What superannuation has to do with slavery
According to the latest United Nations figures, 40 million people are living and working in a state of modern slavery, coerced through violence, intimidation, debt-accumulation and the retention of travel and visa documents.
Directly or indirectly, forced labour contributes to the profits made by a wide array of companies.
Australian superannuation funds of a certain size have to report on how they guard against investing in companies that use slaves.
Superannuation funds run a big risk they invest in companies which, directly or indirectly, use slaves.
Investment consultancy JANA has researched how twenty big Australian superannuation funds deal with this possibility.
JANA found that 100 per cent of the funds surveyed acknowledge modern slavery as an investment risk, and 95 per cent are carrying out modern slavery risk assessments on assets.
This is not surprising, because these funds must report, and acknowledging the risk is hardly an achievement. Neither is carrying out an assessment.
Once you move beyond these big numbers, things start to look a lot less attractive.
In investment-consultant-speak, only “5 per cent of superannuation funds reviewed conduct risk assessments of supply chains beyond tier one of assets – modern slavery is more likely to be identified at tiers three or four”.
What this means is that the company a super fund invests in may be clean but that this company may be doing business with businesses which either use slaves or do business with businesses which use slaves.
Less than half of super funds had conducted internal training how to spot the use of modern slavery, and if they had, often the most senior people had had no training.
In other words, big super funds must comply, and they do, because they report and assess, but they’re not putting their back into it.
Another outfit, the Australasian Centre for Corporate Responsibility, found that ESG is gaining ground among super funds. ESG stands for ‘Environmental Social Governance’ and is a measure of socially responsible, ethical and environmentally ways of doing business. Being anti-slavery is part of that.
Australia’s top-50 super funds voted in favour of various ESG shareholder proposals in 42 per cent of instances last financial year. That sounds a lot until you realise that there were only thirty-two ESG shareholder proposals.
This means fifty super funds voted in favour of thirteen ESG resolutions.
The funds most supportive of ESG proposals over the past four years were Local Government Super (now branded Active Super, supporting 76 per cent of proposals), HESTA (65 per cent), Cbus (63 per cent), Macquarie (62 per cent), NGS Super (58 per cent), Mercer (54 per cent) and Qantas Super (50 per cent).
The country’s biggest fund, AustralianSuper, voted in favour of ESG proposals 51 per cent of the time.
“… the best performing funds [..] tend to have better disclosure and are more supportive of ESG proposals”, the Australasian Centre for Corporate Responsibility said.
The fact remains that there were only thirteen proposals super funds voted in favour of to prove their undying commitment to ESG.