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Responsible investment a 'political act'

The furore created by ANU's decision to divest a “trivial” $16 million shows that responsible investment is now a "political act", argues the director of a left-leaning think tank.


Speaking at the Responsible Investment Conference in Melbourne yesterday, Australia Institute executive director Richard Denniss warned the audience they are now political actors “whether [they] like it or not”.

Prime Minister Tony Abbott labelled the Australian National University's decision to divest its holdings in seven resources companies in October as “stupid”.

CAER, the environmental, social and governance (ESG) company that advised ANU on the decision, was later forced to defend its research process against allegations on the front page of The Australian Financial Review

“The tenor of that furious debate showed that rational thought had very little contribution to it,” Mr Denniss said.

He pointed to a petition signed by over 10,000 people defending ANU's right to divest as evidence of the groundswell of public opinion on the issue.

“[Those people wanted to] support one of Australia's most trusted institutions to be trusted to make that decision itself,” Mr Denniss said.

But despite that popular support, the responsible investment sector should brace itself for further attacks from vested interests in the investment community, he said.

“If you think about it, your name is an insult to the rest of the industry. By definition, you describe everyone else as 'irresponsible investors',” he told the audience.

In addition, the rapid growth of the sector means it is set to face more and more opposition, Mr Denniss said.

“[There is a] complete head-on collision between what you're selling and what the prime minister is selling,” he said.

Canadian-based Sustainalytics chief executive Michael Jantzi, who also spoke at the conference, said the divestment by ANU (as well as the likes of HESTA and Local Government Super before it) is a 'canary in the coal mine' event.

“Powerful interests are worried it will gain more traction,” Mr Jantzi said – adding that the ANU campaign caused waves as far as Canada.

He compared the campaign by university students at ANU to similar divestment campaigns at North American universities against apartheid in South Africa 25 years ago.

“It's eerily similar. If you look at the divestment from South Africa, it started on campuses around the US and the interesting thing is it's not hordes of universities divesting their holdings,” Mr Jantzi said.

“If you're a student of history, maybe the reaction here and in other places around the world is not so difficult to understand,” Mr Jantzi said.

“[Superannuation trustees] have to look at this now as part of their fiduciary duty. These are material risks,” he said.

 

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