ESG Update as at 28 May 2019

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Australian and New Zealand ESG Updates

Future Fund ditches male-only boards as investment companies

Every company in Future Fund’s portfolio that has only men on the board is being divested because of it. The fund says that these companies are failing to meet community standards, but are likely to deliver poorer financial results too. There is plenty of evidence that diverse boards perform better, so there is no excuse for not shaping up. So far seven companies have had their shares sold off, with all those companies based in Japan, and were part of Future Fund’s only international exposure.

The fund has reached out to Australian companies, and found them largely responsive, however there are still plenty of male-only boards in Australian companies.

APRA says soon there’ll be no such thing as ‘sustainable’ finance - it’ll all be green

The Australian Prudential Regulatory Authority (APRA) head of insurance Geoff Summerhayes flagged climate change risks as soon to be at the heart of all financial decisions that APRA-regulated entities have to make, speaking at an ACSI conference. There will be no such thing, he explained, as ‘sustainable’ finance; all finance must be sustainable. Green finance will be the only kind we have.

Summerhayes confirmed that APRA does not see climate change as a moral issue, but a directly financial one. Australia’s regulation already covers all financial risks, so there is no need for new regulation - it’s adaptable and guidelines will continue to be updated to reflect ESG importance.

Australian Ethical campaigning against gambling investments in super

A new marketing campaign launched by Australian Ethical is trying to encourage consumers to think about how they feel about their superannuation being invested in the gambling industry. While it may be a good investment - Australians gamble more than any other country, losing $23 billion each year - the negative impacts on our communities is not in dispute.

Exposure to gambling via superannuation can be direct or indirect, and may not be easily distinguished - supermarket chains, for example, may be an indirect exposure, while Crown is direct.

Christchurch Call gains traction

The summit in Paris launched by New Zealand’s Prime Minister Jacinda Ardern and French President Emmanuel Macron, the Christchurch Call, has seen very broad support. Attended by big tech companies and government representatives, the Christchurch Call outlines a set of voluntary commitments that governments and online service providers can agree to, to help prevent terrorist and extremist violence spreading online.

Google, Facebook, Twitter, Daily Motion and Amazon have all agreed. This means the companies will take specific measures to prevent the uploading of terrorist and extremist content, and take measures to manage the risks of this content being shared via live streaming. Algorithms will also be reviewed.

Governments who agreed will commit to enforcing the laws that already exist that make the production and spreading of terrorist content illegal. The Australian Government rushed through a social media law, that has been criticised as being a poorly-thought-out bill that did not undergo proper consultation, which may result in undesirable consequences.

The initial group of investors who started the initiative now has 55 funds, including the original group. The Christchurch Call has been agreed to by 18 countries and eight tech companies.

Read the full Christchurch Call agreement details

Ethics Centre launching FASEA-approved financial adviser course

A FASEA-approved bridging course is to be piloted later in 2019 with an Australian university for financial advisers. The course will help advisers to meet the requirements of the Financial Adviser Standards and Ethics Authority (FASEA) reforms.

The Ethics Centre has run the Ethical Professional Program for the financial services industry since 2016. The Ethics Centre is a non-profit organisation that offers ethics programs aimed at the business community.