If you thought voting was something you did once every three years and involves queuing up at your local school hall, avoiding hordes of eager volunteers with how to vote cards, consenting for a stranger you don’t trust to represent you in Parliament before relenting and grabbing something at the sausage sizzle, you’re being taken for a ride.
The fact is that Australians vote every single day and I’m not just talking about voting with our feet or our wallets – though there is that. We are constantly voting on who runs companies and how they are run. If you’re Australian with a superannuation fund then you get the chance to decide whether a director gets the remuneration they want or – in this era defined by the climate crisis – whether some of the world’s biggest fossil fuel companies can continue to search for dirty coal, oil and gas. How will you vote?
If you’re not sure how, it’s time to talk to your super fund because there are some massive decisions coming up.
Image courtesy of EcoWatch
On May 25th, Exxon Mobil and Chevron’s unwilling boards will face off against no less than eight shareholder resolutions including disclosure of how the companies are placed to survive government policy to limit global warming to below two degrees, carbon emissions reduction and political lobbying. Australian super funds will be voting or abstaining (a kind of voting) on these resolutions on your behalf. Unfortunately, despite their insistence that engagement with companies is the the best way to reform them, our super funds are usually missing in action on climate change resolutions, voting against items – on your behalf – that would help companies adapt to climate change.
This is why it matters.
In order to have a chance of avoiding catastrophic climate change, no more than 20% of existing fossil fuel reserves can be burnt. Meaning many companies, including Exxon Mobil and Chevron, are sitting on stranded assets in the form of ‘unburnable’ resources.
Firms investing in additional stranded fossil fuel reserves are gambling shareholders’ money along with the global climate. Increasingly, resolutions like these are gaining serious traction.
Over 30 large investors managing $6 trillionhave pledged their support for one of the Exxon Mobil resolutions filed by the Church Commissioners for England and the New York State Comptroller.
Additionally, one thousand academics from Cambridge, Harvard and Oxford have also signed an open letter to the companies’ largest shareholders, urging them to back the proposals.
Despite the shifting tide, not a single Australian super fund has gone on the record to declare their support, even though they likely have hundreds of millions of dollars of their members’ money invested in both companies and constantly spruik their “engagement” with fossil fuel companies as an alternative to divestment.
If super funds are invested in Chevron and Exxon Mobil passively – through an index fund – then it’s unlikely they will support the resolutions. Blackrock and Vanguard control much of the indexed investment market, and neither manager voted for a single climate-change related resolution in 2014-15.
This is at odds with the views of Vanguard chief executive Bill McNabb, who argues against divestment, stating “you are better remaining an owner and being able to engage with the company”. Vanguard’s definition of engagement clearly doesn’t extend to voting against the board. Investor activist group ShareAction have written to Vanguard – the largest shareholder in both Chevron and Exxon Mobil – calling on them to support the resolutions.
Last week, HESTA chair Angela Emslie declared that “divestment is really the issue of last resort”, implying that her fund prefers to engage with companies, rather than get out altogether.
Market Forces’ analysis of HESTA’s international voting record shows that they are one of the more engaged super funds, voting for 65 of 90 resolutions (72%) related to climate change in 2015. Conversely, Australia’s largest super fund, AustralianSuper, voted for 33 of 95 resolutions (35%); VicSuper voted for just 6 of 48 resolutions (13%). It is to their credit that they publish their voting record at all, most super funds don’t. But to vote against so many resolutions intended to improve companies’ performance on climate change suggests that VicSuper believes its membership consists of Australia’s last remaining climate deniers.
Even though Australian super funds are relatively minor shareholders in both companies, publicly declaring support for resolutions in the US does have merit. Primarily, every shareholder matters – last week, a 2 degree stress testing resolution at Occidental Petroleum only just failed to pass, garnering 48.99% of the vote. A few more institutional investors on board could have made the difference – if only they’d known how their fellow shareholders intended to vote.
Secondly, by publicly declaring support for resolutions at big oil companies in the US, it sends a signal to Australian oil companies – like Santos and Woodside – that climate change matters. It is likely that they too will soon face similar resolutions.
Thirdly, super funds have an obligation to their members to manage climate risk effectively. They can do this by ensuring that every company in which they’re invested is managing climate risk too. Although the idea that a pure-play fossil fuel company can effectively manage climate risk is debatable.
Chevron and Exxon Mobil each have a significant presence in Australia. According to ATO data, Chevron earned revenue of $3.03 billion in Australia in 2013-14, Exxon Mobil earned $9.62 billion. Notably, neither paid any corporate tax. While they’re both pure play fossil fuel companies – incompatible with an economy trying to keep a lid on global warming – super funds are invested in them on your behalf and could be about to prevent action that would force Exxon Mobil and Chevron to clean up their act.
A chat with your super fund might be a good idea right now. If you wouldn’t vote to keep fossil fuel companies damaging the climate, you should make sure your fund doesn’t in your name.
An edited version of this article first appeared on www.reneweconomy.com.au