement (Norwicement (Norwicement (Norwich Union)h Union)h Union)h Union)h Union)1 Poultry, London EC2R 8EJTel: 020 7809 8198 Fax: 020 7489 7940Email: [email protected]: Anja LaitinenManage funds for the CGNU plc Group,including the Norwich Union Funds. Highlyrespected SRI team moved to Morley in2000. Run six funds “Sustainable Future”funds on an SRI basis. Also engage on socialand environmental issues on behalf of thewhole funds.

US SRI FundsUS SRI FundsUS SRI FundsUS SRI FundsUS SRI FundsAriel Mutual FundsAriel Mutual FundsAriel Mutual FundsAriel Mutual FundsAriel Mutual Funds

200 East Randolph Drive, Suite 2900, Chicago,IL 60601, USATel: +1 800 292 7435 Fax: +1 312726 7473E-Mail:thepatientinvestor@arielmutualfund.comwww.arielmutualfunds.comwww.arielmutualfunds.comwww.arielmutualfunds.comwww.arielmutualfunds.comwww.arielmutualfunds.comContact: John W. Rogers, Jr., President andCo-Chief Investment Officer

Offers two publicly traded, sociallyresponsible mutual funds. Focuses oninvesting for the long term in US domesticcompanies with market capitalizations below


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$5 billion at the time of investment.

CalvCalvCalvCalvCalvererererer t Grt Grt Grt Grt Groupoupoupoupoup12th Floor, 4550 Montgomery Avenue,Bethesda, MD 20814-3304, USATel: +1 800 368 2748 Fax: +1 301 654 2960E-Mail: socialproducts@calvert.comwww.calvert.comwww.calvert.comwww.calvert.comwww.calvert.comwww.calvert.comContact: Dianne Saenz, Manager, SocialProducts Sales and PolicyWith more than $6 billion in assets and eightmutual funds, Calvert offers the largestfamily of socially and environmentallyscreened mutual funds in the US. Its socialresearch department is a leader inshareholder activism efforts.

Citizens FundsCitizens FundsCitizens FundsCitizens FundsCitizens Funds230 Commerce Way, Suite 300, Portsmouth,NH 03801, USATel: +1 800 223 7010 Fax: +1 603 433 4209E-Mail: [email protected] www.citizensfunds.com www.citizensfunds.com www.citizensfunds.com www.citizensfunds.com www.citizensfunds.comContact: John Shields, President and CEOMission is to earn an above-market rate ofreturn for shareholders while investing incompanies that operate in a sociallyresponsible manner. Offers a full range offunds .

Domini Social InDomini Social InDomini Social InDomini Social InDomini Social Invvvvvestmentsestmentsestmentsestmentsestments,,,,, LL LL LL LL LLCCCCCP.O. Box 60494, King of Prussia, PA 19406-0494, USATel: +1 800 225 3863E-Mail: smoser@domini.comwww.domini.comwww.domini.comwww.domini.comwww.domini.comwww.domini.comContact: Sigward MoserDomini Social Investments manages morethan $2.0 billion in assets. Its Domini SocialEquity Fund is the oldest and largest sociallyresponsible index fund in the USA. Closelinks to KLD (www.kld.comwww.kld.comwww.kld.comwww.kld.comwww.kld.com) who areresponsible for research and calculate theunderlying social index .

TTTTThe Drhe Drhe Drhe Drhe Dreeeeeyfus Coryfus Coryfus Coryfus Coryfus Corporporporporporaaaaationtiontiontiontion200 Park Avenue, 55th Floor, New York, NY10166, USATel: (800)782-6620E-Mail: info@dreyfus.comwww.dreyfus.comwww.dreyfus.comwww.dreyfus.comwww.dreyfus.comwww.dreyfus.comContact: Paul Hilton, Portfolio ManagerDreyfus is a mainstream fund manager (partof the Mellon group) with over $2 billion of

socially screened assets under management.Focus on companies that conduct business ina manner that contributes to theenhancement of the quality of life.

NeuberNeuberNeuberNeuberNeuberggggger Berer Berer Berer Berer Bermanmanmanmanman605 Third Avenue, 2nd Floor, New York, NY10158-0180, USATel: + 800 877 9700 Fax: + 212 476 8848E-Mail: sri@nb.comwww.nb.comwww.nb.comwww.nb.comwww.nb.comwww.nb.comContact: Janet W. Prindle, Portfolio ManagerMutual fund manager that seeks long-termcapital appreciation by investing in commonstock of companies that meet both financialstandards and social criteria.

TTTTThe Phe Phe Phe Phe Parararararnassus Fundnassus Fundnassus Fundnassus Fundnassus FundOne Market, Steuart Tower, Suite 1600, SanFrancisco, CA 94105, USATel: +1 800 999 3505 Fax: +1 415 778 0228E-Mail: [email protected] www.parnassus.comwww.parnassus.comwww.parnassus.comwww.parnassus.comwww.parnassus.comOffers four mutual fund portfolios. Invests incompanies that treat employees well, respectthe environment, and have good communityrelations.

PPPPPax ax ax ax ax WWWWWororororor ld Manald Manald Manald Manald Managggggement Corement Corement Corement Corement Corppppp.....222 State Street, Portsmouth, NH 03801-3828, USATel: +1 800 767 1729 Fax: +1 603 431 8732E-Mail: [email protected]://www.paxfund.com/http://www.paxfund.com/http://www.paxfund.com/http://www.paxfund.com/http://www.paxfund.com/index_COGP3.htmindex_COGP3.htmindex_COGP3.htmindex_COGP3.htmindex_COGP3.htmContact: Anita GreenOrganized in 1970, focused on SRI. Largestfund over $1200m. Has an affiliatedfoundation working for the world’s poor andfor world peace.

TTTTTrillium rillium rillium rillium rillium Asset ManaAsset ManaAsset ManaAsset ManaAsset Managggggement Corement Corement Corement Corement Corporporporporporaaaaationtiontiontiontion711 Atlantic Avenue, Boston, MA 02111-2809,USATel: +1 800 548 5684 Fax: (617)482-6179 ) E-Mail: csmith@trilliuminvest.comwww.trilliuminvest.comwww.trilliuminvest.comwww.trilliuminvest.comwww.trilliuminvest.comwww.trilliuminvest.comContact: Cheryl Smith, Portfolio Manager.Trillium is an independent investmentmanagement firm committed exclusively tosocially responsible investing, founded in1982. It runs the Advocacy Fund, a mutualfund that advocates progressive socialchange through the use of shareholderpower.


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RRRRResearesearesearesearesearccccchinghinghinghinghingsectorsectorsectorsectorsectorsssss


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AAAAAGRICULGRICULGRICULGRICULGRICULTURE,TURE,TURE,TURE,TURE, AAAAAGRGRGRGRGROINDUSTRIES &OINDUSTRIES &OINDUSTRIES &OINDUSTRIES &OINDUSTRIES &BIOBIOBIOBIOBIOTECHNOLTECHNOLTECHNOLTECHNOLTECHNOLOGYOGYOGYOGYOGY

LibrLibrLibrLibrLibrararararary ry ry ry ry resouresouresouresouresourcescescescesces Many of the resources on biotechnology (especially on scientificcompanies) combine food / crop biotechnology with medical /pharmaceutical biotechnology. In such directories and websites(which include most that have “biotechnology” in their title), you willfind considerably more information on the medical side than on crops,as the industry is bigger, more developed and involves morecompanies.

TTTTThe 2001 Bioteche 2001 Bioteche 2001 Bioteche 2001 Bioteche 2001 Biotechnolohnolohnolohnolohnologggggy y y y y VVVVVenturenturenturenturenture Cae Cae Cae Cae Capital Dirpital Dirpital Dirpital Dirpital Directorectorectorectorectory:y:y:y:y:US US US US US VVVVVenturenturenturenturenture Cae Cae Cae Cae Capital Companies and Contactspital Companies and Contactspital Companies and Contactspital Companies and Contactspital Companies and Contacts

Institute for Biotechnology Information, PO Box 14569, Research TrianglePark, North Carolina 277709-4569, USA.www.biotechinfo.comwww.biotechinfo.comwww.biotechinfo.comwww.biotechinfo.comwww.biotechinfo.comIdentifies companies that have invested in biotechnology and lists 523sites of 449 venture capital companies.

2001 GEN Dir2001 GEN Dir2001 GEN Dir2001 GEN Dir2001 GEN Directorectorectorectorector y ofy ofy ofy ofy of Biotec Biotec Biotec Biotec Biotechnolohnolohnolohnolohnologggggy Companiesy Companiesy Companiesy Companiesy CompaniesMary Ann Leibert Inc., 2 Madison Avenue, New York, NY 10538, USA.www.liebertpub.comwww.liebertpub.comwww.liebertpub.comwww.liebertpub.comwww.liebertpub.comContains basic company information on over 5,000 biotechnologycompanies; their markets, products, capitalisation, technologies and keypersonnel. Entries cover ownership, R&D partnerships, marketing andlicensing agreements, technologies, products in the market, productsunder development, clinical trial results and international ventures.

The UK Biotechnology HandbookThe UK Biotechnology HandbookThe UK Biotechnology HandbookThe UK Biotechnology HandbookThe UK Biotechnology HandbookBiocommerce Data / Bioindustry Association, Prudential Buildings, 95High Street, Slough, Berkshire SL1 1DH.www.pjbpubs.comwww.pjbpubs.comwww.pjbpubs.comwww.pjbpubs.comwww.pjbpubs.comDetailed profiles of all the major UK biotech companies, includingequipment suppliers and venture capital providers. Also profiles academicresearch institutions and government agencies in the sector.

Biotechnology Guide USA: Companies, Data, AnalysisBiotechnology Guide USA: Companies, Data, AnalysisBiotechnology Guide USA: Companies, Data, AnalysisBiotechnology Guide USA: Companies, Data, AnalysisBiotechnology Guide USA: Companies, Data, AnalysisMacmillan Reference Ltd, 25 Eccleston Place, London SW1W 9NF.www.macmillan-reference.co.ukwww.macmillan-reference.co.ukwww.macmillan-reference.co.ukwww.macmillan-reference.co.ukwww.macmillan-reference.co.ukDirectory of over 1,400 companies.

BiotecBiotecBiotecBiotecBiotechnolohnolohnolohnolohnologggggy Diry Diry Diry Diry Directorectorectorectorector y 2001y 2001y 2001y 2001y 2001Macmillan Reference Ltd, 25 Eccleston Place, London SW1W 9NF.www.macmillan-reference.co.ukwww.macmillan-reference.co.ukwww.macmillan-reference.co.ukwww.macmillan-reference.co.ukwww.macmillan-reference.co.ukCovers over 10,000 organisations, including 5,300 profiles of commercialcompanies, research organisations and biotechnology institutions in 88countries. Entries include details of research funding.


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Biotech Phone BookBiotech Phone BookBiotech Phone BookBiotech Phone BookBiotech Phone BookInstitute for Biotech Information, PO Box 14569, Research Triangle Park,North Carolina 277709-4569, USA.www.biotechinfo.comwww.biotechinfo.comwww.biotechinfo.comwww.biotechinfo.comwww.biotechinfo.comFree directory of 1,500 US Biotech companies. Extremely useful forbasic contact information (addresses, ‘phone and fax numbers, and emailaddresses).

CorCorCorCorCor porporporporporaaaaate Infte Infte Infte Infte Infororororor mamamamamationtiontiontiontionwww.corporateinformation.comwww.corporateinformation.comwww.corporateinformation.comwww.corporateinformation.comwww.corporateinformation.comExcellent listing of biotechnology sites. We would advise printing a copyof the page out; it is an invaluable resource. From the home page, selectoption 2 (“Research a country’s industry”), then “health andpharmaceuticals” and “USA” – this is the best of the country lists forbiotechnology.

BiolinksBiolinksBiolinksBiolinksBiolinkswww.biolinks.comwww.biolinks.comwww.biolinks.comwww.biolinks.comwww.biolinks.comSite with links to a range of useful databases, covering scientificcompanies, science meetings, scientific journals and medical sites. If youare researching biotech companies, click on the “scientific companies”link on the main menu; this takes you to an A-Z listing of US companiesworking in biotechnology , with links to a thumbnail profile (address andbrief description of the companies main products or lines of research) andto the company’s home pages. Very useful for preliminary research.

Cato Research LtdCato Research LtdCato Research LtdCato Research LtdCato Research Ltdwww.cato.comwww.cato.comwww.cato.comwww.cato.comwww.cato.comSite of Cato’s Worldwide Web Virtual Library Biotechnology Directory.The site’s Directory gives “over 1,000 web addresses of companies andresearch institutes, universities, sources of information and otherdirectories specific to the biotechnology, pharmaceutical development andrelated fields.” The index page has easily found links to further pages on“Sources of Information” (400 URLs), “Pharmaceutical Companies” andPublications” (electronic and paper). At the foot of the index page, thereis a link to Cato’s “Calendar of Meetings, Seminars and Courses” in thebiotech sector (with a link to a European “mirror” page).

BiospaceBiospaceBiospaceBiospaceBiospacewww.biospace.comwww.biospace.comwww.biospace.comwww.biospace.comwww.biospace.comSearchable database of biotech companies – access is free. Entries giveownership details and basic profiles. There are also links to news releaseson the industry as a whole and on individual companies.

Bio OnlineBio OnlineBio OnlineBio OnlineBio Onlinewww.bioline.comwww.bioline.comwww.bioline.comwww.bioline.comwww.bioline.comFree, searchable database on biotechnology and pharmaceutical research.

Biotech InnovationsBiotech InnovationsBiotech InnovationsBiotech InnovationsBiotech Innovationswww.biofind.comwww.biofind.comwww.biofind.comwww.biofind.comwww.biofind.comLengthy profiles of some 200 companies.

TTTTThe Nahe Nahe Nahe Nahe Naturturturturture Biotece Biotece Biotece Biotece Biotechnolohnolohnolohnolohnologggggy Diry Diry Diry Diry Directorectorectorectorectoryyyyyhttp://guide.nature.comhttp://guide.nature.comhttp://guide.nature.comhttp://guide.nature.comhttp://guide.nature.com

IndustrIndustrIndustrIndustrIndustry-y-y-y-y-orientedorientedorientedorientedorientedwebsiteswebsiteswebsiteswebsiteswebsites


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Database of over 10,000 organisations, product and service providers in thebiotechnology industry.

Institute fInstitute fInstitute fInstitute fInstitute for Biotecor Biotecor Biotecor Biotecor Biotech Infh Infh Infh Infh Infororororormamamamamationtiontiontiontionwww.biotechinfo.comwww.biotechinfo.comwww.biotechinfo.comwww.biotechinfo.comwww.biotechinfo.comPriced service. Bills itself as providing “high quality strategic businessinformation to the biotechnology, pharmaceutical and life science scientificcommunities.” Provides database of biotechnology companies – withinformation on financing (public or private), key personnel, products, US andforeign investors and parent company. The database is available on disc forUS$790 or you can subscribe to IBInternet for $990 a year, which givesunlimited access to the database. Undertakes market research and competitoranalysis.

SciCentrSciCentrSciCentrSciCentrSciCentralalalalalwww.scicentral.comwww.scicentral.comwww.scicentral.comwww.scicentral.comwww.scicentral.comLinks to databases on biotech companies, specialised resources, researchnews, special reports and selected articles on biotech developments. Fromthe homepage, you can also browse the contents of the latest Nature – auseful source of information on biotechnology – in addition to linking toselected articles from New Scientist and newspaper articles. Click the“Science in the News” tab at the top of the home page.

Genetic Engineering NewsGenetic Engineering NewsGenetic Engineering NewsGenetic Engineering NewsGenetic Engineering Newswww.genengnews.comwww.genengnews.comwww.genengnews.comwww.genengnews.comwww.genengnews.comSite of “Biotechnology News of the Day” service – which is free. Gives dailyreports on biotech mergers, research agreements, product development andmuch more. A key resource if you are tracking the industry.

Open DirOpen DirOpen DirOpen DirOpen Directorectorectorectorectory Pry Pry Pry Pry Projectojectojectojectojecthttp://dmoz.org/Science/Biology/Biotechnology/Companieshttp://dmoz.org/Science/Biology/Biotechnology/Companieshttp://dmoz.org/Science/Biology/Biotechnology/Companieshttp://dmoz.org/Science/Biology/Biotechnology/Companieshttp://dmoz.org/Science/Biology/Biotechnology/CompaniesListing of major biotechnology companies with links.

MorMorMorMorMor ningstarningstarningstarningstarningstarwww.morningstar.comwww.morningstar.comwww.morningstar.comwww.morningstar.comwww.morningstar.comHelpful for researching individual biotech companies, particularly inmedicine, and mutual funds devoted to biotech investments.

DialogDialogDialogDialogDialogwww.dialog.comwww.dialog.comwww.dialog.comwww.dialog.comwww.dialog.comIf you are looking for investment analyses on the biotech industry, you canorder Investext’s reports through Dialog. Many of the reports are inexpensive– $0.60 each – and cover both companies and the industry as a whole. Fromthe Home Page, go to the “products” page (click tab at the top of the page).Select “business and news” from the menu in the left-hand column. Thisbrings up a new page with another menu, again in the left-hand column.Select “Business Research” and then “Investment Research” – which givestwo options: searches by industry or company.

EuropaBioEuropaBioEuropaBioEuropaBioEuropaBiowww.europa-bio.bewww.europa-bio.bewww.europa-bio.bewww.europa-bio.bewww.europa-bio.beWeb site of industry umbrella group, representing 40 corporation and 13national associations involved in researching, testing, manufacturing anddistributing biotechnology products.


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GoGoGoGoGovvvvvererererernmentnmentnmentnmentnmentsitessitessitessitessites

US DeUS DeUS DeUS DeUS Deparparparparpar tment oftment oftment oftment oftment of AgAgAgAgAgriculturriculturriculturriculturricultureeeeewww.usda.govwww.usda.govwww.usda.govwww.usda.govwww.usda.govDatabase of biotechnology permits which have been issued by the USDepartment of Agriculture. Entries, which are searchable by applicant andstate, give details of release permits and the status of any applications.

UK DeUK DeUK DeUK DeUK Deparparparparpar tment oftment oftment oftment oftment of En En En En Envirvirvirvirvironment,onment,onment,onment,onment, F F F F Food and Rood and Rood and Rood and Rood and Rururururural al al al al AfAfAfAfAffffffairairairairair ssssswww.defra.gov.ukwww.defra.gov.ukwww.defra.gov.ukwww.defra.gov.ukwww.defra.gov.ukUseful for background data on UK agriculture and UK agricultural policy.

UK UK UK UK UK AdAdAdAdAdvisorvisorvisorvisorvisory Committee on Ry Committee on Ry Committee on Ry Committee on Ry Committee on Releases to the Eneleases to the Eneleases to the Eneleases to the Eneleases to the Envirvirvirvirvironmentonmentonmentonmentonmentwww.defra.gov.uk/environment/acre/index.htmwww.defra.gov.uk/environment/acre/index.htmwww.defra.gov.uk/environment/acre/index.htmwww.defra.gov.uk/environment/acre/index.htmwww.defra.gov.uk/environment/acre/index.htmLists location of trial genetic releases.

The UK Patent OfficeThe UK Patent OfficeThe UK Patent OfficeThe UK Patent OfficeThe UK Patent OfficeHarmsworth House, 13-15 Bouveries Street, London EC4Y 8DP.www.patent.gov.ukwww.patent.gov.ukwww.patent.gov.ukwww.patent.gov.ukwww.patent.gov.ukIf you are looking to see whether or not a company has taken out a patent ona particular biotechnology product, you can search the databases of the UKPatent Office, the European Patent Office and other European nationalpatent offices through this site. Entries provide a basic minimum set of datafor each application published in the UK: publication number, publicationdate, application number, application date, applicant name, inventor nameand title text. For fuller searches, it may be necessary to visit the PatentOffice and access the CD-Roms available there; printed copies of the fullpatent application can be ordered for the price of photocopying.

FFFFFriends ofriends ofriends ofriends ofriends of the Ear the Ear the Ear the Ear the Ear th–Ength–Ength–Ength–Ength–England and land and land and land and land and WWWWWalesalesalesalesales26-28 Underwood Street, London N1www.foe.co.uk/campaigns/food_and_biotechnologywww.foe.co.uk/campaigns/food_and_biotechnologywww.foe.co.uk/campaigns/food_and_biotechnologywww.foe.co.uk/campaigns/food_and_biotechnologywww.foe.co.uk/campaigns/food_and_biotechnologyUpdates and background information of FOE’s biotechnology campaign.Links page has list of UK supermarkets and other organisations.

RRRRRururururural al al al al AdAdAdAdAdvvvvvancement Fund Interancement Fund Interancement Fund Interancement Fund Interancement Fund Inter nananananationaltionaltionaltionaltional110 Osborne St., Suite 202, Winnipeg, MB R3L 1Y5, Canada.www.rafi.orgwww.rafi.orgwww.rafi.orgwww.rafi.orgwww.rafi.orgOne of the first organisations to raise questions about biotechnology and thepatenting of seeds. Publishes a regular updated chart of “Who OwnsWhom?” in the seed industry. Focuses on genetic diversity, intellectualproperty rights and patents.

Union ofUnion ofUnion ofUnion ofUnion of Concer Concer Concer Concer Concer ned Scientistsned Scientistsned Scientistsned Scientistsned Scientists2 Brattle Square, Cambridge, MA 02238, USAwww.ucusa.orgwww.ucusa.orgwww.ucusa.orgwww.ucusa.orgwww.ucusa.orgPublishes quarterly newsletter, FoodWeb. Monitors environmental impacts ofGM crops in the USA.

Edmonds InstituteEdmonds InstituteEdmonds InstituteEdmonds InstituteEdmonds Institute20319 92nd Avenue, Edmonds, WA 98020, USAwww.edmonds-institute.orgwww.edmonds-institute.orgwww.edmonds-institute.orgwww.edmonds-institute.orgwww.edmonds-institute.orgExcellent research reports on biosafety, patenting and the social andenvironmental impacts of genetic engineering. Publishes Manual forAssessing the Ecological and Human Health Effects of Genetically-Engineered Organisms.

NGO sitesNGO sitesNGO sitesNGO sitesNGO sites


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OIL & GASOIL & GASOIL & GASOIL & GASOIL & GAS

US aUS aUS aUS aUS agggggriculturriculturriculturriculturriculturalalalalalindustrindustrindustrindustrindustryyyyystatisticsstatisticsstatisticsstatisticsstatistics

Institute fInstitute fInstitute fInstitute fInstitute for or or or or AgAgAgAgAgriculturriculturriculturriculturriculture and e and e and e and e and TTTTTrrrrrade Pade Pade Pade Pade Policolicolicolicolicyyyyy2105, 1st Avenue South, Minneapolis, MN 55404, USAwww.iatp.orgwww.iatp.orgwww.iatp.orgwww.iatp.orgwww.iatp.orgInvaluable source of information on US agricultural policy. Campaigns focuson trade and agriculture, food and agriculture, global governance and theWorld Trade Organisation.

We would highly recommend the following reports on consolidation inthe food / agriculture industry :

Consolidation in the food and agriculture systemConsolidation in the food and agriculture systemConsolidation in the food and agriculture systemConsolidation in the food and agriculture systemConsolidation in the food and agriculture systemWilliam Heffernan, Dept of Rural Sociology, University of Missouri, USAwww.calfu.org/whstudy.htmlwww.calfu.org/whstudy.htmlwww.calfu.org/whstudy.htmlwww.calfu.org/whstudy.htmlwww.calfu.org/whstudy.html

CarCarCarCarCargill’gill’gill’gill’gill’s acquisition ofs acquisition ofs acquisition ofs acquisition ofs acquisition of Continental Gr Continental Gr Continental Gr Continental Gr Continental Grainainainainain’’’’’s gs gs gs gs grrrrrain merain merain merain merain merccccchandising bhandising bhandising bhandising bhandising businessusinessusinessusinessusinessMarvin Hayenga and Robert Wisner, Dept of Economics, Iowa State University,USAwww.econ.iastate.edu/outreach/agriculture/marketing/hayengawww.econ.iastate.edu/outreach/agriculture/marketing/hayengawww.econ.iastate.edu/outreach/agriculture/marketing/hayengawww.econ.iastate.edu/outreach/agriculture/marketing/hayengawww.econ.iastate.edu/outreach/agriculture/marketing/hayenga

Financial Financial Financial Financial Financial Times Oil and Gas InterTimes Oil and Gas InterTimes Oil and Gas InterTimes Oil and Gas InterTimes Oil and Gas Internananananational tional tional tional tional YYYYYearbookearbookearbookearbookearbookwww.directories.ft.comwww.directories.ft.comwww.directories.ft.comwww.directories.ft.comwww.directories.ft.comExcellent profiles of operations of around 1,500 oil and gas companies – sizeof investments, in which countries, and so on.

WWWWWho’ho’ho’ho’ho’s s s s s WWWWWho in ho in ho in ho in ho in WWWWWororororor ld Oil and Gasld Oil and Gasld Oil and Gasld Oil and Gasld Oil and GasLongman, Avenue of the Americas, New York, NY 10036, USA.www.ablongman.comwww.ablongman.comwww.ablongman.comwww.ablongman.comwww.ablongman.com

FT EnergyFT EnergyFT EnergyFT EnergyFT Energywww.ftenergy.comwww.ftenergy.comwww.ftenergy.comwww.ftenergy.comwww.ftenergy.comPublishes numerous reports and journals on energy industry issues.

Oil Company Financial Analysis in Nontechnical LanguageOil Company Financial Analysis in Nontechnical LanguageOil Company Financial Analysis in Nontechnical LanguageOil Company Financial Analysis in Nontechnical LanguageOil Company Financial Analysis in Nontechnical Languageby Daniel JohnsonPennwell, 1421 S. Sheridan Road, Tulsa, Oklahoma, USA.www.pennwell.comwww.pennwell.comwww.pennwell.comwww.pennwell.comwww.pennwell.com

WWWWWherherherherhere’e’e’e’e’s the Shors the Shors the Shors the Shors the Shor tatatatataggggge? – a Nontece? – a Nontece? – a Nontece? – a Nontece? – a Nontechnical Guide to Phnical Guide to Phnical Guide to Phnical Guide to Phnical Guide to Petretretretretroleum Economicsoleum Economicsoleum Economicsoleum Economicsoleum Economicsby Bob TippeePennwell, 1421 S. Sheridan Road, Tulsa, Oklahoma, USAwww.pennwell.comwww.pennwell.comwww.pennwell.comwww.pennwell.comwww.pennwell.com

Oil Economist’s HandbookOil Economist’s HandbookOil Economist’s HandbookOil Economist’s HandbookOil Economist’s Handbookby G. JenkinsElsevier, PO Box 221, 1000 AE Amsterdam, The Netherlandswww.elsevier.nlwww.elsevier.nlwww.elsevier.nlwww.elsevier.nlwww.elsevier.nlVol.1: statistics; Vol.2: dictionary, chronology, directory


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Oil and Gas InfOil and Gas InfOil and Gas InfOil and Gas InfOil and Gas InfororororormamamamamationtiontiontiontionInternational Energy Agency, 9, Rue de la Federation, Paris, Cedex 15,France.Detailed statistical breakdown of energy sources and uses, by country.

The best trade journals (in terms of content and accessibility) are:

PPPPPetretretretretroleum Roleum Roleum Roleum Roleum ReeeeevievievievieviewwwwwInstitute of Petroleum, 61 New Cavendish Street, London W1M 8AR. Monthly. Includes excellent news section (~10 pages) and various featureson companies, countries and issues.

UpstreamUpstreamUpstreamUpstreamUpstreamwww.upstream.tmwww.upstream.tmwww.upstream.tmwww.upstream.tmwww.upstream.tmNewspaper-format, quite easy to read, dealing just with exploration andproduction.

PPPPPetretretretretroleum Economistoleum Economistoleum Economistoleum Economistoleum Economistwww.petroleum-economist.comwww.petroleum-economist.comwww.petroleum-economist.comwww.petroleum-economist.comwww.petroleum-economist.comAlso publishes directories and statistical handbooks. More technical, but aninvaluable source of information.

TTTTThe Institute ofhe Institute ofhe Institute ofhe Institute ofhe Institute of P P P P Petretretretretroleumoleumoleumoleumoleum61 New Cavendish Street, London W1M 8AR. www.petroleum.co.ukwww.petroleum.co.ukwww.petroleum.co.ukwww.petroleum.co.ukwww.petroleum.co.ukOne of the best resources on oil and gas. The IP is a professional institutefor those working in the oil and gas industry. In particular, the library isexcellent (catalogue on website). Use of the library costs about £30 a dayor £20 a half day for non-members, or free for IP members. The libraryhas a vast array of trade journals (about 40-50 different titles, includingOil company profits (statistical), Oil industry outlook and others), andnumerous reports and directories. There are also files of press cuttingscollected by the librarians on well over 100 subjects, ranging from stocksto insurance to industrial relations. The library also has an abstractsdatabase and (pay-per-hour) access to Reuters Business Briefing.Membership of the Institute costs £75 a year (or £10 a year if under 26years old). For this, you also get the monthly trade journal, PetroleumReview, notification of industry conferences and use of the IP’sinformation service – researchers who can advise you on industry issuesand information, on how to find something out, and who will even fax youinformation you require. This service is free, as long as it can be done overthe ‘phone – that is, not more than about 10 minutes of their time. The IP

TTTTThe Enerhe Enerhe Enerhe Enerhe Energggggy Ry Ry Ry Ry Reeeeeporporporporpor t t t t t VVVVVol.2:ol.2:ol.2:ol.2:ol.2: Oil & g Oil & g Oil & g Oil & g Oil & gas ras ras ras ras resouresouresouresouresources ofces ofces ofces ofces of the United Kingdom (the the United Kingdom (the the United Kingdom (the the United Kingdom (the the United Kingdom (the“Brown Book”)“Brown Book”)“Brown Book”)“Brown Book”)“Brown Book”)

Department of Trade and Industry, 1 Victoria Street, London, SW1.Published annually, statistical, operating and company information on theNorth Sea, field-by-field, and with aggregate and company information.

Digest of United Kingdom Energy StatisticsDigest of United Kingdom Energy StatisticsDigest of United Kingdom Energy StatisticsDigest of United Kingdom Energy StatisticsDigest of United Kingdom Energy StatisticsDepartment of Trade and Industry, 1 Victoria Street, London, SW1.

TTTTTrrrrrade jourade jourade jourade jourade journalsnalsnalsnalsnals

IndustrIndustrIndustrIndustrIndustryyyyyorororororggggganisaanisaanisaanisaanisationstionstionstionstionsand web sitesand web sitesand web sitesand web sitesand web sites


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NGO web sitesNGO web sitesNGO web sitesNGO web sitesNGO web sites

also publishes useful guides to industry information sources, and statisticaldata on the industry (especially but not exclusively in the UK), both of whichare available to non-members. The website is also excellent, in particular thenews in brief (in the “industry information” section), which gives on averageabout 8 stories a day (each just 1-3 sentences), archived back to January1997 – and for this, it’s well worth searching the site. Also good links page.

BP StaBP StaBP StaBP StaBP Statistical Rtistical Rtistical Rtistical Rtistical Reeeeevievievievieview ofw ofw ofw ofw of WWWWWororororor ld Enerld Enerld Enerld Enerld Energggggyyyyywww.bp.com/stats/www.bp.com/stats/www.bp.com/stats/www.bp.com/stats/www.bp.com/stats/Statistics on production, consumption and trade of each energy source, bycountry.

Alexander’s Gas & Oil ConnectionsAlexander’s Gas & Oil ConnectionsAlexander’s Gas & Oil ConnectionsAlexander’s Gas & Oil ConnectionsAlexander’s Gas & Oil Connectionswww.gasandoil.com/goc/www.gasandoil.com/goc/www.gasandoil.com/goc/www.gasandoil.com/goc/www.gasandoil.com/goc/News and trends in the oil and gas industry, organised by geographicalregion, plus fortnightly email update, and access to (expensive) marketresearch.

OfOfOfOfOffshorfshorfshorfshorfshore e e e e TTTTTececececechnolohnolohnolohnolohnologggggyyyyywww.offshore-technology.comwww.offshore-technology.comwww.offshore-technology.comwww.offshore-technology.comwww.offshore-technology.comThe information here is more at the operational level than the corporate /financial, but is excellent. For the oil and gas projects it covers (which isn’tall in the world, but includes many important ones – offshore only), it givesdetailed information on how the project was / is carried out, and lists thecontractors who worked on it and what they did.

OilOnlineOilOnlineOilOnlineOilOnlineOilOnline,,,,, WWWWWororororor ld Oil & Gasld Oil & Gasld Oil & Gasld Oil & Gasld Oil & Gaswww.oilonline.com/infomall_worldoil.htmlwww.oilonline.com/infomall_worldoil.htmlwww.oilonline.com/infomall_worldoil.htmlwww.oilonline.com/infomall_worldoil.htmlwww.oilonline.com/infomall_worldoil.htmlDetailed information on oil and gas activity in each country, plus backgroundeconomic and political information.

OilwatchOilwatchOilwatchOilwatchOilwatchwww.oilwatch.org.ecwww.oilwatch.org.ecwww.oilwatch.org.ecwww.oilwatch.org.ecwww.oilwatch.org.ecGrassroots network of groups in the South affected by oil and gasoperations. Website in Spanish and English, some in French. Producesbriefings (Tegantai) on various relevant subjects, and the monthlyResistance Bulletin of news and campaigns.

Project UndergroundProject UndergroundProject UndergroundProject UndergroundProject Underground1916A MLK Jr. Way, Berkeley, CA 94704, USA.Tel: +1 510-705-8981Email: [email protected] source of information on the impacts of the oil and mining industries oncommunities in the South. Website includes reports, campaigns, and best ofall, the fortnightly newsletter, Drillbits & Tailings, which is a must (alsoavailable on email).

SANE BP links pageSANE BP links pageSANE BP links pageSANE BP links pageSANE BP links pagewww.sanebp.com/links/links.htmlwww.sanebp.com/links/links.htmlwww.sanebp.com/links/links.htmlwww.sanebp.com/links/links.htmlwww.sanebp.com/links/links.htmlExcellent list of links on the arctic, oil-focused NGOs, renewable energy, oiland gas intelligence, climate and investment. Produced by Greenpeace’sfinancial campaign against BP.


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WWWWWho’ho’ho’ho’ho’s s s s s WWWWWho in ho in ho in ho in ho in WWWWWororororor ld Miningld Miningld Miningld Miningld MiningFinancial Times Business, Maple House, 149 Tottenham Court Road,London W1P 9LL.Tel: 020 7896 2000Provides contact and biographical details for over 3,500 senior personnel inthe mining industry.

Mining:Mining:Mining:Mining:Mining: Financial Financial Financial Financial Financial Times Times Times Times Times YYYYYearbookearbookearbookearbookearbookFinancial Times Business, Maple House, 149 Tottenham Court Road,London W1P 9LL.Tel: 020 7896 2000Over 600 international mining companies covered. Each entry typicallyincludes: brief histories of companies; their address and contact details;details of directors and officers; subsidiaries and associates; main activitiesand operations; three-year financial and operating summaries; ownership andstructure information; latest ore reserves; recent company developments;property and operations.

DigDigDigDigDigging Deeging Deeging Deeging Deeging Deeperperperperper ::::: A MineA MineA MineA MineA Minewwwwwaaaaatctctctctcher’her’her’her’her’s Bibs Bibs Bibs Bibs Bibliolioliolioliogggggrrrrraaaaaphphphphphyyyyyby Roger MoodyMinewatch Asia Pacific, Agpaoa Compound, 111 Upper General Luna Road,Baguio City, Philippines.Tel/fax: +63 74 443 9459Concentrates on recent documentation which addresses major current issuesin mining, and on older sources which have stood the test of time. Only afew titles are included from regular industry and NGO publications (includingRaw Materials Report, Clementine, AGID, MERN, Higher Values, MiningEnvironmental Management) which are easily available.

The Gulliver FileThe Gulliver FileThe Gulliver FileThe Gulliver FileThe Gulliver FileRoger Moody,Minewatch/WISE-Glen Alpin, 218 Liverpool Road, London N6 5AA.A classic. Details the record of all the major mining companies. Can bedownloaded from www.sea-us.org.au/gulliver

TTTTTaking Raking Raking Raking Raking Responsibility:esponsibility:esponsibility:esponsibility:esponsibility: Metal Mining Metal Mining Metal Mining Metal Mining Metal Mining,,,,, P P P P People and the Eneople and the Eneople and the Eneople and the Eneople and the EnvirvirvirvirvironmentonmentonmentonmentonmentMilieudefensie (FOE-Netherlands), Damrak 26, 1012 LJ Amsterdam, TheNetherlands.Tel: +31 20 626 2620www.milieudefensie.nlwww.milieudefensie.nlwww.milieudefensie.nlwww.milieudefensie.nlwww.milieudefensie.nlGeneral critique of mining industry with a dozen short case studies.

HazarHazarHazarHazarHazardous dous dous dous dous WWWWWastes frastes frastes frastes frastes from Miningom Miningom Miningom Miningom MiningMineral Policy Institute, PO Box 21, Bondi Junction, Australia.Tel: +61 2 9387 5540www.mpi.org.auwww.mpi.org.auwww.mpi.org.auwww.mpi.org.auwww.mpi.org.au

Plunder! Plunder! Plunder! Plunder! Plunder! TTTTThe Storhe Storhe Storhe Storhe Story ofy ofy ofy ofy of Rio Rio Rio Rio Rio Tinto ZincTinto ZincTinto ZincTinto ZincTinto ZincRoger MoodyPartizans, 218 Liverpool Road, London N6 5AA.

FFFFFolloolloolloolloollow the Mining Monew the Mining Monew the Mining Monew the Mining Monew the Mining Money:y:y:y:y: An An An An An ActiActiActiActiActivist vist vist vist vist TTTTToolkit foolkit foolkit foolkit foolkit for Diror Diror Diror Diror Direct Corect Corect Corect Corect CorporporporporporaaaaateteteteteCampaigningCampaigningCampaigningCampaigningCampaigning

Western Mining Activist Networkc/o Western Organization of Resource Councils, 2401 Montana Avenue, #301

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Billings, MT 59101, USATel: +1 406 252 9672First class guide. Sections cover: getting information on mining companies;different strategic options for drawing the attention of investors toconcerns over mining operations; and listings of organizations, books,databases and web sites. Available on line from http://http://http://http://http://emcbc.miningwatch.org emcbc.miningwatch.org emcbc.miningwatch.org emcbc.miningwatch.org emcbc.miningwatch.org .

RiskRiskRiskRiskRisky Business:y Business:y Business:y Business:y Business: TTTTThe Grhe Grhe Grhe Grhe Grasberasberasberasberasberg Gold Mine:g Gold Mine:g Gold Mine:g Gold Mine:g Gold Mine: An IndeAn IndeAn IndeAn IndeAn Independent pendent pendent pendent pendent AnnAnnAnnAnnAnnual Rual Rual Rual Rual Reeeeeporporporporpor ttttt1916A MLK Jr. Way, Berkeley, CA 94704, USATel: +1 510-705-8981Email: project_underground@moles.orgwww.moles.orgwww.moles.orgwww.moles.orgwww.moles.orgwww.moles.org

MinerMinerMinerMinerMineral Funds al Funds al Funds al Funds al Funds AdAdAdAdAdvisorvisorvisorvisorvisory Py Py Py Py Pararararar ty Ltd.ty Ltd.ty Ltd.ty Ltd.ty Ltd.www.mineralfunds.comwww.mineralfunds.comwww.mineralfunds.comwww.mineralfunds.comwww.mineralfunds.comInvaluable industry-focussed web site. Has searchable database oncompanies worldwide.

Oxfam Community Aid AbroadOxfam Community Aid AbroadOxfam Community Aid AbroadOxfam Community Aid AbroadOxfam Community Aid Abroad156, George Street, Fitzroy, Victoria 3065, Australia.Tel: +61 3 9289 9444Email: enquire@caa.org.auwww.caa.org.auwww.caa.org.auwww.caa.org.auwww.caa.org.auwww.caa.org.auUseful information on Australian companies mining in Indonesia, with linksto campaign pages.

Project UndergroundProject UndergroundProject UndergroundProject UndergroundProject Underground1916A MLK Jr. Way, Berkeley, CA 94704, USA.Tel: +1 510-705-8981Email: [email protected]

MinerMinerMinerMinerMineral Pal Pal Pal Pal Policolicolicolicolicy Institutey Institutey Institutey Institutey InstitutePO Box 21, Bondi Junction, Australia.Tel: +61 2 9387 5540www.mpi.org.auwww.mpi.org.auwww.mpi.org.auwww.mpi.org.auwww.mpi.org.auResearch and advocacy organisation. Monitors impacts of mining in Asia-Pacific region.

WWWWWesteresteresteresterestern Orn Orn Orn Orn Orggggganizaanizaanizaanizaanization oftion oftion oftion oftion of R R R R Resouresouresouresouresource Councilsce Councilsce Councilsce Councilsce Councils2401 Montana Avenue, #301 Billings, MT 59101, USAwww.worc.orgwww.worc.orgwww.worc.orgwww.worc.orgwww.worc.orgAssociation of grassroots organizations in western US.

Environmental Mining Council of British Columbia (EMCBC)Environmental Mining Council of British Columbia (EMCBC)Environmental Mining Council of British Columbia (EMCBC)Environmental Mining Council of British Columbia (EMCBC)Environmental Mining Council of British Columbia (EMCBC)#201-607 Yates Street, Victoria, BC, Canada V8W 2A7Tel: +1 2050 384 2686http://emcbc.miningwatch.orghttp://emcbc.miningwatch.orghttp://emcbc.miningwatch.orghttp://emcbc.miningwatch.orghttp://emcbc.miningwatch.orgWorks with community groups, unions, government and industry onmining issues in British Colombia and the Yukon.

IndustrIndustrIndustrIndustrIndustry-y-y-y-y-oriented weboriented weboriented weboriented weboriented websitessitessitessitessites



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Dams and DeDams and DeDams and DeDams and DeDams and Devvvvvelopment:elopment:elopment:elopment:elopment: A neA neA neA neA new frw frw frw frw frameameameameamewwwwwororororor k fk fk fk fk for decision-makingor decision-makingor decision-makingor decision-makingor decision-makingby the World Commission on DamsEarthscan Publications Ltd, 120 Pentonville Road, London N1 9JN.www.dams.orgwww.dams.orgwww.dams.orgwww.dams.orgwww.dams.orgReport of a two-year inquiry by an independent commission, drawn fromindustry, government and NGOs, to examine the developmenteffectiveness of dams. Full of information. Sets out a path-breakingframework for future decision-making on energy and water projects, basedon principles of equity, efficiency, participatory decision-making,sustainability and accountability. Recommends that no dam should be builtunless it enjoys “demonstrable public consent” (or, where indigenouscommunities are affected, “prior informed consent”). The report can bedownloaded from the Commission’s web site. The site also contains one ofthe best archives of information on the impacts of dams, consisting ofbackground “thematic papers” and case studies commissioned by theWCD as part of its inquiry and submissions to the regional hearings held bythe Commission during its investigations. Invaluable.

Dams IncorDams IncorDams IncorDams IncorDams Incorporporporporporaaaaated:ted:ted:ted:ted: TTTTThe Rhe Rhe Rhe Rhe Recorecorecorecorecord ofd ofd ofd ofd of TTTTTwwwwwelvelvelvelvelve Eure Eure Eure Eure European Dam Builderopean Dam Builderopean Dam Builderopean Dam Builderopean Dam Buildersssssby Kate Geary, Mathew Grainger, Nicholas Hildyard and Chris LangAvailable from Svenska Naturskyddsforeningen, Box 4625, SE - 116 91,Stockholm, Sweden.Tel: +46 8 702 6500Fax: +46 8 702 08 55Details the record of twelve European dam building companies: ABB(incorporating Alsthom), Balfour Beatty, Coyne et Bellier, Electrowatt,Knight Piesold and Partners, Kvaerner Energy (now GE Hydro),Lahmeyer, Siemens, Skanska, Sogreah, VA Tech (incorporating SulzerHydro). The report contains a wealth of information on the social andecological impacts of the dams built by the companies who financed theprojects and eight case studies.

PPPPPooooowwwwwer Confer Confer Confer Confer ConflictslictslictslictslictsFIVASwww.solidaritetshuset.org/fivas/pub/power_c/index.htmwww.solidaritetshuset.org/fivas/pub/power_c/index.htmwww.solidaritetshuset.org/fivas/pub/power_c/index.htmwww.solidaritetshuset.org/fivas/pub/power_c/index.htmwww.solidaritetshuset.org/fivas/pub/power_c/index.htmExcellent 1994 report on the Norwegian hydropower industry and itsinvolvement in the South.

Silenced RiSilenced RiSilenced RiSilenced RiSilenced Rivvvvvererererers:s:s:s:s: TTTTThe Ecolohe Ecolohe Ecolohe Ecolohe Ecologggggy and Py and Py and Py and Py and Politics ofolitics ofolitics ofolitics ofolitics of Lar Lar Lar Lar Larggggge Damse Damse Damse Damse Damsby Patrick McCullyZed Books, 7 Cynthia Street, London N1 9JF.A classic. If you need one book on the case against large dams, this is it.Invaluable chapter on the political economy of dams.

WWWWWororororor ld Dirld Dirld Dirld Dirld Directorectorectorectorector y ofy ofy ofy ofy of R R R R Reneeneeneeneenewwwwwaaaaabbbbble Enerle Enerle Enerle Enerle EnergggggyyyyyJames and James, 35-37 William Road, London NW1 3ER.

DDDDDAMSAMSAMSAMSAMS

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www.jxj.com/yearbook/wdress/index.htmlwww.jxj.com/yearbook/wdress/index.htmlwww.jxj.com/yearbook/wdress/index.htmlwww.jxj.com/yearbook/wdress/index.htmlwww.jxj.com/yearbook/wdress/index.htmlOver 5,000 companies described, including hydro industry firms.

WWWWWaaaaater Pter Pter Pter Pter Pooooowwwwwer and Dam Constrer and Dam Constrer and Dam Constrer and Dam Constrer and Dam Construction uction uction uction uction YYYYYearbookearbookearbookearbookearbookInternational Water Power and Dam Construction, Wilmington House,Maidstone Road, Foots Cray, Sidcup, Kent DA14 5HZ.www.connectingpower.comwww.connectingpower.comwww.connectingpower.comwww.connectingpower.comwww.connectingpower.comAnnual. Details dams built and under construction, hydro resources,companies and project updates.

InterInterInterInterInternananananational Commission on Lartional Commission on Lartional Commission on Lartional Commission on Lartional Commission on Larggggge Damse Damse Damse Damse Damswww.genepi.louis-jean.com/cigbwww.genepi.louis-jean.com/cigbwww.genepi.louis-jean.com/cigbwww.genepi.louis-jean.com/cigbwww.genepi.louis-jean.com/cigbIndustry umbrella group, with national chapters.

InterInterInterInterInternananananational Hytional Hytional Hytional Hytional Hydrdrdrdrdropoopoopoopoopowwwwwer er er er er AssociaAssociaAssociaAssociaAssociationtiontiontiontionwww.hydropower-dams.comwww.hydropower-dams.comwww.hydropower-dams.comwww.hydropower-dams.comwww.hydropower-dams.comUseful for insights on how the industry is thinking.

WWWWWororororor ld Rld Rld Rld Rld Reneeneeneeneenewwwwwaaaaabbbbble Enerle Enerle Enerle Enerle Energggggy Suppliery Suppliery Suppliery Suppliery Suppliers and Sers and Sers and Sers and Sers and Ser vices Onlinevices Onlinevices Onlinevices Onlinevices Onlinewww.jxj.com/suppands/renenerg/index.htmlwww.jxj.com/suppands/renenerg/index.htmlwww.jxj.com/suppands/renenerg/index.htmlwww.jxj.com/suppands/renenerg/index.htmlwww.jxj.com/suppands/renenerg/index.htmlArguably the most comprehensive global database of hydro-industrycompanies available. You can tailor your search by region and country,activity or alphabetical listing. The database can be searched for free.

WWWWWororororor ld ld ld ld ld WWWWWaaaaater Buyter Buyter Buyter Buyter Buyer’er’er’er’er’s Guides Guides Guides Guides Guidewww.connectingpower.com/buyers_guidewww.connectingpower.com/buyers_guidewww.connectingpower.com/buyers_guidewww.connectingpower.com/buyers_guidewww.connectingpower.com/buyers_guideUseful searchable database of suppliers in the hydro industry.

InterInterInterInterInternananananational Ritional Ritional Ritional Ritional Rivvvvvererererers Netws Netws Netws Netws Networorororor kkkkk1847, Berkeley Way, Berkeley CA 94703, USA.Tel: + 1 510 848 1155Email: irn@irn.orgwww.irn.orgwww.irn.orgwww.irn.orgwww.irn.orgwww.irn.orgFirst port-of-call for anyone seeking information on current and past damconflicts. All issues relating to the social and environmental impacts ofdams. Excellent links to organisations challenging dams around the world.

SwSwSwSwSwedish Society fedish Society fedish Society fedish Society fedish Society for Naor Naor Naor Naor Naturturturturture Consere Consere Consere Consere Conser vvvvvaaaaationtiontiontiontionPO Box 4625, Asogataan 115, 11691 Stockholm, Sweden.Tel: +48 8 702 650Email: info@snf.sewww.snf.sewww.snf.sewww.snf.sewww.snf.sewww.snf.seMonitors Swedish involvement in destructive development projects. DamsIncorporated (see above) can be downloaded from the site (type “DamsInc” into search facility; the report comes up under “Vattenkraft”)

FIVFIVFIVFIVFIVASASASASASOserhausgt. 27, 0183 Oslo, Norway.Tel: +47 22 98 9300Email: [email protected]/fivas/Nyforsideeng.htmwww.solidaritetshuset.org/fivas/Nyforsideeng.htmwww.solidaritetshuset.org/fivas/Nyforsideeng.htmwww.solidaritetshuset.org/fivas/Nyforsideeng.htmwww.solidaritetshuset.org/fivas/Nyforsideeng.htmMonitors Norwegian dam building companies and Norwegian involvement

IndustrIndustrIndustrIndustrIndustry-orientedy-orientedy-orientedy-orientedy-orientedweb sitesweb sitesweb sitesweb sitesweb sites


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in destructive development. You can download FIVAS’s report on theNordic hydropower industry – Power Conflicts – viawww.solidaritetshuset.org/fivas/pub/power_c/index.htm

BerBerBerBerBer ne Decne Decne Decne Decne DeclarlarlarlarlaraaaaationtiontiontiontionQuellenstr. 25, PO Box 1327, CH-8031 Zurich, Switzerland.Tel: +41 12 777 000Email: info@evb.chwww.evb.chwww.evb.chwww.evb.chwww.evb.chwww.evb.chSwiss NGO dedicated to promoting more equitable, sustainable anddemocratic North-South relations. Campaigns against Swiss involvement indestructive development projects and programmes, including dams.Produced 1998 financial analysis of ABB’s involvement in the hydropowersector – High Risk, Low Returns. This (together with other reports on theABB campaign) can be accessed via www.evb.ch/bd/index.html. Site hasEnglish, French and German versions.

Hydropower and DamsHydropower and DamsHydropower and DamsHydropower and DamsHydropower and Damswww.hydropower-dams.com/journal.htmlwww.hydropower-dams.com/journal.htmlwww.hydropower-dams.com/journal.htmlwww.hydropower-dams.com/journal.htmlwww.hydropower-dams.com/journal.htmlBi-monthly industry journal.

InterInterInterInterInternananananational tional tional tional tional WWWWWaaaaater Pter Pter Pter Pter Pooooowwwwwer and Dam Constrer and Dam Constrer and Dam Constrer and Dam Constrer and Dam Constructionuctionuctionuctionuctionwww.connectingpower.comwww.connectingpower.comwww.connectingpower.comwww.connectingpower.comwww.connectingpower.comMonthly industry journal. Useful for news of contracts and updates onprojects.

The following books are industry outsiders’ treatments of the paperindustry and its effects:

Pulping the South:Pulping the South:Pulping the South:Pulping the South:Pulping the South: Industrial Industrial Industrial Industrial Industrial TTTTTrrrrree Plantaee Plantaee Plantaee Plantaee Plantations and the tions and the tions and the tions and the tions and the WWWWWororororor ld Pld Pld Pld Pld PaaaaaperperperperperEconomyEconomyEconomyEconomyEconomy

by Larry LohmannZed Books, 7 Cynthia Street, London N1 9JF.

WWWWWororororor ld Rld Rld Rld Rld Rainfainfainfainfainforororororest Moest Moest Moest Moest Movvvvvement,ement,ement,ement,ement, TTTTTrrrrree Plantaee Plantaee Plantaee Plantaee Plantations:tions:tions:tions:tions: Impacts and Str Impacts and Str Impacts and Str Impacts and Str Impacts and Strugugugugugggggglesleslesleslesby Ricardo Carrere and Larry LohmannWorld Rainforest Movement, Maldonado, 1858-11200 Montevideo,Uruguay.Tel: +598 2 403 2989Email: [email protected]

Timber frTimber frTimber frTimber frTimber from the South Seas:om the South Seas:om the South Seas:om the South Seas:om the South Seas: An An An An An AnalAnalAnalAnalAnalysis ofysis ofysis ofysis ofysis of J J J J Jaaaaapanpanpanpanpan’’’’’s s s s s TTTTTrrrrropical opical opical opical opical Timber Timber Timber Timber Timber TTTTTrrrrradeadeadeadeadeand Its Environmental Impactand Its Environmental Impactand Its Environmental Impactand Its Environmental Impactand Its Environmental Impact

by Francois Nectoux and Yoichi KurodaWorld Wildlife Fund , 1196 Gland, Switzerland.Tel: +41 22 364 9111www.panda.orgwww.panda.orgwww.panda.orgwww.panda.orgwww.panda.org

PULP & PPULP & PPULP & PPULP & PPULP & PAPERAPERAPERAPERAPER

LibrLibrLibrLibrLibrararararary ry ry ry ry resouresouresouresouresourcescescescesces

Compiled by Larry Lohmann


190190190190190

TTTTTrrrrrade jourade jourade jourade jourade journalsnalsnalsnalsnals

Logging the GlobeLogging the GlobeLogging the GlobeLogging the GlobeLogging the Globeby M. Patricia MarchakMcGill – Queens University Press, 3430 McTavish Street, Montreal,Quebeco H3A 1X9, Canada

TTTTThe US Phe US Phe US Phe US Phe US Paaaaaper Industrper Industrper Industrper Industrper Industry and Sustainay and Sustainay and Sustainay and Sustainay and Sustainabbbbble Prle Prle Prle Prle Production:oduction:oduction:oduction:oduction: An An An An An ArArArArArgument fgument fgument fgument fgument forororororRRRRRestrestrestrestrestructuringucturingucturingucturingucturing

by Maureen SmithMIT Press, Five Cambridge Centre, Cambridge, Mass., USA

TTTTThe Last Grhe Last Grhe Last Grhe Last Grhe Last Greaeaeaeaeat Ft Ft Ft Ft Forororororest:est:est:est:est: J J J J Jaaaaapanese Multinapanese Multinapanese Multinapanese Multinapanese Multinationals and tionals and tionals and tionals and tionals and AlberAlberAlberAlberAlber ta’ta’ta’ta’ta’s Nors Nors Nors Nors Nor thertherthertherthernnnnnFFFFForororororestsestsestsestsests

by Larry Pratt and Ian UrquhartNeWest Press, 201,8540 - 109 Street, Edmonton, CanadaTel: +1 780 432 9427

Cut Cut Cut Cut Cut WWWWWasteasteasteasteaste,,,,, Not Not Not Not Not TTTTTrrrrreeseeseeseeseesRainforest Action Network, 221 Pine Street, Suite 500, San Francisco, CA94104, USA.Tel: +1 415 398 4404Email: rainforest@ran.orgwww.ran.orgwww.ran.orgwww.ran.orgwww.ran.orgwww.ran.org

Dying frDying frDying frDying frDying from Dioom Dioom Dioom Dioom Dioxin:xin:xin:xin:xin: A CitizA CitizA CitizA CitizA Citizenenenenen’’’’’s Guide to Rs Guide to Rs Guide to Rs Guide to Rs Guide to Recececececlaiming Our Health andlaiming Our Health andlaiming Our Health andlaiming Our Health andlaiming Our Health andRRRRReeeeebbbbbuilding Democruilding Democruilding Democruilding Democruilding Democracacacacacyyyyy

by Lois Marie GibbsSouth End Press, 7 Brookline Street #1, Cambridge, Mass 02139-4149,USA.Tel: +1 800 523 8478www.southendpress.orgwww.southendpress.orgwww.southendpress.orgwww.southendpress.orgwww.southendpress.org

PPPPPaaaaaper Cuts:per Cuts:per Cuts:per Cuts:per Cuts: R R R R Recoecoecoecoecovvvvvering the Pering the Pering the Pering the Pering the Paaaaaper Landscaper Landscaper Landscaper Landscaper Landscape – pe – pe – pe – pe – WWWWWororororor ldldldldldwwwwwaaaaatctctctctch Ph Ph Ph Ph Paaaaaper 149per 149per 149per 149per 149by Janet Abramowitz and Ashley MattoonWorldWatch Institute, 1176 Massachusetts Ave NW, Washington DC20036-1904, USA.Tel: +1 202 452 1999Email: worldwatch@worldwatch.orgwww.worldwatch.orgwww.worldwatch.orgwww.worldwatch.orgwww.worldwatch.orgwww.worldwatch.org

Of many industry journals, the following two are perhaps the mostuseful in providing insiders’ updates on both industry evolution and theroles of particular firms. They are available in the Science andBusiness Information Service of the British Library and other largebusiness collections:

Pulp and PPulp and PPulp and PPulp and PPulp and Paaaaaper Interper Interper Interper Interper Internananananational (PPI)tional (PPI)tional (PPI)tional (PPI)tional (PPI)

Paper & Packaging AnalystPaper & Packaging AnalystPaper & Packaging AnalystPaper & Packaging AnalystPaper & Packaging Analyst

Other valuable industry periodicals available in business librariesinclude Asia Pulp and Paper, Paper, Paper Asia, Paper Europe,Paperboard Packaging, Papermaker, Pulp and Paper, TAPPI Journal,and World Wood. Both PPI and the Japan Paper Association publish anannual collection of pulp and paper Statistics. Specific paper or paper-machinery companies such as ENSO and Valmet also produceperiodicals. Providing interesting overview articles on the industry is


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Know-How Wire, the client journal of the giant forestry and engineeringconsulting company Jaakko Poyry, headquartered in Finland.

NGO periodicals providing updates on the paper industry’s activitiesinclude:

DoDoDoDoDown to Earwn to Earwn to Earwn to Earwn to Ear ththththth59 Athenlay Road, London SE15 3EN, UK.Tel: +44 207 732 7984Email: [email protected]/dtewww.gn.apc.org/dtewww.gn.apc.org/dtewww.gn.apc.org/dtewww.gn.apc.org/dteExcellent. Covers environmental justice issues in Indonesia, whereplantations and pulp mills are leading social and ecological menaces.

TTTTTaigaigaigaigaiga Nea Nea Nea Nea NewswswswswsTaiga Rescue Network, Box 116, 96223 Jokkmokk, Sweden.Tel: +46 971 17039Email: info@taigarescue.orgwww.taigarescue.orgwww.taigarescue.orgwww.taigarescue.orgwww.taigarescue.orgwww.taigarescue.orgAlso invaluable. Provides information on corporate threats to boreal forestlands.

EarEarEarEarEar th Firth Firth Firth Firth First!st!st!st!st!PO Box 3023, Tuscon, AZ 85702, USA.Tel: +1 520 620 6900Email: collective@earthfirstjournal.orgwww.earthfirstjournal.orgwww.earthfirstjournal.orgwww.earthfirstjournal.orgwww.earthfirstjournal.orgwww.earthfirstjournal.orgOften covers paper corporations’ impacts on North American lands

EvEvEvEvEverererereryyyyyone’one’one’one’one’s Bacs Bacs Bacs Bacs BackkkkkyyyyyararararardddddCenter for Health, Environment and Justice, Inc., PO Box 6806, FallsChurch, VA 22040, USA.Tel: +1 703 237 2249Email: [email protected]/cchwwww.essential.org/cchwwww.essential.org/cchwwww.essential.org/cchwwww.essential.org/cchwOffers updates on and shrewd analysis of grassroots environmental justiceissues connected with dioxin and with the paper and other industries.

PR PR PR PR PR WWWWWaaaaatctctctctchhhhhCenter for Media & Democracy, 520 University Ave., Suite 310, Madison,WI 53703, USA.Tel: +1 608 260 9713Email: editor@prwatch.orgwww.prwatch.orgwww.prwatch.orgwww.prwatch.orgwww.prwatch.orgwww.prwatch.orgValuable for its analysis of corporate strategy.

Regularly-held Financial Times conferences on pulp and paper areuseful places to pick up the latest information on the industry.

Pulp & Paper OnlinePulp & Paper OnlinePulp & Paper OnlinePulp & Paper OnlinePulp & Paper Onlinewww.pulpandpaperonline.comwww.pulpandpaperonline.comwww.pulpandpaperonline.comwww.pulpandpaperonline.comwww.pulpandpaperonline.comAn industry website; provides useful information about the paper industry

NGO periodicalsNGO periodicalsNGO periodicalsNGO periodicalsNGO periodicals

ConfConfConfConfConferererererencesencesencesencesences

IndustrIndustrIndustrIndustrIndustry-orientedy-orientedy-orientedy-orientedy-orientedwebsiteswebsiteswebsiteswebsiteswebsites


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The trade in rights to pollute the atmosphere with carbon is a newmarket sector which, although it may soon be worth hundreds ofbillions of dollars, is still very much under construction. A backgroundbriefing on the issue (“The Dyson effect: Carbon ‘offset’ forestry andthe privatisation of the atmosphere”) is available from The CornerHouse, Station Road, Sturminster Newton, Dorset DT10 1YJ, but thereare no comprehensive guides to the territory. An electronic version ofthe Corner House’s briefing can be obtained fromwww.cornerhouse.icaap.org .

CARBON TRADINGCARBON TRADINGCARBON TRADINGCARBON TRADINGCARBON TRADING

as well as links to other sites.

Paper LoopPaper LoopPaper LoopPaper LoopPaper Loopwww.paperloop.comwww.paperloop.comwww.paperloop.comwww.paperloop.comwww.paperloop.comInter-industry website with the information on research, companies andconferences.

American FAmerican FAmerican FAmerican FAmerican Forororororest and Pest and Pest and Pest and Pest and Paaaaaper per per per per AssociaAssociaAssociaAssociaAssociation.tion.tion.tion.tion.www.afandp.orgwww.afandp.orgwww.afandp.orgwww.afandp.orgwww.afandp.org

P P P P Paaaaaper Fper Fper Fper Fper Federederederederederaaaaation oftion oftion oftion oftion of Gr Gr Gr Gr Greaeaeaeaeat Britain.t Britain.t Britain.t Britain.t Britain.www.paper.org.ukwww.paper.org.ukwww.paper.org.ukwww.paper.org.ukwww.paper.org.ukInformation on members of Paper Federation of Great Britain

Canadian Pulp and Paper AssociationCanadian Pulp and Paper AssociationCanadian Pulp and Paper AssociationCanadian Pulp and Paper AssociationCanadian Pulp and Paper Associationwww.cppa.orgwww.cppa.orgwww.cppa.orgwww.cppa.orgwww.cppa.org

CorCorCorCorCor porporporporporaaaaate Infte Infte Infte Infte Infororororor mamamamamationtiontiontiontionwww.corporateinformation.com/jpsector/peper.htmlwww.corporateinformation.com/jpsector/peper.htmlwww.corporateinformation.com/jpsector/peper.htmlwww.corporateinformation.com/jpsector/peper.htmlwww.corporateinformation.com/jpsector/peper.htmlInformation about 45 Japanese pulp and paper companies.

Pulp and PPulp and PPulp and PPulp and PPulp and Paaaaaper Interper Interper Interper Interper Internananananationaltionaltionaltionaltionalwww.ppi-mfi.comwww.ppi-mfi.comwww.ppi-mfi.comwww.ppi-mfi.comwww.ppi-mfi.com

Index of Pulp and Paper BooksIndex of Pulp and Paper BooksIndex of Pulp and Paper BooksIndex of Pulp and Paper BooksIndex of Pulp and Paper Bookswww.books.mfi.com/paperwww.books.mfi.com/paperwww.books.mfi.com/paperwww.books.mfi.com/paperwww.books.mfi.com/paper

Center for Health, Environment and JusticeCenter for Health, Environment and JusticeCenter for Health, Environment and JusticeCenter for Health, Environment and JusticeCenter for Health, Environment and Justicewww.chej.orgwww.chej.orgwww.chej.orgwww.chej.orgwww.chej.org

PR PR PR PR PR WWWWWaaaaatctctctctchhhhhwww.prwatch.orgwww.prwatch.orgwww.prwatch.orgwww.prwatch.orgwww.prwatch.org

TTTTTaigaigaigaigaiga Ra Ra Ra Ra Rescue Netwescue Netwescue Netwescue Netwescue Networororororkkkkkwww.snf.se/TRNwww.snf.se/TRNwww.snf.se/TRNwww.snf.se/TRNwww.snf.se/TRN

WWWWWororororor ld Rld Rld Rld Rld Rainfainfainfainfainforororororest Moest Moest Moest Moest Movvvvvementementementementementwww.wrm.org.uywww.wrm.org.uywww.wrm.org.uywww.wrm.org.uywww.wrm.org.uyHas an extensive section on pulpwood plantations.

Compiled by Larry Lohmann


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LibrLibrLibrLibrLibrarararararyyyyyrrrrresouresouresouresouresourcescescescesces

For general background to the scientific issues surrounding climatechange, see the Intergovernmental Panel on Climate Change’s reportsand assessments. The IPCC (www.ipcc.org.ch) assesses the state ofknowledge regarding climate change every five years in addition toproducing technical papers, special reports and methodological work.The IPPC’s controversial Special Report on Land Use, Land UseChange and Forestry (Cambridge University Press, May 2000) lays outsome of the methodologies that corporations and governments might usein planting trees as a way gaining permission to emit carbon dioxide,but conveys little understanding of the social issues involved in carbontrading.

Some of the narrower technical issues are treated, with widely varyingdegrees of professionalism, in academic or technocratic journals suchas Global Environmental Change, Energy Policy, EnvironmentalEconomics, Biomass and Bioenergy, Mitigation and AdaptationStrategies for Global Change, Environmental Science and Policy andJoint Implementation Quarterly (www.northsea.nl/jiq).

More useful in tracking the activities and interests of the growingcarbon business is Environmental Finance, a new periodical edited outof the UK (www.environmental-finance.com). Subscription inquiresshould be addressed to [email protected] .

Also of interest is the Australian newsletter Carbon Market(www.carbonmarket.com), published by Ecos Corporation. Generalistnewspapers and periodicals, such as the Financial Times and AmericanProspect, also occasionally carry coverage of the subject. The GallonEnvironment Letter from the Canadian Institute for Business andEnvironment ([email protected]) is also useful.

Uncritical analyses endorsing trading emissions for trees range from theearly Mark Trexler and C. Haugen, Keeping it Green: TropicalForestry Opportunities for Mitigating Climate Change, published bythe World Resources Institute, Washington DC, to the more recentMichael Totten, Getting it Right: Emerging Markets for StoringCarbon in Forests (published by Forest Trends and the WorldResources Institute, Washington DC).

Cantor FitzgCantor FitzgCantor FitzgCantor FitzgCantor Fitzgerererererald Enald Enald Enald Enald Envirvirvirvirvironmental Bronmental Bronmental Bronmental Bronmental Brokokokokokerererereraaaaaggggge Sere Sere Sere Sere Ser vicesvicesvicesvicesviceswww.emissionstrading.com or www.cantor.com/ebswww.emissionstrading.com or www.cantor.com/ebswww.emissionstrading.com or www.cantor.com/ebswww.emissionstrading.com or www.cantor.com/ebswww.emissionstrading.com or www.cantor.com/ebs

Carbon StorCarbon StorCarbon StorCarbon StorCarbon Storaaaaaggggge e e e e TTTTTrrrrrustustustustustwww.co2.orgwww.co2.orgwww.co2.orgwww.co2.orgwww.co2.org

C*TC*TC*TC*TC*Trrrrr adeadeadeadeadeEmail: info@ctrade.orgwww.ctrade.orgwww.ctrade.orgwww.ctrade.orgwww.ctrade.orgwww.ctrade.orgUS company that helps business clients identify, design, develop, verify,register and certify carbon “offset” projects.

Carbon brCarbon brCarbon brCarbon brCarbon brokokokokokererererersssss& consultants& consultants& consultants& consultants& consultants


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Associations,Associations,Associations,Associations,Associations,exchanges &exchanges &exchanges &exchanges &exchanges &infinfinfinfinfororororormamamamamationtiontiontiontion

EcoSecuritiesEcoSecuritiesEcoSecuritiesEcoSecuritiesEcoSecuritieswww.ecosecurities.comwww.ecosecurities.comwww.ecosecurities.comwww.ecosecurities.comwww.ecosecurities.comUK company which has worked with Shell, SGS Forestry, ConservationInternational and the Costa Rican and Australian governments on carbonprojects. It recently developed an alliance with PriceWaterhouseCoopers inAustralia (www.pwcglobal.com) to develop products and services relatingto climate change, including emissions “reduction” (sic) credits.

Edinburgh Centre for Carbon ManagementEdinburgh Centre for Carbon ManagementEdinburgh Centre for Carbon ManagementEdinburgh Centre for Carbon ManagementEdinburgh Centre for Carbon Managementwww.eccm.uk.comwww.eccm.uk.comwww.eccm.uk.comwww.eccm.uk.comwww.eccm.uk.comDesigns, assesses and monitors projects to sequester or manage carbon inMexico, Britain and other countries.

Environmental Financial Products, Inc.Environmental Financial Products, Inc.Environmental Financial Products, Inc.Environmental Financial Products, Inc.Environmental Financial Products, Inc.www.envifi .comwww.envifi .comwww.envifi .comwww.envifi .comwww.envifi .comChicago-based firm, run by the financial derivatives pioneer RichardSandor. Sandor brokered a deal by which Ontario Power purchasedemissions “reductions” (sic) credits from ZAPCO (Zahren Alternativepower Corporation, www.zahren.com), a firm that converts landfill gas toenergy. Environmental Finance works with a broad spectrum oforganisations, including PriceWaterhouseCoopers, the world’s largestconsulting firm, and has advised Brazilian, Canadian and Australianofficials on carbon trades.

FFFFForororororests fests fests fests fests for the Futuror the Futuror the Futuror the Futuror the Futureeeeewww.futureforests.comwww.futureforests.comwww.futureforests.comwww.futureforests.comwww.futureforests.comContracts with Mazda, Avis, British Telecom, Access Freight, J. WalterThompson and other firms to plant trees to “compensate” for theiremissions.

SGS (Societe GenerSGS (Societe GenerSGS (Societe GenerSGS (Societe GenerSGS (Societe Generale de Surale de Surale de Surale de Surale de Sur vvvvveillance) Feillance) Feillance) Feillance) Feillance) Forororororestrestrestrestrestryyyyywww.sgs.co.uk/forestrywww.sgs.co.uk/forestrywww.sgs.co.uk/forestrywww.sgs.co.uk/forestrywww.sgs.co.uk/forestryDesigns, monitors and certifies carbon forestry projects.

TTTTTrrrrreeeeexler and xler and xler and xler and xler and AssociaAssociaAssociaAssociaAssociatestestestesteswww.climateservices.comwww.climateservices.comwww.climateservices.comwww.climateservices.comwww.climateservices.comA US-based firm that promotes and monitors “climate mitigation projects”.

WWWWWinrinrinrinrinrococococock Interk Interk Interk Interk Internananananational Institute ftional Institute ftional Institute ftional Institute ftional Institute for or or or or AgAgAgAgAgriculturriculturriculturriculturricultural Deal Deal Deal Deal Devvvvvelopmentelopmentelopmentelopmentelopmentwww.winrock.orgwww.winrock.orgwww.winrock.orgwww.winrock.orgwww.winrock.orgNot-for-profit organisation. Undertakes contracts for carbon measurementand monitoring.

TTTTThe Emission Marhe Emission Marhe Emission Marhe Emission Marhe Emission Markkkkketing eting eting eting eting AssociaAssociaAssociaAssociaAssociationtiontiontiontionEmail: info@emissions.orgwww.emissions.orgwww.emissions.orgwww.emissions.orgwww.emissions.orgwww.emissions.orgBoasts 140 corporate members, arranges meetings and other events to“serve the international emissions trading community”.

ClimaClimaClimaClimaClimate te te te te ArArArArArkkkkkwww.climateark.org/climateark.htmlwww.climateark.org/climateark.htmlwww.climateark.org/climateark.htmlwww.climateark.org/climateark.htmlwww.climateark.org/climateark.htmlUseful web search tool on climate change, carbon trading and alternativeenergy sources.


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Resources for the FutureResources for the FutureResources for the FutureResources for the FutureResources for the Futurewww.rff.weathervane.orgwww.rff.weathervane.orgwww.rff.weathervane.orgwww.rff.weathervane.orgwww.rff.weathervane.orgIndustry-friendly think-tank. Champions carbon trading and maintains awebsite devoted to climate issues.

Rocky Mountain InstituteRocky Mountain InstituteRocky Mountain InstituteRocky Mountain InstituteRocky Mountain Institutewww.rmi.orgwww.rmi.orgwww.rmi.orgwww.rmi.orgwww.rmi.orgLeading think-tank in energy and energy efficiency.

The energy utilities, oil corporations, car companies, travel agents,NGOs and others in the market for carbon emission credits are toonumerous to list here. A Dutch consortium of energy utilities which wasone of the first in the field is described at www.facefoundation.nl/. Inthe mid-1990s, some 41 North American utilities formed a consortiumcalled the UtiliTree Carbon Company to pursue carbon trades. Firmssuch as Suncor (www.suncor.com), Ontario Power(www.ontariopowergneration.com) and TransAlta(www.transalta.com) have sought carbon credits from a wide range ofsellers. Shell (www.shell.com) and BP (www.bp.com), meanwhile,have launched internal carbon trading schemes to help themselves meettheir own emissions-reduction goals more efficiently.

The UN climate negotiations, which are expected to set out some of therules for an international carbon market, are tracked by the InternationalInstitute for Sustainable Development (www.iisd.ca/climate). TheUnited Nations Framework Convention on Climate Change’s web site(www.unfccc.de). The Intergovernmental panel on Climate Change(IPCC) has a web site at www.ipcc.org.ch .

The World Bank’s Prototype Carbon Fund maintains a website(www.prototypecarbonfund.com) aimed largely at attracting corporateinterest in carbon trading.

Various departments of the US government provide support for thedeveloping carbon market, including the Departments of State(www.state.gov) and Energy (www.doe.gov), as well as theEnvironmental Protection Agency (www.epa.gov). The Department ofEnergy subsidizes research in carbon sequestration and its 1999Carbon Sequestration State of the Science: A Working paper forRoadmapping Future Carbon Sequestration R&D is available atwww.fe.doe.gov/coal_power/sequestration/index_rpt.html .

Many Latin American governments, including those of Costa Rica,Chile, Colombia, Bolivia and Guyana support carbon forestry projects.A useful source of information is www.iucn.org/reuters/articles/winningweurope.htm.

CompaniesCompaniesCompaniesCompaniesCompaniesbuying carbonbuying carbonbuying carbonbuying carbonbuying carbon

emissionemissionemissionemissionemissioncrcrcrcrcreditseditseditseditsedits

GoGoGoGoGovvvvvererererernmentsnmentsnmentsnmentsnmentspromotingpromotingpromotingpromotingpromoting

carbon trcarbon trcarbon trcarbon trcarbon tradingadingadingadingading

InterInterInterInterInternananananationaltionaltionaltionaltionalagenciesagenciesagenciesagenciesagencies


196196196196196

NGOs morNGOs morNGOs morNGOs morNGOs moreeeeecritical of carboncritical of carboncritical of carboncritical of carboncritical of carbontrtrtrtrtradingadingadingadingading

NGOs andNGOs andNGOs andNGOs andNGOs andacademicsacademicsacademicsacademicsacademicssympathetic tosympathetic tosympathetic tosympathetic tosympathetic tocarbon trcarbon trcarbon trcarbon trcarbon tradingadingadingadingading

The New South Wales government in Australia(www.forest.nsw.gov.au) is notably active in carbon trading involvingforestry. The Sydney Futures Exchange also looks to play a large role inthe carbon market and has a website at www.carbontrading.com.au .

TTTTThe Nahe Nahe Nahe Nahe Naturturturturture Consere Consere Consere Consere Conser vvvvvancancancancancyyyyywww.tnc.orgwww.tnc.orgwww.tnc.orgwww.tnc.orgwww.tnc.org

Environmental DefenseEnvironmental DefenseEnvironmental DefenseEnvironmental DefenseEnvironmental Defensewww.edf.orgwww.edf.orgwww.edf.orgwww.edf.orgwww.edf.org

Union ofUnion ofUnion ofUnion ofUnion of Concer Concer Concer Concer Concerned Scientistsned Scientistsned Scientistsned Scientistsned Scientistswww.ucsusa.orgwww.ucsusa.orgwww.ucsusa.orgwww.ucsusa.orgwww.ucsusa.org

Center fCenter fCenter fCenter fCenter for Interor Interor Interor Interor Internananananational Lational Lational Lational Lational Lawwwwwwww.ciel.orgwww.ciel.orgwww.ciel.orgwww.ciel.orgwww.ciel.org

WWWWWororororor ld Rld Rld Rld Rld Resouresouresouresouresources Instituteces Instituteces Instituteces Instituteces Institutewww.wri.orgwww.wri.orgwww.wri.orgwww.wri.orgwww.wri.org

Alex MichaelowaAlex MichaelowaAlex MichaelowaAlex MichaelowaAlex Michaelowahttp://perso.easynet.fr/~michaelohttp://perso.easynet.fr/~michaelohttp://perso.easynet.fr/~michaelohttp://perso.easynet.fr/~michaelohttp://perso.easynet.fr/~michaelo

Centre for Science and Environment, IndiaCentre for Science and Environment, IndiaCentre for Science and Environment, IndiaCentre for Science and Environment, IndiaCentre for Science and Environment, Indiawww.cse.india.orgwww.cse.india.orgwww.cse.india.orgwww.cse.india.orgwww.cse.india.org

GreenpeaceGreenpeaceGreenpeaceGreenpeaceGreenpeacewww.greenpeace.orgwww.greenpeace.orgwww.greenpeace.orgwww.greenpeace.orgwww.greenpeace.org

Global Commons InstituteGlobal Commons InstituteGlobal Commons InstituteGlobal Commons InstituteGlobal Commons Institutewww.gci.org.ukwww.gci.org.ukwww.gci.org.ukwww.gci.org.ukwww.gci.org.uk

TTTTTrrrrransnaansnaansnaansnaansnational Rtional Rtional Rtional Rtional Researesearesearesearesearccccch and h and h and h and h and Action CentrAction CentrAction CentrAction CentrAction Centreeeeewww.trac.orgwww.trac.orgwww.trac.orgwww.trac.orgwww.trac.org

WWWWWororororor ld Rld Rld Rld Rld Rainfainfainfainfainforororororest Moest Moest Moest Moest Movvvvvementementementementementwww.wrm.org.uywww.wrm.org.uywww.wrm.org.uywww.wrm.org.uywww.wrm.org.uy

WWWWWororororor ld ld ld ld ld WWWWWide Fund fide Fund fide Fund fide Fund fide Fund for Naor Naor Naor Naor Naturturturturture (WWF)e (WWF)e (WWF)e (WWF)e (WWF)www.wwf.orgwww.wwf.orgwww.wwf.orgwww.wwf.orgwww.wwf.org


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RRRRRefefefefeferererererencesencesencesencesences1. Kristof, N.D. and Sanger, D.E., “How US wooed Asia to let cash flow in”, The

New York Times, 16 February 1999.2. Brown, J., “From slow start to relentless build-up – globalisation of equity

markets now looks unstoppable as the cheapest capital options are sought”,Markets 2000 – A millenium guide, Financial Times, January 2000, p.6.

3. Coggan, P., “Investors prosper in open economy”, Markets 2000 – A milleniumguide, Financial Times, January 2000, p.6.

4. Business Week, “Global capitalism – can it be made to work better?” Specialreport, 6, November 2000, p.40.

5. Between 1980 and 1992, the World bank recorded a total of 6,832 state-ownedcompanies being sold: the majority are now owned by transnationalcorporations.

6. Harbinson, J.R. and Pekar, P., “Institutionalising alliance skills: secrets ofrepeatable success”, Strategies and Business, Issue 11, Second quarter, 1998,p.80.

7. Crooks E., “Britain takes lead in overseas investment”, Financial Times, 9February 2000.

8. Quoted in Khor, M., Rethinking liberalisation and reshaping the WTO, ThirdWorld Network, Penang, June 2000.

9. Business Week, Global capitalism: can it be made to work better?”, Specialreport, 6 November 2000, p.43.

10. Quoted in Khor, M., Rethinking liberalisation and reshaping the WTO, ThirdWorld Network, Penang, June 2000.

11. Utting, P., Business responsibility for sustainable development, UN ResearchInstitute for Social Development, Geneva, 2000, pp.1-2.

12. Lash, J., “Foreword”, in Ghazi, J., Seymour, F., Buffet, S. and Dubash, N.,leverage for the Environment: A guide to the private financial servicesindustry, World Resources Institute, Washington, DC, 1998, p.iv.

13. Utting, P. Business responsibility for sustainable development, UN ResearchInstitute for Social Development, Geneva, 2000, p.1.

14. In the 1980s and 1990s, pressure from environmentalists and developmentactivists forced the majority of development agencies, such as the World Bank,to adopt environmental and development standards, which, though far fromstringent and often not observed, nonetheless imposed a range of conditions onproject developers. Environmental impact assessments are now mandatory formany categories of projects: the participation of affected groups is increasinglyrequired; and project developers are (in theory) bound by a raft of rulesgoverning involuntary resettlement, indigenous peoples, wetlands and forests.

15. Ganzi, J. and Tanner, J., Global survey on environmental policies andpractices of the financial services industry: The private sector, NationalWildlife Federation, Washington DC, 1998. Ganzi and Tanner report that lessthan 50% of the companies they surveyed “always” or “usually” require thatenvironmental due diligence be performed on lines of credit, project finance


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transactions or equipment financing. In addition, while the survey found thatmonitoring by banks of a borrowers’ environmental performance has increased,the banks which lent the money rarely do anything with the information they gain,other than requesting the borrower to “fix the problem”.

16. Browne, A., “Trail of rainforest wood from the Amazon to the High Street”, TheObserver, 23 July 2000.

17. Vidal, J., “Power to the people”, The Guardian, 7 June 1999.18. Vidal, J., “Power to the people”, The Guardian, 7 June 1999.19. Ward, A., “Squirming in the ethical spotlight”, Financial Times, 13 July 2000.20. “Putting initiatives to the test”, Business in the community: A Financial Times

Guide, Financial Times, London, 1998, p.6.21. Vidal, J., “Consumer power ready to take on corporations”, The Guardian, 27

November 1999.22. Brown, P. and Vidal, J., “GM investors told to sell shares”, The Guardian, 25

August 1999.23. Quoted in Henderson, C., “Pilgrim in the casino”, Green Futures, March/April

2000, p.42.24. Quoted in Business Week, Global capitalism: can it be made to work better?”,

Special report, 6 November 2000, p.45.25. Quoted in Maitland, A., “A code to export best practice”, Financial Times, 29

January 1999.26. Maitland, A., “Human rights weigh heavier with investors”, Financial Times, 6

April 2000.27. Hill, A., “Wall Street crush: the number of US citizens owning shares is higher

than it has ever been but the image of the typical investor remains hard to pindown”, Financial Times, 30 August 2000.

28. Ward, A., “Pension holders back green funds”, Financial Times, 23 August2000.

29. Ward, A., “Ethical investing: companies come under pressure to alter course”,Financial Times, 8 July/9th July 2000.

30. Jones, R., “What to look for if you go ethical”, The Guardian, 18 March 2000.31. Quoted in Ward, A., “Ethical investing: companies come under pressure to alter

course”, Financial Times, 8 July/9th July 2000.32. Tanner, J., Statement to ABB shareholders’ AGM, Zurich, 1 April 1998.33. Business Week, Global capitalism: can it be made to work better?”, Special

report, 6 November 2000, p.42.34. Personal communication, June 2000. The executive requested anonymity.35. MacKenzie, C., Director of the Ethics Unit at Friends Ivory and Sime, quoted in

Ward, A., “City funds added value in green credentials”, Financial Times, 31August 2000.

36. Suranyi, M., “Blind to sustainability? Stock markets and the environment, Forumfor the Future, London, 1999.

37. “Putting initiatives to the test”, Business in the community: A Financial TimesGuide, Financial Times, London, 1998, p.6.

38. Burns, J., “Pressure groups ‘have influence on investors’”, Financial Times, 22May 2000.


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39. Pensions Week, July 1999.40. 1995 Pensions Act, London, The Stationary Office, www.hmso.gov.uk/acts .41. Quoted in “Rise of the green factor”, The Guardian, 3 June 2000.42. Henderson, C., “Pilgrim in the casino”, Green Futures, March/April 2000, p.41.43. Turnbull Committee, Internal controls: Guidance for directors on the combined

code, Institute of Chartered Accountants, London, 1999.44. Henderson, C., “Pilgrim in the casino”, Green Futures, March/April 2000, p.39.45. Department of Trade and Industry, Modern company law for a competitive

economy, London, July 2001.46. Crowe, R., “Start of quiet revolution in pension funds”, The Guardian, 30 June

2000.47. Chitty, G., “Climate of change”, Green Futures, November/December 2000,

p.21.48. Chitty, G., “Climate of change”, Green Futures, November/December 2000,

p.21.49. Quoted in Crowe, R., “Start of quiet revolution in pension funds”, The Guardian,

30 June 2000.50. Quoted in Birch, S., “Accentuating the positive”, The Observer, 2 July 2000.51. Greenpeace, Re-source: Market alternatives to ancient forest destruction,

Greenpeace, London, 1999, p.19.52. Quoted in Sharma, A., “Ensuring corporate responsibility: Beyond sticks and

stones”, Higher Values, 11, February 1997, p.17.53. Chan-Fishel, M., Risk exposure: Revealing environmental risks to financiers –

Anatomy of a deal, White Paper # 1, Friends of the Earth-US, Washington DC,1998, p.5.

54. World Commission on Dams, Dams and Development – A new framework fordecision-making, Earthscan, London, 2000.

55. Chitty, G., “Climate of change”, Green Futures, November/December 2000,p.21.

56. Chan-Fishel, M., Risk exposure: Revealing environmental risks to financiers –Anatomy of a deal, White Paper # 1, Friends of the Earth-US, Washington DC,1998, p.5.

57. Chan-Fishel, M., Risk exposure: Revealing environmental risks to financiers –Anatomy of a deal, White Paper # 1, Friends of the Earth-US, Washington DC,1998, p.4.

58. Control Risk Group, Business securities outlook 1996, McLean, Virginia, 1996,p.8.

59. Deutsche Banc Alex. Brown, GMOs are Dead, New York, 21 May 1999.60. Nicholas Hildyard, ABB’s hydropower strategy under review, Berne

Declaration, Zurich, February 1998.61. Mineral Policy Institute, The buck’s gotta stop somewhere – social and

environmental accountability in the financing of mining, Mineral PolicyInstitute, Sydney, 1998.

62. Mineral Policy Institute, The buck’s gotta stop somewhere – social andenvironmental accountability in the financing of mining, Mineral PolicyInstitute, Sydney, 1998, p.13.


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63. Blighe, F., International social investment – past, present and future, Paperread to conference on “Making profit while making a difference, New York, 23July 1997.

64. Statement of environmental commitment by the insurance industry, UnitedNations Environment Programme, Cologne, 1995.

65. UNEP statement by financial institutions on the environment and sustainability,United Nations Environment Programme, www.unep.ch/etu/finserv/finserv/english.htm , accessed 1 June 2000.

66. Chan-Fishel, M., Risk exposure: Revealing environmental risks to financiers –Anatomy of a deal, White Paper # 1, Friends of the Earth-US, Washington DC,1998, Appendix 2.

67. For invaluable advice on socially-oriented shareholder activism, see: Friends ofthe Earth-US, Confronting companies using shareholder power, www.foe.org/international/shareholder ; Mackenzie, C., The shareholder action handbook,New Consumer, Newcastle upon Tyne, 1993, www.ethics.fsnet.co.uk .

68. Chan-Fishel, M., Risk exposure: Revealing environmental risks to financiers –Anatomy of a deal, White Paper # 1, Friends of the Earth-US, Washington DC,1998, pp.7-8.


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GlossarGlossarGlossarGlossarGlossaryyyyy“Buy side” Used particularly in America to refer to fund managers and institutional

investors that buy shares and other investments from investment bankers.

Defined Benefit A type of pension where the pension fund pays its members a pensionbased on their final salary. This means the pension fund makes all theinvestment decisions, and the fund sponsor essentially carries the risk ofthe pension.

Defined Contribution A type of pension fund where a fixed amount of money is invested for itsmembers each period, typically a fraction of their current salary. Thismeans the level of pension that scheme members receive will depend oninvestment returns, but also that members may have some choice abouthow their funds are invested.

Equity A “share” or “common stock”. Ownership of a company is divided into anumber of shares (which are usually all equal - hence the term “equity”).Also used to refer to the company itself, particularly in the plural.

Equity market A term for all the shares quoted in a particular area or stock exchange.

Flotation, Floated Essentially the same as IPO - the time a company is first quoted on astock exchange.

FTSE Usually short for “FTSE All Share” - the major benchmark index for theUK equity market. FTSE is the name of a company that develops andcalculates a range of indices.

IPO Initial Public Offering. When a company is first listed on a stock exchange,and its shares are sold to investors, including the general public.

Listed As in “listed on a stock exchange”. This means that the shares areavailable to buy and sell, that the prices at which this happens are madepublic. Normally some brokers agree to “make prices” in the shares. Italso means that the company has to obey the rules of the stock exchange,notably on disclosure of information about the company’s activities.

Make a price State a pair of prices at which someone (typically a broker) is prepared tosell and buy a share.For example, 20-22 means they will buy shares (youcan sell them) at 20, and they will sell them (you buy) at 22.

Privatisation When the government sells off state owned assets to a private sector body.In particular, the selling of a state-owned company to the general public by“floating” it on the stock exchange.

Quoted “Quoted” means somebody is “making a price” (qv) for theequity. See “listed”.

“Sell Side” The investment bankers and stockbrokers (see Part Four, p.77) who makea price in shares, and organise new share issues for companies seeking toraise money.

Share See “equity”.

Sponsor A broker who is responsible for introducing a company to a stockexchange. Vouchsafes for the information provided about thecompany.


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campaigners guide to financial markets

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