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Pahari proves it’s not about the money

Lachlan Maddock
— 1 minute read

The events of the last several weeks have been a seismic shift. From Juukan Gorge to the AMP boardroom, it’s clear the times are changing.

When AMP CEO Francesco De Ferrari told journalists that he would not be answering questions about the recently departed Alex Wade at the top of an earnings call, he was doing what CEOs have always done: focusing on results, the hard financial data by which companies live or die. Mr De Ferrari had plenty to be pleased about. AMP finally had a clear plan to turn itself around. AMP Capital – with the controversial Boe Pahari at its head – would be the centrepiece of that plan.

But it wasn’t good enough. Within weeks, Mr Pahari would be demoted, and chairman David Murray and director John Fraser would both step down from AMP’s board. There was nothing to suggest the performance of any of the men was in question – Mr Pahari is apparently the key to AMP Capital’s success – and aside from Mr Murray’s questionable perspectives on climate change they were all more or less straight shooters.

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But people are increasingly conscious about where and how their money is invested – something the people who invest it for them are taking very seriously.

“Investors will be continuing to engage with AMP to understand how these decisions were made and how the company intends to strengthen company culture,” said Louise Davidson, CEO of the powerful Australian Council of Superannuation Investors (ACSI), upon news of the executive changes at AMP. 

“Today’s announcements signal change in the organisation. Clearly AMP’s initial response to community, staff, and shareholder concerns around the appointment of Pahari and the treatment of sexual harassment was inadequate,” he said.

Elsewhere, the destruction of an Aboriginal site at Juukan Gorge became an enormous embarrassment to mining giant Rio Tinto – one that culminated in a number of executives losing more than $7 million in short-term remuneration. Where the loss of bonuses (a punishment that has really always been a slap on the wrist) used to be good enough for many shareholders, ACSI questioned why greater accountability hadn’t been applied to the executives and others outright called for their firing. Fifty-two billion-dollar billion industry fund HESTA has now warned that mining companies can now expect their direct engagement on matters involving traditional landowners, saying that investors were “dismayed” at the destruction of the sites at Juukan Gorge.

“Not only was priceless heritage destroyed and the costs borne by shareholders as a result, but we had believed this risk to be well managed in our portfolio,” said HESTA CEO Debby Blakey. 

While AMP shareholders have suffered years of fumbling, Rio Tinto delivered strong returns and upped its dividend at its half-year results. The reaction to Juukan Gorge suggests that’s not good enough. And with companies like Australian Ethical now seeing a tidal wave of interest, it’s clear that it’s no longer just about the money.

 

Pahari proves it’s not about the money
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