ESG Aus and NZ Updates
/Australian and New Zealand ESG Updates
First State Super drops Rio Tinto from two portfolio options after sacred site destruction
After a 46,000-year-old Indigenous heritage site at Juukan Gorge was destroyed last month, First State Super has removed Rio Tinto from the diversified socially responsible investment (SRI) and single sector SRI Australian equities option.
The $100 billion industry fund has indicated its team are ‘extremely concerned’ about the destruction of the site and had an urgent meeting to talk over Rio Tinto’s governance, community engagement and policies surrounding the adequacy of governance regarding significant sites and cultural heritage.
After the meeting, First State Super’s executives decided that Rio Tinto no longer met the requirements for the SRI options. Rio Tinto has publicly apologised for the distress its actions caused. Rio Tinto has not apologised for destroying the site, but only for the distress caused, which is deliberate, according to Rio Tinto Iron Ore chief executive Chris Salisbury, who was recorded saying as much in an internal meeting with staff. Rio Tinto has commissioned an independent review into the event.
First State Super is monitoring the issue and is continuing to actively engage with Rio Tinto. The Juukan Gorge rock shelters were of deep significance for the Puutu Kunti Kurrama and Pinikura traditional custodians.
There are reports that BHP Billiton has paused plans for an expansion to its South Flank iron ore mining operation that could destroy up to 86 Indigenous sites of importance. BHP’s plan was given the go-ahead by the Western Australia government three days after the Juukan Gorge site was destroyed, The Guardian reported, however, BHP will only consult with 40 of the 80 heritage sites’ traditional custodians.
Uniting Financial Services (UFS), an Australian ethical investor operating for several decades, had already excluded Rio Tinto from its list of investments but was reconsidering after a solid corporate performance from the miner. A positive review was about to emerge from UFS about Rio Tinto regarding it being a good investment, however, the blast has snatched that away from Rio Tinto.
A LinkedIn note distributed by Warren Bird of UFS explains: ‘Rio Tinto has been on the ‘excluded investments’ list of the United Church Synod of NSW and ACT for several years. However, the company’s positive steps in relation to divestment from coal and other risk extraction activities means that a process of reviewing the exclusion had commenced at the Ethical Investments Monitoring Committee (EIMC), which I chair.
‘The continued negative for Rio has been its involvement in a number of ethical controversies. With the terrible news that Rio has destroyed a significant heritage site… the EIMC has decided to cease the review process immediately. Despite the company’s apology for this incident, the concerns it raises about the depth of commitment to ethical reform across Rio’s board and management are too great to ignore.
‘The Synod’s ethical policy opens with the broad principle that the Church has no desire to profit from or support a company that behaves in such a manner. Rio Tinto will therefore remain on the Church’s ‘excluded investments’ list for the foreseeable future.’
Heated tobacco products blocked (for now) in Australia
Tobacco giants such as Philip Morris have been developing new tobacco products, known as Next Generation Products (NGPs), such as heated tobacco products. Heated tobacco products produce significantly less damaging chemicals than a traditional cigarette, thereby reducing the harmful effects associated with smoking. Other NGPs include Snus, a traditional Scandinavian smokeless tobacco product, and e-cigarettes.
On 10 June 2020, Australia’s Therapeutic Goods Administration (TGA) made an interim decision to block the sale of heated tobacco products. The decision was made due to the health concerns, with experts saying the products have no public health benefits, increase the likelihood of causing harm, and are simply a new delivery method for nicotine.
Lobbying is likely to continue, with tobacco companies meeting with Prime Minister Scott Morrison, Health Minister Greg Hunt, and the Minister for Indigenous Affairs, Ken Wyatt, and others. The final decision is expected in August. In 2018, the New Zealand government was overruled in court by Philip Morris, who argued for the right to sell the products.
The TGA decision is in line with the World Health Organisation recommendations that heated tobacco products be regulated in the same way as other tobacco products.
AXA IM launches fourth global impact fund, doubles down on impact investing
AXA Investment Managers has launched its fourth global impact fund, and via a webinar in mid-June, reiterated that sustainable investing is now the new normal, with no doubts about investor returns. The new fund is to focus on emerging markets in ‘health and wealth’, with five per cent of AXA IM’s fees being donated to non-profits involved in the investments.
In 2019, AXA IM’s Global Stewardship Report indicated that climate change accounted for over 40 per cent of their engagement with companies. Across a year, AXA IM engaged with 217 issuers, voted at 6,016 general meetings and voted in 64,439 proposed company resolutions. That is an increase in engagement of 74 per cent from 2018 levels. Climate change is a key focus area, according to the company, along with biodiversity loss, diversity and public health.
