AUSTRALIA - The conservation movement has scored a key victory in Australia as the pensions industry has hardened its stance against industrial pollution.
One of Australia’s biggest civil service funds, the 260,000 member PSS/CSS, has released a landmark survey that blasts poor levels of corporate reporting on energy use.
With around A$10bn under management, the PSS/CSS is ringing alarm bells throughout the investment sector marking one of the first few times a major Australian fund has linked conservation policy with investment mandates.
It is one of the most assertive pension funds in Australia’s corporate governance debate. The chief executive of PSS/CSS, Steve Gibbs, has already influenced key changes made to Australia’s corporate governance blueprint, the Australian Stock Exchange’s code of governance released earlier this year.
The new PSS/CSS report, commissioned in conjunction with the 30,000-member (A$1bn) Catholic Superannuation Fund, aims to extend the corporate governance debate well beyond basic issues such as boardroom structure to wider issues such as the level of greenhouse emissions at Australia’s 200 largest listed companies.
The report was carried out by BT Financial group, a subsidiary of Westpac Banking Corporation, and Australia’s biggest university, Monash University in Melbourne.
Among the dramatic findings of the report were:
- 90% of Australia’ top companies (members of the ASX 200 index) do not include information on the management of energy use in their corporate disclosures.
- Even within corporate environmental management systems, only 14 companies from the ASX top 200 had integrated energy and greenhouse gas emissions.
- One in 17 ASX 200 companies disclosed greenhouse gas reductions at or below Australia’s Kyoto targets.
As Australia has an unusually high proportion of top companies in the mining and energy sectors, it might have been expected that conservation management such as the reduction of greenhouse gases would have been higher on the agenda of corporate Australia.
However, Gibbs said: “We looked at this issue from a purely financial perspective.
“The main problem is that many companies are simply not reporting on standards of energy use and greenhouse emissions.
“It is clear that these items are just too low on the agenda. Energy issues can become operational or contingent risks for a large company. Our plan now is to sit down face-to-face with companies and ask them what they plan to do.”
At the Australian Council of Superannuation Investors, an industry lobby group, executive director Philip Spathis said: “The issue of corporate governance is becoming more important in the boardroom and the dimensions of governance are widening to include new issues like the environment.
“The PSS/CSS report confirms the trend.”
The Australian report coincides with the release of a global report based on the FT Global Index that found that 80% of top companies acknowledged the importance of climate change as a business risk. The report from the Carbon Disclosure Project was supported by 35 institutional investors representing assets worth more than US$4.5trn.
“The whole area of environmental regulation is not new, but it is only in relatively recent times that it has become an issue among institutional investors like ourselves,” said Gibbs.
“It is going to become progressively more important across Australia in the near future.”
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