Ethics of investing, can activist shareholders make a difference? Here a major investor talks with its feet by walking away from Rio Tinto for stomping all over local environment in Indonesia with its heavy mining boots.Reuters reported today that Norway's sovereign wealth fund sold out its stake in Rio Tinto - the worlds largest mining company - in protest against its environmental credentials.
Specific reference was made to the Grasberg mine in Indonesia, and the Finance Ministry is reported as having said yesterday Rio Tinto was a joint venture partner in this mine with US-based Freeport McMoRan Copper & Gold, which was blacklisted by the Norwegian fund in 2006, and as having referred to the "severe environmental damage'' being inflicted at this site.
Rio Tinto spokesman Nick Cobban is reported as saying that the environmental measures at the mine were deemed satisfactory by independent audits. He also said that even though Rio Tinto owns a 40% stake in the mine, it is Freeport which runs the operations. "We are surprised and disappointed by the ministry's decision,'' Mr Cobban said.
The ministry also said however that it decided to continue its investments in US-based Monsanto, which develops genetically modified plants, despite recommendations by their ethics council to exclude the firm over concerns it was using child labor in India.
According to the ministry, Norway's ownership activities in Monsanto "have contributed to a significant reduction in the use of child labour in the company's hybrid cotton seed production in India.''
Rio shares had another bad day, losing 5.1%, or $5.47, to close at $102.03, their lowest since September. Major investors and minor stake holders should get active!
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