Australia’s biggest industry superannuation fund has appointed a sustainable investment expert from Goldman Sachs to focus on corporate governance standards in the companies it invests in.
AustralianSuper has appointed Andrew Gray, Goldman’s former head of enviornmental, social, corporate governance research in Australia, as its governance manager.
The fund’s senior manager of investments, Peter Curtis, said AustralianSuper was undergoing a major review of the inherent climate change risks across the various assets in its portfolio.
Curtis said real estate holdings were already being assessed to determine the risk around building design and green ratings.
The assessment process would also be expanded to the infrastructure portfolio. Other asset classes will follow.
“We have toll ways, airports, power generation,” Curtis said. “We have big exposure to green power generation through Pacific Hydro, so we want to understand what carbon credits and those sorts of things will mean for us.
“It is drilling down into the portfolio and understanding that, if there is a carbon price, how will it start to impact the different assets and what are the managers within the portfolio are doing as part of their strategy to understand those risks.”
The potential for a carbon tax and an eventual price on carbon has focused funds’ attention on how companies are handling their carbon exposure.
Woodside Petroleum this year faced Australia’s first ever shareholder vote on climate change.
AustralianSuper was one of the institutional investors to vote against the proposal to force the company to disclose the carbon-price assumptions it uses when planning future resource projects.
Curtis said the Woodside issue was one of the catalysts for appointing a governance manager.
“They (Woodside) were very reluctant to disclose anything and that is really one of the reasons I think that we want to get a dedicated focus on governance,” Curtis said.
“That then becomes an issue we would seek to engage with Woodside around, either directly through Australian Council of Super Investors or with other interested investors.”
Curtis has previously said AustralianSuper voted against the proposed amendment because of concerns that the release of commercially sensitive information had the potential to hurt the company.
He indicated they preferred to talk directly with companies like Woodside.
“What we want to understand is whether companies have got the proper governance arrangements in place at the board level,” Curtis said.
“We think that if companies get the board right and the governance right, then companies will be thinking about these [sustainability] issues and reflecting them into their plans and strategies.”
Goldman Sachs said they will not replace Gray.
Research analysts Hamish Tadgell and Jien Goh would continue to monitor company governance as part of its Structural Leaders Index it launched last year.