OPINION | As I prepare to stand down from my allotted term as president of the Australian Council of Superannuation Investors in August 2017, after six years, I think about what we’ve achieved and the challenges that lie ahead.
It’s easy to forget how different the scene was when ACSI was formed in 2001, with the late Michael Sullivan as president.
Since then, the pool of superannuation money in Australia has grown from $400 billion to a startling $2.3 trillion, on its way to more than $5 trillion by 2030. The ‘all profit to member’ industry and government funds, which are the core of ACSI’s membership, represent about one-third of that vast pool.
In 2001, ACSI members collectively owned just a small percentage of the shares in the ASX 200. Now we account for about 11 per cent. In those long-ago days, it was a battle to meet with the chairs and chief executives of most major listed companies. Now they call us.
Back then, few boards cared seriously about diversity. In those days, diversity meant having Melbourne and Sydney represented on the one board. Today, there are long-running campaigns to improve gender diversity. The yardstick has become at least 30 per cent women, and we have raised the bar at ACSI, as members will vote this year against the re-election of any directors to boards with zero women.
As far back as 2011, ACSI began to tackle the issue of human rights in corporate supply-chains, thanks to the support of LUCRF Super and, in particular, trustees from the National Union of Workers. Tragically, the issue of supply-chain conditions hit home with the Rana Plaza collapse in Bangladesh in 2013, which resulted in deaths of 1120 workers, mainly women.
Taking these issues into engagement with Australia’s largest retailing companies, we’ve seen a marked increase in the transparency and sophistication of supply-chain management, and in support from Australian companies of global initiatives such as the Bangladesh fire safety accord. There remains, however, a great deal to do, and ACSI certainly supports the adoption of an act addressing modern slavery.
When we started in 2001, climate change concerns were fringe issues for most companies and most investors, the Principles for Responsible Investment had not been established and the term ‘ESG’ did not exist. Now, sensible companies treat such issues seriously. Increasingly, so do senior regulators, as flagged by the Australian Prudential Regulation Authority’s Geoff Summerhayes earlier this year.
So, does all this represent progress?
Clearly, there have been considerable achievements from the steady work. The progress has been due to the support of our member funds. It’s a reminder that by working collectively we can have a strong influence on the behaviour of the companies in which we – and the broader financial market – invest. However, while we have made progress on a number of fronts, I can’t help but think we have some big struggles ahead.
Work yet to do
Coming challenges include the treatment of employees in Australian franchising businesses, which has been added to ACSI’s agenda as a priority in 2017.
The globalisation of corporate ownership reminds us that there is a need to build our collaboration with like-minded pension funds across the globe. We need their support for our work with recalcitrant companies in Australia and we should support other long-term investors with their agenda regarding companies in their home markets.
I’ve spoken before about the problems a lack of corporate tax transparency poses, with heightened political and community focus on this issue in the current climate. These issues go to the heart of corporations’ ‘license to operate’ and must be addressed. We need to challenge widespread and aggressive tax avoidance by corporations, often masquerading as barely legitimate accounting arrangements.
The Australian Taxation Office’s recent win in the courts against Chevron has emboldened the ATO to issue unpaid tax bills of close to $3 billion to seven Australian listed companies. So here’s a challenge to individual funds: Have you got those pencilled in on your voting priorities for the coming year? We also know, via evidence to Parliament, that many of our own major listed companies have been shown to be shifting profits via barely credible arrangements in Singapore. Have you got that pencilled in, too?
Speaking of offshore tax arrangements, we do have a role, using our increasing financial heft, working with others of like mind around the world, in bringing to book the cluster of rootless mega-corporations – in which we all invest, often through index funds – that roam the world in an incessant quest to find tax-less havens.
Are our members, for whom we are acting as fiduciaries, better off living in a world that not only tolerates, but celebrates such activity, whose ultimate purpose (or at least ultimate effect) is to deprive governments of the foundation for creating and underwriting a viable civil society?
This column is adapted from Gerard Noonan’s opening address to the sixth-annual ACSI Conference in Melbourne on May 4, 2017.