Treasurer Josh Frydenberg’s move to curtail the power of proxy advisers and the super funds that use them is at odds with his own government’s rhetoric.
Barely a fortnight ago Prime Minister Scott Morrison put responsibility for Australia’s climate transition squarely in the hands of the “animal spirits of the business community”. He would not “tax our industries off the face of the planet”. Net zero would instead be achieved by good old market forces and innovation.
But this week Treasurer Josh Frydenberg has introduced a slew of proposed changes to how proxy advice works that would seem to work against this approach.
Proxy advisers like the Australian Council of Superannuation Investors (ACSI) have become increasingly powerful in recent years, emboldened in part by the clear public support for action on climate change and governance at some of Australia’s largest financial institutions. ACSI has been particularly effective, calling for heads to roll at Rio Tinto and issuing a strong rebuke to AMP over its handling of the Boe Pahari scandal; more recently, it announced it would step up its campaign against company directors it believes are failing to act on climate change risks.
It seems that in the absence of a carrot (any kind of concrete government policy) one must instead use the stick.
But members of the Morrison government have already warned super funds to stay out of the climate debate, with senator Jane Hume saying “some of these funds have got very big and very influential and they seem to forget their job isn’t to rebuild the economy or create jobs or reframe the climate debate” but was instead to maximise member returns – something those funds would argue is the motivating factor behind their entry into the climate debate in the first place.
This latest move looks very much like an effort to curtail the power of super funds at a time when they have become one of the leading voices in Australia for decisive action on climate change.
In this policy vacuum, the super funds (and other large institutional investors) have decided they must act. The Morrison government has even insisted they act. Now they’re being told they can’t. ScoMo and Mr Frydenberg have abdicated what should be a leading role in the climate transition, but are now moving to prevent anybody else from stepping into it. It’s confusing rhetoric at best, sheer bloody-mindedness at worst – and it will make companies less transparent and less accountable to shareholders demanding change.
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