Australian and New Zealand ESG Update

Future Fund dives into renewables

Future Fund is to acquire Tilt Renewables as part of a scheme of arrangement by a consortium. New Zealand energy company Mercury NZ will acquire the assets with Powering Australian Renewables (PowAR), and the consortium buying 100 per cent of the shares. PowAR is a partnership between AGL and QIC on behalf of managed clients and the Future Fund. Mercury is to run the renewables business with the PowAR consortium to own all the shares.

Frontier addressing culture

Frontier Advisors is warning investment managers of upcoming more stringent appraisals of management of cultural and governance issues. These factors have always played a role in ratings, but the company is doubling down. The trigger has been AMP’s handling of a sexual harassment claim against AMP Capital global head and managing partner Boe Pahari and his subsequent promotion as a good example.

An internal framework has been set up to explore cases of concern. Metrics include how transparent the company is with their communications and actions with clients regarding adverse events, along with diversity, inclusion and equality initiatives. Closer attention will also be paid to patterns of behaviour within the company and how managers rectify issues.

The idea is that if a manager is failing to properly manage culture, there are likely more failures to come in other areas of the business that may affect the overall success of the business. A research paper, What lurks in the shadows, is to be published soon.

Mercy Super drops AMP’s ethical fund

AMP Capital Ethical Leaders Balanced Fund has been dropped by Mercy Super amongst short-term liquidity concerns and negative press. The super fund was using the fund as the manager of its socially responsible option. In March 2020 the fund had just under $1 billion in funds under management, however, in December, the fund had lost over half its funds, sitting at $435 million. Member assets from Mercy Super have been rolled over to its MySuper Balanced option in the interim as a new manager is found.

Tobacco products given the green light in Australia for quitters

After a consultation period with health officials, a 2020 Senate inquiry into tobacco harm reductions in Australia has decided that tobacco products should be available to support smokers and nicotine users to quit via prescription. The recommendation is controversial, with lobbying support provided by big tobacco company Phillip Morris.