Environment, social, and governance (ESG) progress is being threatened by the proxy adviser proposal set out by the Government, according to departing AustralianSuper chief executive, Ian Silk.
Silk used his speech as outgoing president of the Australian Council of Superannuation Investors (ACSI) to take aim at the Government’s proxy proposal that would “undermine the financial outcomes for superannuation beneficiaries by rendering this system less effective”.
Silk said ESG issues were ultimately investment and financial issues and that the funds that treated ESG seriously were those that performed best in absolute and relative terms.
“This is no surprise to those of us who recognise that most strong performing companies are those that take ESG issues seriously in the running of their businesses,” he said.
“And similarly, investors who embed ESG considerations in their investment programs are those that typically generate the strongest investment performance.
“It’s not magic, it’s simply smart investing.”
Silk pointed to the Government proposal that would require superannuation funds to be independent of proxy advisers but said there had only been two complaints made against proxy advice reports.
“Proxy advisers provide investors with a level of analysis that would be difficult and more costly to generate themselves. ACSI helps super funds be more efficient by pooling resources to ensure they are comprehensively and independently informed.
“Both the Business Council of Australia and the Australian Institute of Company Directors have rejected the proposal targeting ACSI.
“In 2018, ASIC reviewed the proxy advice sector and found no issues. In the three years since this review, there have been only two complaints made against any proxy advice report across the market.
“To be prudent stewards of capital and to act in their members’ best interests, investors must remain focused on ESG issues in their portfolios. The Government proposal to make super funds independent from a proxy adviser – read ‘ACSI’ - is counter to this.”