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Retirement

How ESG-focused is your super fund?

  • September 08 2021
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Retirement

How ESG-focused is your super fund?

By Michael Karpathios
September 08 2021

A recent look into the voting patterns of Australia’s 50 largest super funds has shown that only eight funds supported more than 50 per cent of ESG-related shareholder proposals in 2020, a fall from nine between 2017–2020.

ESG

How ESG-focused is your super fund?

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  • September 08 2021
  • Share

A recent look into the voting patterns of Australia’s 50 largest super funds has shown that only eight funds supported more than 50 per cent of ESG-related shareholder proposals in 2020, a fall from nine between 2017–2020.

ESG

The Australasian Centre for Corporate Responsibility (ACCR) Super Votes report has analysed how super funds engage with shareholder proposals relating to environmental, social and governance (ESG).

Allowing shareholders to proxy vote on ESG issues through proposals is considered to be an integral part of company engagement, according to the report.

Since 2019, the funds seen most supportive of their shareholders’ proposals were Active Super (supporting 76 per cent), Vision Super (69 per cent) and HESTA (65 per cent).

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Lobbying-related proposals were found to get the most traction, with 16 out of 50 funds supporting more than 50 per cent of lobbying-related proposals between 2017 and 2020.

Only seven funds consistently supported more than 50 per cent of climate-related proposals in this time, while only six funds did the same for over 50 per cent of social-related proposals in this time.

In 2020, lobbying-related proposals saw 31 per cent support across the board, while the same was only true for 27 per cent of climate-related proposals and 18 per cent of social-related proposals.

What was also of concern to the ACCR was that less than half of the funds examined published complete proxy voting records on such proposals in 2020.

Only 22 of the 50 funds examined made this information available, with industry funds being far and away the most transparent — 59 per cent disclosed the information.

The most opaque were corporate funds — only 9 per cent made these records available.

Despite low numbers, the proportion of funds disclosing such information has jumped since 2017, when only 12 funds made this information available.

Furthermore, while 11 funds did not disclose any proxy voting records in 2019, this fell to eight in 2020.

This change may owe itself to the increased demand from investors and shareholders that funds show accountability by disclosing how they are engaging with ESG issues and communicating the real-world outcomes of the investments made.

The ACCR was critical of the funds found to show little engagement with shareholder proposals and those that did not disclose an adequate voting record.

“Six of the biggest super funds in the country — AMP, BT, Colonial First State, Commonwealth Super Corp, MLC and QSuper — either don’t vote, don’t disclose their voting records or support far fewer ESG proposals than their peers,” said Dan Gocher, ACCR director of climate and environment,” it said.

“Together, these six funds manage more than $748 billion, or approximately 38 per cent, of APRA-regulated funds.

“Their members deserve better transparency and stronger support for ESG issues.”

The report’s key recommendations included having all funds disclose their entire proxy voting record, with a rationale provided should the fund opt to abstain from a vote or vote against management.

How ESG-focused is your super fund?
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