17 May 2023
2023 Annual ACSI Conference
The 2023 Annual ACSI Conference was held on Wednesday 3 May 2023 in Sydney and the Morrow Sodali team was there to hear from the largest investors in Australia and some of the country’s leading public figures.
The conference opened with an address from Debby Blakey, President of ACSI and CEO of Hesta, one of the largest pension funds in Australia. In her speech, Ms Blakey highlighted the need for ESG to be embedded as a critical element at the core of every business. Only with ESG integrated into the business can investors see improvements in company performance, with engagement and active stewardship being the most effective tools contributing to improvements.
The Hon Stephen Jones, Federal Minister for Financial Services, continued in a very similar tone in his address, reiterating that a breach of a social licence has an existential impact on any business. Minister Jones assured the audience of the Australian government’s commitment to reduce emissions by 43% by 2030 and noted that investment worth 1.3% of global GDP will be required for the transition. He also announced a sovereign green bonds fund program, to be launched in the middle of 2024, whereby investors will be able to back public projects to boost the transformation. In addition, the first Australian sustainable finance taxonomy is also being developed, aligning with global standards but with ‘an Australian accent’.
The US Inflation Reduction Act (IRA) was mentioned frequently throughout the day, mainly as a game changer for how other nations attract capital. The IRA marks the single largest investment in climate and energy in American history, enabling the US to tackle the climate crisis, advance environmental justice, secure its position as a world leader in domestic clean energy manufacturing, and putting the US on a pathway to achieving its climate goals, including a net-zero economy by 2050. The IRA, in return, puts a lot of pressure on other nations, including Australia, to act and remain competitive.
This notion was reiterated by the Directors’ panel, comprising Christine Holgate (Metcash, Collins Foods), Rob Sindel (Orora, Mirvac, Boral) and Mike Wilkins (QBE, Medibank Private, Scentre Group). All directors unanimously agreed that we are facing unprecedented uncertainty on all fronts, starting with the conflict in Ukraine, through to energy crisis and transition, immigration, bad loans and a housing crisis, all the way to labour shortages, cyber security threats and supply chain risks. However, it was also noted that it is the directors’ job to make decisions in those conditions and that it is exactly for this reason they are being elected to the boards.
This point was further discussed in relation to recent cyber security threats at large companies like Medibank, Optus and Latitude Financial, and the boards’ decisions about not paying a ransom under such attacks. In November 2022, the Australian government announced it was considering new laws to make it illegal for companies to pay a ransom to cyber criminals, and that it would increase penalties for data breaches. However, the panel noted that not paying a ransom may result in a loss of life and therefore the new legislation should carefully consider the wording around this issue.
Ms Holman agreed with Ms Blakey’s speech in that ESG is about managing risks and that it has to be embedded in an organisation’s strategy. But the biggest challenge seems to be a mindset challenge with many still thinking the ESG should sit ‘outside’. As an example of this, she pointed to ACSI’s report on modern slavery - Compliance without ambition - which provides evidence that many of the ESG aspects are more compliance-driven rather than truly embedded into the risk registers and business strategies of ASX200 companies.
This led to a discussion on whether businesses should take a stand on important socio-economic issues, and support social cause. The panel on the Voice to Parliament agreed that it is overwhelmingly helpful when businesses, AFL clubs, universities and other organisations publicly support the campaign. Led by the outspoken Professor Marcia Langton, Foundation Chair of Australian Indigenous Studies at the University of Melbourne, this panel outlined details of the proposed amendment to the Australian Constitution. The amendment would give Indigenous communities a route to help inform policy and legal decisions that impact their lives, subject to a successful Referendum to be held in the second half of 2023. Ms Langton also mentioned two active campaign groups - Yes23.com and TogetherYes.com.au – that the public can use, join, and access for training.
The second half of the day was focused on just transition, building a circular economy and the global challenges of responsible investment with the associated risk of greenwashing.
While we can expect continuous technology advancements in relation to transition, the information provided by businesses still appears patchy. According to the 2022 TCFD Status Report, only about 4% of companies provide all 11 of the required recommended disclosures. And the recent greenwashing allegations and ASIC investigations at some Australian funds and listed companies only show that more rigour is needed when it comes to transparency. The hope is that the new international sustainability Standards (IFRS Sustainability Disclosure Standards) will address some of this ‘patchiness’ when they come into effect in January 2024.
The last panel, a conversation with superannuation fund leaders, concluded that the world is getting complex and the superannuation industry, just like everyone else, has to keep adapting. What was almost unheard of a few years ago (active stewardship, voting, engagement) is now part of everyday life, if not a requirement. And we all need to be flexible and agile to withstand the challenges coming our way and turn them into opportunities.
For the event agenda and speakers please click here.
The conference opened with an address from Debby Blakey, President of ACSI and CEO of Hesta, one of the largest pension funds in Australia. In her speech, Ms Blakey highlighted the need for ESG to be embedded as a critical element at the core of every business. Only with ESG integrated into the business can investors see improvements in company performance, with engagement and active stewardship being the most effective tools contributing to improvements.
The Hon Stephen Jones, Federal Minister for Financial Services, continued in a very similar tone in his address, reiterating that a breach of a social licence has an existential impact on any business. Minister Jones assured the audience of the Australian government’s commitment to reduce emissions by 43% by 2030 and noted that investment worth 1.3% of global GDP will be required for the transition. He also announced a sovereign green bonds fund program, to be launched in the middle of 2024, whereby investors will be able to back public projects to boost the transformation. In addition, the first Australian sustainable finance taxonomy is also being developed, aligning with global standards but with ‘an Australian accent’.
The US Inflation Reduction Act (IRA) was mentioned frequently throughout the day, mainly as a game changer for how other nations attract capital. The IRA marks the single largest investment in climate and energy in American history, enabling the US to tackle the climate crisis, advance environmental justice, secure its position as a world leader in domestic clean energy manufacturing, and putting the US on a pathway to achieving its climate goals, including a net-zero economy by 2050. The IRA, in return, puts a lot of pressure on other nations, including Australia, to act and remain competitive.
This notion was reiterated by the Directors’ panel, comprising Christine Holgate (Metcash, Collins Foods), Rob Sindel (Orora, Mirvac, Boral) and Mike Wilkins (QBE, Medibank Private, Scentre Group). All directors unanimously agreed that we are facing unprecedented uncertainty on all fronts, starting with the conflict in Ukraine, through to energy crisis and transition, immigration, bad loans and a housing crisis, all the way to labour shortages, cyber security threats and supply chain risks. However, it was also noted that it is the directors’ job to make decisions in those conditions and that it is exactly for this reason they are being elected to the boards.
This point was further discussed in relation to recent cyber security threats at large companies like Medibank, Optus and Latitude Financial, and the boards’ decisions about not paying a ransom under such attacks. In November 2022, the Australian government announced it was considering new laws to make it illegal for companies to pay a ransom to cyber criminals, and that it would increase penalties for data breaches. However, the panel noted that not paying a ransom may result in a loss of life and therefore the new legislation should carefully consider the wording around this issue.
Ms Holman agreed with Ms Blakey’s speech in that ESG is about managing risks and that it has to be embedded in an organisation’s strategy. But the biggest challenge seems to be a mindset challenge with many still thinking the ESG should sit ‘outside’. As an example of this, she pointed to ACSI’s report on modern slavery - Compliance without ambition - which provides evidence that many of the ESG aspects are more compliance-driven rather than truly embedded into the risk registers and business strategies of ASX200 companies.
This led to a discussion on whether businesses should take a stand on important socio-economic issues, and support social cause. The panel on the Voice to Parliament agreed that it is overwhelmingly helpful when businesses, AFL clubs, universities and other organisations publicly support the campaign. Led by the outspoken Professor Marcia Langton, Foundation Chair of Australian Indigenous Studies at the University of Melbourne, this panel outlined details of the proposed amendment to the Australian Constitution. The amendment would give Indigenous communities a route to help inform policy and legal decisions that impact their lives, subject to a successful Referendum to be held in the second half of 2023. Ms Langton also mentioned two active campaign groups - Yes23.com and TogetherYes.com.au – that the public can use, join, and access for training.
The second half of the day was focused on just transition, building a circular economy and the global challenges of responsible investment with the associated risk of greenwashing.
While we can expect continuous technology advancements in relation to transition, the information provided by businesses still appears patchy. According to the 2022 TCFD Status Report, only about 4% of companies provide all 11 of the required recommended disclosures. And the recent greenwashing allegations and ASIC investigations at some Australian funds and listed companies only show that more rigour is needed when it comes to transparency. The hope is that the new international sustainability Standards (IFRS Sustainability Disclosure Standards) will address some of this ‘patchiness’ when they come into effect in January 2024.
The last panel, a conversation with superannuation fund leaders, concluded that the world is getting complex and the superannuation industry, just like everyone else, has to keep adapting. What was almost unheard of a few years ago (active stewardship, voting, engagement) is now part of everyday life, if not a requirement. And we all need to be flexible and agile to withstand the challenges coming our way and turn them into opportunities.
For the event agenda and speakers please click here.