Via Financial Times

Australia’s biggest asset managers and public pension funds are facing tough questions over how they view risks from global warming, after data revealed that many investors failed to support climate change resolutions at the country’s businesses last year.

The wildfires that have ripped through Australia, killing more than two dozen people and hundreds of millions of animals, have elevated the public debate in the country about the effects of climate change. Global warming has exacerbated the fires, according to leading scientists.

Figures compiled exclusively for FTfm by Proxy Insight, the data provider, revealed that big asset managers, including Macquarie’s A$460bn (US$318bn) investment unit, Pendal Group and pension funds such as UniSuper, Equipsuper and the Retail Employees Superannuation Trust (Rest), failed to support any climate change resolutions at Australian businesses during the 2018-19 annual meeting season.

“Australian investors, by and large, have failed to consider the signal that voting against climate resolutions sends, both to companies and the government,” said Dan Gocher, director of climate and the environment at the Australasian Centre for Corporate Responsibility, a non-profit association.

“After the horrific summer we have just lived through, Australia is rightly seen as a global laggard on climate action. Investors must now step up with clear policies and consistent voting in favour of more ambitious, effective climate action — incrementalism will no longer cut it.”

Tim Buckley, director of energy financial studies at the Institute for Energy Economics and Financial Analysis, said many investors and corporate leaders in Australia were “spineless” when it comes to global warming.

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He said the public could push big shareholders to take action on climate change, such as by writing to the so-called super pension funds, which manage the retirement cash of millions of workers across Australia.

“If they can’t get accountability from the government, they can act on their super,” he said. “It wouldn’t take much for . . . it to be elevated to the top board.” 

According to Proxy Insight, Australian Ethical, which oversees cash for 45,000 workers and investors, backed all climate change resolutions in Australia.

“Climate resolutions are important because they allow the target company and all shareholders to consider and express an opinion on climate strategy in an organised and transparent way,” said Stuart Palmer, head of ethics research at Australian Ethical.

But other big investors in Australia said they preferred engagement, where shareholders try to influence corporate management through face-to-face meetings and other interactions.

This includes Pendal, which said it voted “according to the merits of the resolution”, and Rest, which oversees $60bn in retirement savings. It said it works with the companies it invests in to improve disclosure of climate change risk and opportunities.

UniSuper said that in Australia, it had “excellent access” to boards and management, allowing it to directly push companies to manage climate risks. “As a result, we haven’t felt the need to use proxy voting for this purpose,” it said, but added it had supported similar shareholder proposals in other countries.

FutureFund did not comment on its voting record, but said it was supportive of companies reporting on the potential impact of climate change on their business.

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Equip said it asks its fund managers to vote on its behalf, because it believes they are best placed to evaluate relevant issues. “Equip and its managers will not support resolutions that are not pragmatic, reasonable or well drafted, or, where the company has already made significant strides in addressing the issue,” it added.

Macquarie said it incorporated climate considerations into investment decisions. It added that it previously backed a resolution before at an Australian company for enhanced climate risk disclosure, but this was outside the time period Proxy Insight examined.

Additional reporting by Chris Flood