Australian super funds vote down climate proposals
Three of Australia’s leading super funds have defended their engagement on environmental issues following research revealing that they opposed more than 70% of shareholder climate proposals in 2022.
Despite all having committed to being net zero by 2050, Hostplus, TelstraSuper, and Commonwealth Bank Group Super voted against more climate proposals at annual general meetings of companies they owned, than any of Australia’s 30 largest super funds, according to research by Market Forces, an affiliate of Friends of the Earth Australia, which lobbies the financial sector for better environmental outcomes.
In response to questions from AsianInvestor, none of the three companies disclosed whether they had improved on this voting record in 2023.
PLAYING DEFENSE
TelstraSuper chief investment officer Graeme Miller told AsianInvestor that the fund had engaged with 42 Australian listed companies over the last year “on various matters such as climate change, social impact, modern slavery, remuneration, and gender equality, attending 77 meetings specifically on these issues with directors and management of those companies.”
TelstraSuper
A Commonwealth Group Super spokesperson told AsianInvestor: “The focus of this report is just one of the many factors that we take into account when assessing the decisions we make in respect of climate action and our investment portfolio. Our investment managers make decisions on shareholder resolutions on a case-by-case basis in accordance with our ESG policy, which governs how we invest from an environmental perspective.”
A representative of Hostplus declined to comment.
“Super funds have been telling their members for years they take climate action by voting at company annual general meetings, yet many funds are simply greenwashing while failing to support proposals for genuine emissions reduction,” said Brett Morgan, Australian campaigns coordinator for Market Forces.
The research reviewed voting behaviour by shareholders at 190 public Australian companies judged by Market Forces to have the biggest fossil fuel expansion plans. It found that only eight of the 30 funds supported more than half of climate-related shareholder proposals. A fourth fund, Mine Plus, whose members work in Australia’s mining industry, also voted against more than 70 per cent of shareholder environmental resolutions, but does not have a 2050 net zero target.
LOOKING CLOSER
“It is easy to make a long-term commitment, but tangible near-term steps are needed to get there. This means supporting shareholder proposals around governance and environmental sustainability,” Morgan said.
Miller said TelstraSuper was on target for its interim goal of reducing emissions by 45% by 2030, adding the fund had achieved a 23% reduction in emissions across its listed portfolio since October 2020, which was ahead of its 10% reduction target for 2023.
Speaking at the Australian Financial Review Super & Wealth Summit on the day the Market Forces report was published (but without knowledge of the research), Sarah Court, deputy chair of the Australian Securities and Investments Commission, the national corporate regulator, warned super funds against overstating the degree of their engagement on ESG issues.
“Trustees can choose to invest in any fund they wish to, there’s no law against who to invest in. The issue [ASIC] is interested in, of course, is what are you telling your investors about why you’re holding those funds, if you choose to say anything,” Court said.
“If you’re making representations about an engagement strategy, or an active steward strategy … don’t overstate the degree of influence that you could reasonably have in relation to the companies that you’re investing in,” she added.
In August, ASIC sued Active Super, the A$14 billion (US$8.6 billion) Australian super fund, for allegedly misleading stakeholders regarding its ethical and responsible investment claims. It was the latest in a series of actions against asset owners and asset managers that were part of a high-profile crackdown on greenwashing.