Vote Like You Mean It
A study of the proxy voting records of Australia’s largest super funds in 2018
The Australasian Centre for Corporate Responsibility (ACCR) has analysed the proxy voting records of Australia’s 50 largest superannuation funds in 2018, on 260 shareholder proposals on environmental, social and governance (ESG) issues in Australia, Canada, Japan, Norway, the United Kingdom and the United States (US).
This analysis highlights two critical issues. Firstly, the majority of these funds are failing to disclose, complete or even partially complete proxy voting records. Disclosure of international proxy voting records is particularly poor. Secondly, the majority of these funds are failing to support a majority of shareholder proposals on ESG issues, although there is a small and growing cohort of funds that consistently support such proposals. Overall, there is a vast difference between the leading funds and the laggards in both disclosure and voting behaviour.
- Just 11 of the 50 largest funds disclose a complete proxy voting record, including both Australian and international shares (these funds were responsible for 22% of APRA-regulated assets under management);
- Just three funds supported more than 75% of the shareholder proposals on ESG issues that they voted on globally in 2018: Local Government Super (91%), Vision Super (88%) and Cbus (77%);
- A further six funds supported more than 50% of the shareholder proposals on ESG issues that they voted on globally in 2018: AustralianSuper (63%), VicSuper (60%), UniSuper (59%), HESTA (56%), Mercer (52%) and Tasplan Super (50%);
- There was no clear correlation between support for shareholder proposals on ESG issues and fund size; the most supportive funds manage between $10 billion and $50 billion in assets;
- Public sector funds – including Local Government Super, VicSuper and Vision Super – were more likely than other types of funds to support shareholder proposals on ESG issues in 2018;
- Members of investor industry associations ACSI, IGCC, PRI and RIAA were more likely to support shareholder proposals on ESG issues in 2018 than non-members;
- Just five funds supported 50% or more of the shareholder proposals on ESG issues at Australian-listed companies that they voted on in 2018;
- Just ten funds supported 50% or more of the shareholder proposals on ESG issues at US-listed companies that they voted on in 2018;
- Thirteen funds supported a significantly lower proportion of the shareholder proposals on ESG issues at Australian-listed companies than the proportion of proposals they supported at US-listed companies in 2018;
- Just eight funds supported 50% or more of the climate-related shareholder proposals that they voted on in 2018;
- Five funds significantly increased their support for climate-related shareholder proposals that they voted on between 2017 and 2018: Cbus (11% to 84%), VicSuper (10% to 81%), AustralianSuper (41% to 73%), Macquarie (0% to 55%), HOSTPlus (0% to 27%).
- Thirteen funds supported 50% or more of the lobbying-related shareholder proposals that they voted on in 2018.
- All funds should disclose their entire proxy voting record, for every proposal at every company meeting.
- Funds that delegate proxy voting to fund managers should disclose the proxy voting record of those fund managers.
- Disclosures should be made accessible and easy to locate on a fund’s website.
- Funds describing themselves as “active owners” must demonstrate such claims through disclosure and justification of their proxy voting record.
- Funds should align their ESG/responsible investment policies with their voting behaviours.
- Funds should employ similar approaches to thematic voting across jurisdictions: if the fund supports a type of proposal in one country (e.g. climate risk disclosure), it should support similar proposals in all countries unless a clear justification is given.
- Australian funds should consider filing or co-filing shareholder proposals in Australia, given the limitations of the tools available to investors to escalate issues within companies.