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Published 11 January 2013 12:14, Updated 14 January 2013 07:03
First Super is selling down its News Corp holdings citing its lack of independence. Photo: Bloomberg
Superannuation funds are sharpening their focus on ethical investing as they attempt to win confidence and lift returns – and some of the biggest names in business are in the firing line.
A decision by superannuation funds to use ethics as a basis for investment decisions has important consequences for big business.
On January 9, the Australian Prudential Regulation Authority announced the total value of superannuation assets rose by 3.7 per cent to $1.4 trillion in the year to June 30, 2012.
The power and influence wielded by Australia’s trillion-dollar superannuation sector is reflected by the personalities they are happy to take on.
Rupert Murdoch’s tough 12 months got worst in recent days when a chairman of a $1.7 billion superannuation fund criticised the Rupert Murdoch-led board at News Corp after it quashed shareholder attempts to boost independence at board level.
The decision by industry superannuation fund First Super to sell its stake in News Corp was made due to the big media company’s failure to improve its corporate governance, according to First Super’s co-chairman Michael O’Connor.
The lack of independence at News Corp is a threat to shareholders, according to O’Connor who is also national secretary of the Construction, Forestry, Mining and Energy Union.
“Open, transparent, representative governance is not only overdue but essential for improved risk management within the company,” he said recently.
“Further, the interests of minority shareholders have too often been compromised. But these issues are apparently of no concern to Rupert Murdoch, so our board decided to take his advice and sell down our shareholding.”
In another pro-ethical investment decision, it was announced on January 10 that Health Employees Superannuation Trust Australia had began selling its tobacco-related investments.
The chief executive of HESTA, which has $20 billion in funds under management, Anne-Marie Corboy says she wants them all gone by April.
The $32 billion fund First State Super removed all tobacco investments from its portfolio last year.