MN SERVICES RESPONSE TO MATERIALS BY SOMO REGARDING DUTCH

CORPORATE SERVICES LEAD MEMBER BRIEFING 18TH NOVEMBER 2002 PRESENT
 RYERSON ABORIGINAL STUDENT SERVICES PEER SUPPORT AT RASS
DATE DIFSOCIAL SERVICES REPRESENTATIVE ADDRESS CITY STATE ZIP RE

ENTER DISTRICT NAME HERE SERVICES PLAN FOR PRIVATE SCHOOL
[PRODUCTS AND SERVICES PROCUREMENT TEMPLATES ASSIGNMENT OF CONTRACT
C HILDREN AND FAMILY SERVICES

MN Services response to materials by SOMO regarding Dutch financial institutions and food speculation

3 February 2012

Business & Human Rights Resource Centre invited MN Services to provide respond to the following items:

- Dutch financial institutions speculate in food markets, SOMO, 23 Dec 2011

- Food markets in Dutch: Dutch Banks and Pensions Funds in Agricultural Derivatives Markets, Rens van Tiburg, Dec 2011

- Feeding the Financial Hype: How excessive Financial Investments Impact Agricultural Derivatives Markets, Rens van Tilburg & Myriam Van der Stichele, SOMO, Nov 2011

In response, MN Services sent the following statement:

“MN and our clients share the concern about the high volatility of food prices, food crises and hunger in parts of the world. And if it is within our possibilities to reduce these problems through changes in our commodity investment policy we are fully prepared to change our policy, as we already have done to some extent. It is precisely because we share this concern that we would like to make a few comments regarding the issue in general:

  1. The UN PRI and the Swiss Government financed a research project on commodity investments that resulted in two reports of the Swiss research institute On Values. Based on that research we did inform our clients that we would implement the On Values recommendations: not to invest in physical commodities and to refrain from investing in smaller, exotic markets. On top of that we have decided to screen our hedge fund investments to make sure we do not have exposure to physical commodity markets indirectly. We will keep monitoring that and include this issue in our hedge fund selection process;

  2. Additionally we started our own small research project, especially about stock-to-use ratio’s (because a causal effect from derivatives to prices on the spot market would require some kind of hoarding behavior by financial institutions). The research showed no increases in the stock-to-use ratio’s that could indicate hoarding behavior that could potentially cause a rise in food prices. The summary of that research was published in Responsible Investor;

  3. We are taking the issue on board in our engagement with large companies that could be involved in ‘hoarding’ behavior (more information about actual hoarding behavior is, in our opinion, the ‘key’ to a better understanding of the problem)

  4. We think the SOMO-research does not comply with normal scientific procedures, is prejudiced and gives no relevant additional information about the causality between commodity derivatives and food prices. The evidence provided by SOMO is of the same character as the evidence that one could provide to proof that crocuses cause the spring. In other words, we all know that there is correlation between spot prices and derivatives. The question is if investments in commodity derivatives CAUSE price changes on the spot market. None of the research mentioned by SOMO gives proof or credibility to that conclusion;

  5. SOMO says we did not want to comment etc. That is not the case, we gave them information and our opinion, we published an abstract of our research in Responsible Investor, gave an interview to the Dutch NRC newspaper and I will participate in the Commodities Asia conference on this subject. In other words, we do not hide, but seek information and input (I mean credible scientific research, not unfounded accusations);

  6. Other sources of information we looked at have also not been able to provide proof for a negative price effect. Sources we looked at (besides the research mentioned in our paper) include the report of Olivier de Schutter (UN representative on food) and his comments in several media. Not one of them has found or provides substantial, credible evidence to the negative price effects of investments in commodity derivatives. That is also the conclusion of the Dutch Ministry of Economic Affairs, Agriculture and Innovation in answers to questions of the Dutch Parliament;  


As you can see we have seriously looked at the available research. We have made changes to our policies and practices, as recommended by On Values and we keep seeking additional information and research results. Up to now we have not seen proof of a causal relation of (our kind of) commodity investments and price changes on the spot market. If anyone has such research results that give credible indications of such a price effect we would (on the basis of the policies of our clients) take a precautionary approach and change our policies. The SOMO-research to which you refer does not provide that credible indications. But if you have other sources of information that do, please let us know and we’ll be the first to react. In that case please feel free to contact me, Kris Douma, Head of Responsible Investment & Governance ([email protected]). “




20022003 ACADEMIC AND SUPPORT PROGRAMS SERVICES FOR
BEVILL STATE COMMUNITY COLLEGE LIBRARIES LIBRARY SERVICES
DELIVERING COMMUNITY SERVICES IN PARTNERSHIP GRANT AGREEMENT


Tags: dutch financial, the dutch, services, materials, regarding, dutch, response