Super fund corporate governance know-how is increasingly being used by Australian companies to test commercial ideas, according to Gordon Hagart,  head of environmental, social and governance (ESG) risk management at the Future Fund.

Hagart, pictured right, was speaking in advance of assuming the role of chief executive of the Australian Council of Superannuation Investors (ACSI) when Anne Byrne retires at the end of this month. a321

He said ACSI was helping Australia to become a centre of excellence in integrating ESG issues into investment decision-making and the exercise of ownership rights.

“More and more companies see the Future Fund, ACSI and the individual members of ACSI as being a really useful testing ground for ideas and a partner.

“The big funds like us and AustralianSuper will always have a certain amount of money in the largest companies. Being a back-seat driver in the company, just giving helpful hints and making sure all the seatbelts are on, is seen as very positive by most companies.”

Hagart said that the public focus on ACSI activities centred around boardroom pay, but that the environmental and social aspects were often overlooked.

He described some of the engagement that is taking place with BHP Billiton and Rio Tinto around their operations in Africa, South East Asia and Latin America; if not handled well, these operations could lead to reputational and, by default, financial risk.

“There are some very interesting challenges and opportunities about how they deal with land rights, human rights and creating sustainable economic outcomes in the economies in which they work. The best companies really get that, that there has to be a shared-value proposition. You cannot just come in as a perceived plunderer as a company. You have to create mutual benefits for the long term of the community and be highly respectful of human and land rights.”

Hagart played a key role in creating the United Nations-backed Principles for Responsible Investment when working with the United Nations Environment Program in Geneva.

Gerard Noonan, president of ACSI, said Hagart’s grasp of ESG issues, enthusiasm and ability to convey the importance of collaboration into the wider public sphere helped win him the role.

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