Dear Super Trustee
A pro-forma for you … from a member of the Wilderness Society Activiist Network
Is my Super destroying the environment?
Dear Super Trustee,
I am aware that since the Federal Government introduced Super Choice legislation in 2005, I now have the right to decide where I invest my retirement money.
I want to ensure that my retirement fund does not contradict my personal values in regards to poor environmental, social and governance (ESG) standards. So I have decided to become a Super Activist! – to find out for myself how my money is being invested.
A report released this year, Carbon Counts 2008: The Carbon Footprints of Australian Investment Managers by Trucost, further emphasised the need to take the environment into consideration as part of investment decisions. The report found “funds employing carbon-efficient investment strategies have the best chance of maintaining returns and portfolio diversification”.
So I hope you understand that I don’t want my retirement money invested with a fund that isn’t doing all it can to act in my best interests – which includes understanding ESG risks and opportunities.
ESG Analysis: Get active to change Gunns’ destructive behaviour!
Gunns Ltd (Gunns) is an example of a company that, due to its environmental, social and governance performance, I want you to be taking an active role in reforming. If the company is unwilling to reform then it should be excluded from your investment portfolio. Since Gunns proposed the pulp mill four years ago its share price has fallen by approximately 75%! Here’s how it performs on ESG criteria:
Environment
The natural forests Gunns’ logs in Tasmania are some of the richest stores of greenhouse gases on the planet. A recent study released by the Australian National University found that Tasmania’s forests store on average three times more carbon than previously thought[1].
Gunns is a major greenhouse emissions polluter. It has also declared its future business strategy relies on the proposed pulp mill. This would lock in the destruction of carbon-rich forests. Estimates have shown that this pulp mill would increase Australia’s greenhouse gas emissions by 2%. That’s the equivalent of putting an extra 2.3 million cars on the road.
Social
Gunns’ practices in Tasmania, such as suing community members who have spoken out against their environmental practices, are socially destructive. Gunns’ logging operations are also known to be socially destructive to the community through impacts like the loss of special local places and the air pollution impact of regeneration burns on human health.
Gunns has also acted to the detriment of democratic process in Tasmania. In March last year Gunns abandoned the independent process for the assessment of the pulp mill on what appear now to have been false pretences. This pattern of poor behaviour continues with Gunns’ board member and former Tasmanian Premier Robin Gray being exposed over a vote by the Launceston City Council to oppose the pulp mill, as reported by The Mercury[2] “Robin Gray has threatened to axe or cut back Gunns’ support for the crisis and homeless charity, the Launceston City Mission, because of the pulp mill stance of its chief executive.”
Governance
Gunns was awarded the 2007 ‘Wooden Spoon’ award by Corporate Monitor due in part to its very poor standards of governance. Corporate Monitor pointed to Gunns:
Lack of Board independence. Only one of the six non-executive directors is fully independent.
Mr John Gay is a substantial shareholder, managing director and chairman.
Three of the non-executive directors have been on the board in excess of 10 years contrary to ASX best practice guidelines.
Non-executive director Richard Millar, who joined the Board in 2007, owns a company that has dealings with Gunns.
Get active on ESG
In 2006 the Parliamentary Joint Committee on Corporations and Financial Services made it clear that a company’s ESG performance is relevant to the investment objectives of super funds[3]:
The committee can see no sensible interpretation of the sole purpose test which would constrain trustees from researching and considering companies’ environmental and social performance, and making investment decisions influenced by that consideration.
To help me ensure my funds are being invested safely and profitably by you, as my Trustee, for my retirement please respond to the following questions:
1) Yes or no: do you have a formal Sustainable Investment Policy, or are you a signatory to the UN Principles of Responsible Investment? If not, why not?
2) Have you carried out a climate change risk analysis of your investments?
3) Do you invest in Gunns Limited?
4) If so what formal actions will the fund take to change Gunns’ ESG performance?
As a Super Activist I eagerly look forward to your response.
Sincerely,
P.S. I’m part of The Wilderness Society’s Super Activist network – check out: www.wilderness.org.au/superactivist
