Invest as it says, not as it does: UN

The United Nations, which urges the world's companies to follow anti-pollution, labour rights and other standards of corporate responsibility, often ignores those aims when investing its own US$29 billion ($41.4 billion) employee pension fund.

A copy of the world body's investment portfolio includes at least a dozen companies that don't adhere to principles in the UN's "Global Compact" for corporate behaviour, according to rights groups and pension managers who reviewed the list of almost 400 companies. Fund managers who screen for social responsibility said they would reject those dozen companies.

One is London-based Rio Tinto, the world's third- biggest mining company, in which the UN has a US$22 million investment. The UN spent the past eight years working to end a civil war in Papua New Guinea that began over complaints about pollution from Rio Tinto's copper mine on the island of Bougainville.

Christopher Burnham, a former investment banker and US State Department official appointed in May to the UN's top management post, says the UN will hire a consulting company next year to review its strategy, including the question of whether to set new criteria.

Burnham said that while he "takes into account" a company's environmental and labour practices, the world body's "primary responsibility is to earn the highest return at the lowest risk" for the fund's 142,245 participants and beneficiaries.

Secretary-general Kofi Annan in 2000 created a programme to encourage companies to embrace 10 "universal" environmental, labour, human rights and anti-graft principles. More than 2400 corporate chief executives have agreed to the Global Compact aims.

The UN's failure to make the principles a factor in investments erodes its credibility, American Karen Burstein, a former judge who is now a consultant to the UN Department of Management, concluded in a February report requested by Annan.

- BLOOMBERG