Two prominent industry superannuation funds, managing more than $174 billion, are the primary signatories to Australia's first asset owner stewardship code.
AustralianSuper and HESTA have committed to the Australian Asset Owner Stewardship Code, a 14-page document developed by the Australian Council of Superannuation Investors (ACSI).
ACSI launched the code at its annual conference in Sydney this afternoon. It believes the code will play key role in influencing the behaviour of asset managers in Australia and globally.
AustralianSuper chief executive and ACSI president Ian Silk said the code was an important step forward for the country's $2.6 trillion superannuation system.
"The code's six clear principles should form the cornerstone of disclosure when it comes to stewardship activities," Silk said.
He added as the $130 billion super fund continues to grow and its holdings increase, "it is vital that the fund maintains a high level of clarity and transparency when it comes to stewardship activities."
HESTA chief executive Debby Blakey, who oversees more than $44 billion, said the code "not only protects and enhances long-term investment value for our members, but promotes sustainable value creation in the companies we invest on their behalf."
A third industry fund, Hostplus, said it will become a signatory to the code before the end of 2018.
The six-point code addresses stewardship activities which include the exercising of voting rights, company engagement, monitoring asset managers and financial system advocacy.
ACSI chief executive Louise Davidson said: "The code raises the bar on signatories to proactively manage and disclose their stewardship activities."
The code promises to benefit all stakeholders, making it easier to understand and assess the focus that asset owners have on good stewardship. It is open to all asset owners including super funds, endowments and sovereign wealth funds, not just ACSI members.
ACSI highlighted stewardship codes exist in many global markets including the UK, US, Japan, Hong Kong and South Africa but this is the first stewardship code to focus exclusively on the activities of Australian asset owners.
Signatories must commit to the new code on an "if not, why not" basis and publish a stewardship statement. The statements are encouraged to be reviewed at least every two years.
The news follows Willis Towers Watson global head of investment content Roger Urwin recently saying the world's largest pension and sovereign wealth funds must see corporate sustainability and stewardship from the viewpoint that it's a long-term licence to operate.
The Australian Asset Owner Stewardship Code principles:
- Publicly disclose how they approach their stewardship responsibilities.
- Publicly disclose their policy for voting at company meetings and voting activity.
- Engage with companies either directly, indirectly (for example, via collective action or third-party providers) or both.
- Monitor asset managers' stewardship activities.
- Encourage better alignment of the operation of the financial system and regulatory policy with the financial interests of long-term investors.
- Report to beneficiaries about their stewardship activities.