With superannuation funds getting a greater share of individual voice in the boardroom, industry representative and proxy advisor Australian Council of Superannuation Investors says it’s quickly adapting to the new landscape.
AustralianSuper on Monday upped its stake in Origin Energy again to just over 15 per cent. This came as the $300 billion fund prepares to vote against the “best and final” offer from private equity firms Brookfield and EIG to acquire the energy company at the AGM later this month.
As a provider of long-term patient capital, AustralianSuper isn’t attracted to the short-term economics of the deal. “The ongoing energy transition, as we move towards net zero by 2050, has further enhanced the value of strategic energy transition platforms, such as Origin, whether public or private,” a fund spokesperson said in a statement.
If it wasn’t evident before, the power that super funds wield over Australian listed companies sure is clear now.
ACSI’s chief executive, Louise Davidson, says she is pleased to see the organisation’s members growing the capacity to take on issues that are of high strategic importance to them.
As the collective body that also represents the shareholder interests of many big and smaller profit-for-member funds, Davidson says there is a raft of reasons why ACSI still has an important role to play in boardroom negotiations, even if a handful of mega-funds are increasingly going it alone.
“Even as the funds grow, working together on issues… is a lot more cost effective in a lot of cases,” she tells Investment Magazine. “Also, it’s sometimes more impactful when you’re speaking with the voice of a whole group of super funds rather than just one.”
Ready for combat
The active ownership piece is ACSI’s raison d’etre, Davidson says, but the organisation’s activities are complimentary to super funds’ own engagement efforts. With a particularly contentious AGM season in full swing, ACSI has its eyes on several key areas.
“Remuneration is always a big one… We don’t like it when companies have a particular remuneration structure, but then they adjust it because they think the market conditions were harsh for the execs this year or something along those lines.
“We are seeing some cases that are sailing a bit close to the wind on that this year.”
Then there’s also the director elections’ element. Davidson makes it clear that ACSI will go into several AGMs this year seeking board accountability for “poor company performance”, quoting Qantas as a prime example.
Institutional and retail shareholders rejected the national airline’s remuneration plan at Friday’s meeting, with 83 per cent of votes cast against the report. Board director and advertising expert Todd Sampson also received a 34 per cent protest vote against his re-election.
Another area on which ACSI believes its advice to members is deemed valuable is climate.
“Some companies that have significant exposure to climate change, at request of investors, have started to put up a climate vote that investors can vote on at AGMs,” Davidson says.
“I think that’s a really excellent transparency measure, and we really applaud companies for doing that.”
There is some confusion around the world about the nature of activity being undertaken under the ESG banner, she says. Asked whether Australia’s investment sector could see a debate like the so-called ESG culture war in the US, Davidson says she will “never dismiss the possibility”.
“We are really clear that managing ESG risks within companies and other parts of the portfolio like unlisted assets is critical to good investment performance over the long term.
“Some of the rhetoric in the US has been really coming from an ideological perspective, rather than thinking about the investment impact for members of the pension funds over there.
“Maybe there’s a responsibility on all of us to be clear about what we’re doing and why as well.”