In letters citing the risk that international sanctions might jeopardize their investments, a coalition of funds from New York, California, North Carolina and Illinois has warned eight foreign energy companies working in Iran about investing there.
These pensions, which include New York City's five main funds and the California Public Employees' Retirement System, hold $3.7 billion worth of shares in energy companies involved in Iran, out of a total $570 billion in assets.
The two-page letters were sent to the chief executives of Royal Dutch Shell, Total of France, Repsol of Spain, Eni of Italy and Gazprom of Russia. In Asia, they were sent to the China National Petroleum, Oil & Natural Gas Corp. of India and Inpex of Japan.
A growing number of U.S. municipalities and legislatures are seeking ways to bar state investments in places like Iran and Sudan. Recently, Florida passed the country's first such measure and others, like California and Texas, are considering similar ones.
Pension funds usually oppose these efforts, which they see as curtailing their ability to invest.
They also point out that long-term investors very rarely divest themselves of any of their holdings. But the funds in the coalition are taking their concerns to the companies directly, seeking to reduce their risks.
"It is increasingly likely that the worsening situation and tightening economic sanctions will negatively impact companies doing business there," said the letters, which referred to Iran as a "state sponsor of terrorism."
The companies were asked to respond about their plans by Aug. 31.
The public strategy is reminiscent of a similar campaign a few years ago in which shareholders pressured U.S. companies like Halliburton, ConocoPhillips and General Electric to shut down the offices of foreign-owned subsidiaries in Iran.
The current move by the institutional shareholders is another headache for European companies with shares traded in American markets in terms of their Gulf strategies.
The U.S. government recently warned foreign energy companies and some foreign governments that they might incur penalties if they pursued deals in Iran. Given the recent tensions, several European companies have frozen plans to invest billions of dollars in several projects.
Iran is the second-largest holder of oil and natural gas reserves after Russia. American companies are barred from doing business there. The assistant comptroller for pension policy at the New York City comptroller's office, Kenneth Sylvester, denied that the move by the pension funds was a response to pressure from state assemblies.
"We are trying to get the companies to focus on the risks to them and to their investors," Sylvester said.
Via: International Herald Tribune
by Jad Mouawad
