Funds should start preparing for a steady growth in member activism over investments before portfolio disclosure requirements come into force on July 2014, says Danielle Press, chief executive of EquipSuper.
While the numbers of members targeting funds is low, the impact could be greater owing to the way replies to questions are being posted online.
Template letters available online have made it easier for the public to enquire why their retirement savings are invested in companies that impact on climate change or those deemed to have unethical behaviours.
Press said: “Funds will ignore this at their peril as it creates reputational issues that could be damaging. We are seeing an increase in this template driven activism. On a recent issue we had five of the same letters signed by different members.”
She saw social media as being a potential area of weakness for funds.
“You do not want a junior marketing communications person managing your twitter feed. What you want is someone who has enough experience and enough knowledge to manage it as if it was a PR function.”
Press said EquipSuper’s basic stance was that its 50,000 members had a wide variety of viewpoints and it should not be held hostage by a small handful of activists with a particular ethical stance.
She is not opposed to the portfolio disclosure requirements (which come into force in July 2014) on the grounds of accountability, but is concerned at how useful it will be.
“We will be disclosing 10-15,000 securities. The challenge is how you make that information useful to members. How do you create a system and an ability to give members information that is useful to them and still comply with the full disclosure requirements.”
A leading financial services PR agency warns that too many superannuation funds are taking a ‘wait and see’ approach to social media, which left them unprepared for the activism that could arise from increased transparency of portfolio disclosure.
Philippa Honner, managing director of Sydney based financial PR agency Honner Media, says this means they will lack online communities and be unprepared for communicating with members online.
“If activism was to occur online, a problem for those funds who have not invested time into building digital channels is they have no real means to respond through the appropriate channels,” she said.
Funds need to identify what their messages were and how they were going to be delivered, she advised.
“They need to know the answers to the questions before the questions arrive, and the best way to deliver them to members or the broader public.
A lot of information around a fund’s investment strategies and proxy voting arrangements will already be up on the website – so it’s a matter of reviewing that content and ensuring it’s current, clear and easy to find – as this will be the first port of call for most members and can quickly diffuse debate that is ill-informed or does not reflect a fund’s investment policy.”