Sydney Morning Herald - Charlotte Grieve
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
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The
Investor Group on Climate Change represents institutional investors
that collectively manage more than $2 trillion and chief executive Emma
Herd said shareholder resolutions are just one tool, alongside
divestment and board-level pressure, used to drive corporate action on
climate change.
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.
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