Eight major super funds have been criticised for voting against the majority of shareholder proposals on climate change at recent annual general meetings despite being members of an investor group pushing for companies to take action on climate risks.
AMP, AustralianSuper and First State Super are among the funds singled out in a report by the Australian Centre for Corporate Responsibility (ACCR) for voting down more than half the climate-related shareholder proposals over the past three years.
"The issue here is – is there a difference between what funds are telling their members and what they’re actually doing? If they’re saying they’re active owners and their voting behaviour says something different, that is a real concern," ACCR's climate director Dan Gocher said.
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| The Australian Centre for Corporate Responsibility's research found super fund support for climate proposals had fallen last year. Credit : Wolter Peeters, The Age |
Investors are increasingly using their voting power to put emissions reductions targets on the agenda at annual general meetings. Woodside Petroleum was hit with a record-breaking investor push in April to slash emissions and link executive pay to reduction targets. In the same month, more than 43 per cent of shareholders at oil and gas giant Santos's AGM defied the board in a vote to set harder targets on carbon reductions.
Shareholder resolutions are non-binding in Australia, although chief executive of the Australian Council of Superannuation Investors Louise Davidson said directors take protest votes seriously. "If you see those big votes on the day, they do lead to changes in behaviour," she said.
The ACCR report examines publicly available voting records of Australia's 50 largest super funds that control a total of $1.8 trillion in assets. It found overall support for climate resolutions in 2019 was down, with AMP, MTAA and Media Super all supporting less than 10 per cent of proposals through the year.
"It's pathetic, really. It really suggests they are not paying attention. If they are just following advice, perhaps they should be looking at the quality of this advice," Mr Gocher said.
Institutional investors often rely on advice from proxy firms to guide voting decisions and Mr Gocher said in some cases, the funds simply agree with board recommendations.
"The super fund industry generally has gotten so big, so they need to be more accountable. For these funds that are controlling tens of billions of dollars to not have a view or express that view is poor."
At BHP's annual meeting last year, AustralianSuper, Unisuper and Mercer were the only three funds to vote against a resolution that asked the mining giant to exit memberships of lobby groups considered to undermine the Paris Agreement goals, according to the report.
AustralianSuper's environmental, social and governance director Andrew Gray said the fund had engaged with BHP on the proposal and decided involvement with industry groups such as the Minerals Council was necessary to encourage emissions reductions.
VicSuper was among four funds that supported more than 70 per cent of all climate-related proposals last year, including demanding Rio Tinto release a plan to transition away from fossil fuels. It also pushed insurer QBE for greater transparency on climate risks.
This is in contrast to First State Super, which voted against 67 per cent of resolutions last year, according to the ACCR report. First State Super and VicSuper will merge at the end of this month to become the second-largest super fund in the country with about $120 billion in funds under management.
The two funds clashed over Origin Energy's disclosure of coal-related public health risks, with VicSuper voting for more disclosure and First State voting against.
A spokesperson speaking on behalf of the two funds said the merged groups would use First State Super's responsible investment policy but recent changes meant there would be greater alignment on voting.
"Whilst both funds had different voting and engagement policies and procedures in place, we share very similar objectives and are absolutely committed to the important role that responsible investment plays in helping shape better outcomes for all our stakeholder."
Unisuper, another member of IGCC, voted against more than half the climate-related shareholder proposals between 2017 and 2019. It comes as its sustainable fund has been criticised for holding a major stake in Rio Tinto following outrage over the blasting of a 46,000-year-old Aboriginal rock shelter site in Western Australia.
A UniSuper spokeswoman said it had been discussing climate change with Australian companies for the past decade and considered shareholder proposals where material risks associated with climate change were not disclosed.
Ms Davidson said measuring the number of shareholder resolutions approved by super funds was not indicative of their commitment to climate change as some proposals lacked merit.
"Shareholder resolutions are quite a blunt instrument and in our view sometimes failure to support a shareholder resolution is because the resolution itself isn't too good," Ms Davidson said. "I genuinely believe super funds are more focused now on climate change than they ever have before and that is leading to change at companies.
"Sometimes it is slower than everyone would like but at the same time change is happening."
An AMP spokeswoman said the wealth manager held more than 80 company engagement meetings in 2019 over ESG issues, many about climate change and that it abstained from voting on resolutions that advocate for constitutional changes at companies.
"There is no doubt that shareholder concerns around climate change are on the rise, both in Australia and abroad. We look forward to continuing our constructive engagement with companies as to how, collectively, we can meet these expectations into the future," the spokeswoman said.
Links
- Super giants funnel billions into fossil fuels, vote down climate push
- AGL and BHP sanctioned by Norwegian wealth fund over emissions
- 'Ethical' super funds invest in coal, oil, gas
- Climate revolt rocks Santos as shareholders fire up emissions push
- Two Steps Forward, One Step Back: How Australia’s largest super funds voted on shareholder proposals 2017-2019 (pdf)
- 'Breakthrough moment': Woodside investors revolt on climate change
- Santos investors to turn up heat on climate change targets
- QBE shareholders push for greater transparency on oil and gas projects
- Rio Tinto investors 'shocked', want answers on rock shelter blast
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