Savvy super activists can change the world
The reason that the former national director of GetUp, Simon Sheikh (pictured), has decided to set up a superannuation fund that will not invest in fossil fuels, or companies that service or finance the fossil fuel industry, is simple. He wants to change the world.
"What we need is a transformation in our economy ... out of the fossil fuels," he says.
Future Super launched two months ago and has 800 members and just over $20 million in funds under management.
The Australian National University's recent decision to divest investments in seven companies with interests in fossil fuels - Santos, Oil Search, Iluka Resources, Sandfire, Sirius, Newcrest and Independence Group - brought renewed attention to the very important issue of sustainable energy and environmental investing.
Sheikh reports that his fund - Future Super - saw a big spike up in interest following the ANU announcement and the subsequent media attention.
"For quite a while now there has been many Australians that have a growing concern about climate change," Sheikh says.
But after many years as an activist and trying to change companies' behaviour through lobbying, he came to realise that what companies will react to, and what just might change their practices, is a demonstration of consumer power.
"Until they see consumers voting with their money and their feet - they won't actually start to take this notion seriously," he says.
Future Super launched two months ago and has 800 members and just over $20 million in funds under management. Sheikh says there are many more people working their way through the membership process at the moment. He has an ambitious target of $1 billion in funds under management over the next few years.
"Until they see consumers voting with their money and their feet - they won't actually start to take this notion seriously." Simon Sheikh, Future Super
Early interest has been better than expected, according to Sheikh, who is well aware of investors willingness to say they like the idea of ethical investing, but then to do nothing about it.
"We believe that the stage we're in, when it comes to the concerns of investors on climate change - requires investors to put money where their mouth is," he says.
"Engagement [with companies] is of limited use."
And to help superannuants do that, Future Super has made sure that the process of becoming a member is as simple as possible.
"What we're all about is reducing the intention to act," he says.
Members can apply on line and receive a member number within days. The slow part is the process of getting existing funds rolled over into Future Super.
Sheikh says that other superannuation funds are very interested in his administration platform, which facilitates all this. He has also had discussions with larger funds about environmental matters.
"We have spoken to other super funds and we will keep those channels open."
It would have been much simpler to launch a managed investment product but Sheikh recognised the real power to change the energy economy was in the $1.8 trillion superannuation industry.
The process of change is not just about divesting companies involved in fossil fuels but also investing in companies that are developing alternative energy.
"We need the ASX 100 to have new entrants on it that come from the new economy," he says.
"And the superannuation sector, over the next five years, has the capacity to change the ASX100 list."
"Activist shareholders can be far more useful than their apparent success in voting results." Martin Lawrence, Ownership Matters
"Activist shareholders can be far more useful than their apparent success in voting results," he says.
"Because often it's what the companies give to avoid an embarrassing vote."
Institutional shareholders may be unlikely to back a shareholder resolution, around remuneration or ESG practices, for example, but they are in a position to be able to ask the company questions about it. And they can give the company the impression they may be inclined to support these kinds of resolutions, which can then prompt change.
The CBA shareholder resolution on disclosure of the climate change causing carbon pollution it finances, although originally rejected, has prompted some improved disclosure around the practice, according to Lawrence.
Activism takes all forms and while public divestments create the most media attention, it might just be the smaller groups working under the radar that could have the biggest impact on group behaviour, due to their savvy approach.
