Greater co-operation of superannuation funds is needed to check growing wealth inequality, leading chief investment officers told delegates.
The call arose in a discussion of Thomas Piketty’s best-selling finance book Capital in the 21st Century and its warning that the rate of capital accumulation is growing faster in western societies than the economy. This, Piketty argues, is causing a growing inequality between the super-rich and those in the lower and middle classes.
Speakers on the panel made the point superannuation funds not only had a responsibility to maximise returns, but also a responsibility not to invest in ways that made the world a harsher place for members.
One area of common agreement was that funds needed to do more to check out-sized rewards for chief executives, particularly those who had lost shareholder value.
Robert Fowler, chief investment officer at HESTA, lamented shareholders who failed to support resolutions aimed at restraining excess in pay.
“For those who take their voting seriously this is really frustrating. The frequency of these things getting knocked off is so high it is ridiculous.”
He added investors could not succeed alone and would need the support of governments to effect real change.
For Janice Sengupta, chief investment officer at Aon Hewitt, such actions were all part of her job. “It is incumbent on us to ask some pretty serious questions,” she said.
Jonathan Armitage, co-head of Jana, said while chief executives were often the focus of corporate governance scrutiny more focus should be made of company boards, which he said were rarely held to account.
And Craig Turnbull, chief investment officer at Local Government Super, pointing towards his funds’ high profile track record in corporate governance, called for more funds to follow suit.
In a separate presentation at the Fiduciary Investors Symposium at Lilianfels, Blue Mountains, Saker Nusseibeh, chief executive of Hermes called for a redefinition of responsibilities for institutional investors.
He said if members faced a world of food scarcity, a lack of infrastructure and lower living standards generally, then chief investment officers were failing in their duty.
He also unveiled research that showed an avoidance of investment in companies with the worst corporate governance practices could save investors 40bps a month.
