Aviva to withhold support at miner Vedanta's AGM

Asset manager Aviva Investors still has concerns over miner Vedanta's social conscience and corporate governance standards, despite a high-profile campaign last year that saw the group under pressure from shareholders and activists.

Aviva, small but vocal shareholder in Vedanta, said on Friday it would again withhold support for three key resolutions at Vedanta's annual general meeting later this month.

A storm last year centring on Vedanta's planned mine in India's eastern Orissa state forced the company, 62 percent owned by the Agarwal family, to defend its human rights record.

The involvement of Aviva in the protest over plans to build a bauxite mine in an area sacred to indigenous people has marked a more activist stance from institutions on social issues.

"The company has made some progress, and we welcome that. But while the direction of travel is the right direction, the speed is far too slow," said Steve Waygood, head of sustainability research and engagement at Aviva Investors.

Changes at Vedanta have included the appointment of a chief sustainability officer late last year, a move welcomed by Aviva.

"We are not against the development of the region (of Orissa) but we do believe in supporting the broader community as well as the shareholders of the company, and that balance has not been struck."

Vedanta has denied its plan would harm the indigenous Dongria Kondh people and said its plan would help lift the Kalahandi district out of poverty.

There has been increased debate about corporate governance in the mining sector after a storm at miner ENRC last month forced a corporate governance review.

Vedanta has long been criticised for its opacity, with critics maintaining it does not have enough independent representation on its board.

Though not uncommon elsewhere, hefty founder-shareholders are unusual in U.S. and UK markets where ownership tends to be more dispersed. This means miners like Vedanta but also Fresnillo , Antofagasta and ENRC are viewed with caution by institutions, as are other more recent arrivals, like Bumi , a venture founded by Nat Rothschild and in which the Indonesia's politically connected Bakrie family have a majority stake.

"We are increasingly concerned about the quality of the governance and sustainability of companies that are listing in the UK," Waygood said. "The more companies listing in the UK that do not really uphold standards of good governance and sustainability, the more it brings the exchange into disrepute."

Vedanta's annual shareholder meeting will be held on July 27. Vedanta were not immediately available for comment.

Aviva has a passive 0.3 percent stake.