Transparency - PowerPoint PPT Presentation

About This Presentation
Title:

Transparency

Description:

Dialogue: Citigroup, JP Morgan, Morgan Stanley... Stock markets and currency movements may cause the value of investments and the ... – PowerPoint PPT presentation

Number of Views:59
Avg rating:3.0/5.0
Slides: 13
Provided by: kth72
Category:

less

Transcript and Presenter's Notes

Title: Transparency


1
Transparency Corruption A Shareholder View
  • The Global Compact
  • Policy Dialogue
  • Karina Litvack
  • ISIS Asset Management
  • Ministry of Economy, Finances and Industry
  • Paris
  • 26-27 January, 2004

2
Outline
  • Why are shareholders involved?
  • Transparency, Corruption and Shareholder Value
  • Why Equator Principles and EITI interest
    shareholders
  • Equator Principles vs EITI
  • Next steps how can investors contribute to their
    success?

3
Why Shareholders?
  • ISIS Asset Management
  • 90 billion Funds Under Management
  • Global investor
  • Long-term holdings Pensions Life Assurance
  • 5 million individuals (retail clients and
    pensioners)
  • Governance specialist shareholder dialogue
  • Growing activism of investment community
  • Governance scandals
  • Slide in share prices
  • Client and regulatory pressure to mind the
    store
  • Engagement makes us better stock pickers
  • As at 31.12.04

4
Transparency, Corruption Shareholder Value
  • Why are shareholders involved?
  • Not so long ago, we looked the other way
  • The share price went up. Next question?
    (Bernie Ebbers)
  • but then we got burnt
  • Marconi, Enron, WorldCom, Parmalat et al
  • Sarbanes-Oxley, UK Combined Code

5
Equator Principles interest shareholders
because...
  • Doing nothing was not an option
  • Default risk
  • Consumers Citigroup the most destructive bank
    in the world Hollywood
  • Shareholders
  • Respected global banks .. are not answerable
    to the shareholders of their customers, but earn
    lucrative fees. They have been involved in many
    of the best-known corporate scandals, in America
    as well as Europe. Arguably, their very presence
    has helped to reassure investors and rating
    agencies. In future it should count for less.
  • The Economist, 18 Dec 03

6
Equator Principles interest shareholders
because...
  • On the plus side...
  • It is an initiative by banks, for banks, with
    teeth
  • Credibility association with recognised IFC
    standards
  • Rapid take-up critical mass, de facto standard
  • However They have teeth, and they are sharp,
    but will they bite?

7
Equator Principles
  • Investors can help, before and after, through
  • Stakeholder engagement
  • Dialogue Citigroup, JP Morgan, Morgan Stanley...
  • Benchmarking Study of Environmental Credit Risk
  • Pre-launch consultation
  • Dissemination and recruitment
  • ...but focus on depth over breadth,
    implementation
  • Engagement with bank customers

8
Equator Principles The Fault Lines
  • Extension to other lending operations esp.
    underwriting
  • Inconsistency between signatories on
  • Interpretation of clauses and safeguards
  • Project categorisation
  • Monitoring
  • Training and use of consultants
  • Regional syndication markets vs. global standards
  • Anti-competititve behaviour informality, yet
    pressure to formalise
  • Export Credit Agenices big role in facilitating
    cross-border credits

9
Equator Principles
  • Investors can help, before and after, through
  • Stakeholder engagement
  • Dialogue Citigroup, JP Morgan, Morgan Stanley...
  • Benchmarking Study of Environmental Credit Risk
  • Pre-launch consultation
  • Dissemination and recruitment
  • ...but focus on depth over breadth,
    implementation
  • Engagement with bank customers

10
EITI
  • Investors Statement on Transparency in the
    Extractives Sector
  • 3 trillion, 38 institutions support EITI
  • It is thanks to the active involvement of all
    parties, including both the businesses operating
    on the ground and the capital markets that fund
    them, that we will succeed in making the EITI
    achieve its goals. Better openness and
    accountability are essential to securing the
    stability and prosperity that the developing
    world needs, and on which our mutual business
    success depends Tony Blair
  • This initiative is good for business, and it is
    good for shareholders Howard Carter, ISIS
  • Investors can push openly where extractive
    companies cannot

11
Lessons Next Steps
  • EP are driven by banks EITI is driven by
    somebody else
  • EP have an institutional host
  • IFC safeguard policies convenient, credible,
    dynamic
  • EITI needs that role to be filled
  • EP will force a realignment in lending practices
    effective conditionality
  • That leverage is absent from EITI
  • Financial leverage counts
  • EP lenders hold the cards, within limits, through
    strong leadership and virtuous collusion
  • Extractive companies lack this leverage

12
Important Notes
  • Issued by ISIS Asset Management plc which is
    authorised and regulated by the Financial
    Services Authority (FSA). This document has been
    produced for information only and should not be
    construed as investment advice.
  • Past performance is not necessarily a guide to
    future performance. Stock markets and currency
    movements may cause the value of investments and
    the income from them to fall as well as rise and
    investors may not get back the amount they
    originally invested.
  • Where investments are made in emerging markets,
    unquoted securities or smaller companies, their
    potential volatility may increase the risk to the
    value of, and the income from, the investment.
  • All sources ISIS Asset Management plc unless
    otherwise stated. www.isisam.com.
  • ISIS Asset Management is registered in Scotland.
    The Registered Office is One Charlotte Square,
    Edinburgh, EH2 4DZ
Write a Comment
User Comments (0)
About PowerShow.com