superannuation climate change

Saving for Retirement Gives You Power, and Ethical Responsibilities

5 November, 2020

In this article in The Conversation Lead Moderator Peter Mares says if you’re in a superannuation fund, then, like it or not, you’ve got ethical decisions to make.

More than 10 million Australians have a superannuation account. Which means, effectively, more than 10 million of us are mini-shareholders with the capacity to influence future business decisions.

With that power, however small, comes responsibility. And nowhere more apparent than in relation to climate change.

Last month, the world’s biggest asset manager, BlackRock, surprised Australia’s biggest electricity producer and carbon dioxide emitter, AGL, by backing a motion that would have forced it to close its coal-fired plants earlier than planned.

The resolution at AGL’s annual general meeting failed, but when a global firm managing more than US$7 trillion in investors’ savings says it’s time to accelerate the exit from coal, it’s wise sit up and take notice.

Interestingly though, some of Australia’s biggest industry super funds, among them Cbus, Hesta and Aware, refused to support the motion, which was put forward by the Australasian Centre for Corporate Responsibility.

It’s been a pattern with industry super funds.

Rather than using their overt voting power to try to change corporate behaviour, or divest from companies altogether, they say they prefer to exert influence behind the scenes, through conversations in board rooms and executive suites.

Peter says the justification sidesteps the question of whether the investment itself is defensible.

And it ignores the opposing argument — that divestment by a leading super fund can send a powerful signal to the market that a company is not properly addressing climate risk or developing an appropriate strategies for a carbon-constrained world.

Any company not doing these things is putting our savings at risk.

According to expert legal opinion, its directors might be breaching their obligations under the Corporations Act.

There are legitimate arguments to be had about the best way for super funds to push businesses to act more urgently on climate change, but as fund members, and the ultimate owners of our money, we need to make up our own minds and act accordingly.

To sit back and let others do it on our behalf is an abrogation of responsibility.

Superannuation may be compulsory, but we still have choices outlined by Peter in this article.

With a combined A$2.9 trillion in assets, one fifth of which are invested in Australian companies listed on the stock exchange, super funds own a fair chunk of Australia’s most important companies.

It would be wrong for them not to take that responsibly seriously, just as it would be wrong of us not to take seriously what our savings are being used for.

The Conversation, Peter Mares, 4 November 2020. Read the full article here.

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Photo by Dominik Vanyi on Unsplash