The chair of the country’s biggest superannuation fund, Heather Ridout, said AustralianSuper actively engages with companies on issues like climate change and immigration but has stopped short of becoming an activist investor.

At an Australian Institute of Company Directors conference held in Sydney on Monday, Ridout argued one of its fundamental strengths is having board members with “skin in the game”.

“We represent hundreds of workers and while our while our engagement approach has had its own issues and challenges, I think it has served the industry super fund extremely well.

“We had something like 279 meeting with companies last year so we would rather sit down and try to understand where they’re coming from.”

Her comments come after AustralianSuper joined forces with Climate Action 100+, the investor group that forced Swiss giant Glencore to cap its coal production and is now leading a similar campaign against 12 other Australian companies over their carbon emissions.

Ridout said the fund had met with BHP to discuss its Samarco mining disaster in Brazil, its tax practices and it would probably discuss industrial relations with the company because treating employees well is part AustralianSuper’s investment principles.

She noted BHP chief executive Andrew Mackenzie had met with the fund’s board, which is made up of independent as well as union and employer group representatives.

“We have got very comfortable with BHP and in fact Andrew Mackenzie came to our board – actively engaging is the best approach and it has worked for AustralianSuper.”

Asked about the recent comments by Josh Frydenberg, the federal treasurer that superannuation should not being used as a platform for pushing the industrial relations agenda, Ridout insisted that Australian Super “will not be dragged into industrial relations”.

Here, she is referring to recent efforts by the ACTU and the Maritime Union of Australia to get industry funds to pressure resource giants BHP and BlueScope Steel into renewing iron ore shipping contracts that had been terminated.

“As representatives of the unions and employers, when they walk through the door of AustralianSuper, they take off their hat and they become a trustee and they have a fiduciary duty to the members of the fund, and as chair of the fund I have seen that the hat is always taken off,'” she argued.

“They can have their views. They are cats and dogs, employers and unions and I think frankly the government doesn’t like trade unions, and it’s antithetical to everything that they believe in that the union movement would have some influence, a degree of influence, over a very sizeable, trillion dollars in assets.

“You have to trust the governance model, you have to trust the ethics, and integrity, you have to trust the regulators.”

Ridout warned superannuation funds along with immigration and climate change should have bipartisan support as they are long term issues for Australians and for their retirement savings.

 

 

Elizabeth Fry has been a financial journalist for more than 25 years and has written for a number of publications, including CFO, The Financial Times and The Australian Financial Review.