Products November 11, 2008

Mercer to Size Up Carbon Footprints

Mercer said it can now provide clients with a carbon footprint analysis of their portfolios, and compare it to a chosen benchmark, such as the FTSE All-Share, S&P 500, or Russell 1000.
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This new client offering comes as Mercer said more institutional investors have expressed an interest in assessing and better managing the risks and opportunities associated with the impact of their investments on the environment and climate change.

Mercer will develop “carbon footprint” analyses via use of the Style Research Portfolio Analyzer (SRPA) tool that can now integrate relevant information from Trucost Plc, an environmental data provider.

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Footprint Defined

A portfolio’s “carbon footprint” is a measure of the impact that a company has on the environment in terms of the amount of greenhouse gas emissions produced. Through this relationship with Trucost, Mercer is the first global investment consultancy to provide carbon footprint analysis to clients, according to the announcement.

Trucost provides data and analysis on company emissions and natural resource usage in financial as well as quantity terms to help investors, fund managers, and analysts understand how environmental issues could affect companies’ future earnings.

“This new tool will allow us to help clients understand the carbon exposure of their equity investments. Acting as an indicator, the carbon footprint and additional analysis will enable our team to work with clients to “green’ their portfolios,’ said Danyelle Guyatt, principal at Mercer. “In addition, providing this type of information to clients will better equip them to raise climate change issues with their investment managers in a way that is systematic and comparable across managers.’

Compliance November 10, 2008

The Hartford 401(k) Draws Stock Drop Scrutiny

The latest company to find itself under scrutiny for a potential “stock drop″ case is The Hartford.
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The law firm of Milberg LLP said it is investigating “possible illegal conduct by Hartford Financial Services Group Inc. and certain fiduciaries” of The Hartford Investment and Savings Plan.

In a press release announcing the “investigation”—a common approach by the law firms looking for potential litigants in situations where a plan’s employer stock has dropped in value suddenly (see “It’s A Jungle Out There’) — Milberg says it is investigating “whether certain fiduciaries of the Plan may have violated the Employee Retirement Income Security Act of 1974 (ERISA).’

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In this particular case, the law firm says that such violations may have occurred in at least two ways:

  • by continuing to offer Hartford common stock as a plan investment when it was imprudent to do so;
  • by maintaining the plan’s investment in Hartford stock in the Plan when it was imprudent to do so.

As for the event(s) that led to the investigation, Milberg said it is investigating whether certain fiduciaries of the Hartford plan “failed to disclose material adverse facts concerning Hartford’s financial well-being, business operations and prospects that led to a $2.63 billion third-quarter loss.’ Specifically, Milberg’s press release suggests that the Harford may have “failed to disclose: (1) the extent of its exposure to the credit markets, and specifically with respect to mortgage-related assets; (2) its true exposure to investments in it held in Fannie Mae, Freddie Mac, Lehman Brothers, and AIG; and (3) the deterioration in its capital position.’

Milberg said its investigation is focusing on whether, based on the foregoing, Hartford stock was an imprudent investment for the Plan.

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