Global funds management giant Aberdeen Standard Investments has rejected prime minister’s Scott Morrison’s call for companies to listen to “quiet shareholders” as part of a comprehensive rebuff of the government’s attack on activist investors and the environmental movement.
The UK’s biggest listed fund manager, which controls assets worth more than £550bn, also defended the role of environmental groups including Market Forces, which has been accused by the attorney general, Christian Porter, of pressuring companies through “widespread, co-ordinated harassment and threats of boycotts”.
Aberdeen’s intervention in Australian politics comes after bank bosses on Friday told a parliamentary inquiry they did not feel bullied by environmental groups and rejected the need for changes to the law foreshadowed by the Morrison government.
In a speech to the Queensland Resources Council last Friday, Morrison attacked “an escalating trend towards a new form of secondary boycotts in this country” in which environmental groups “are targeting businesses and firms who provide goods or services to firms they don’t like, especially in the resources sector”.
“Some of Australia’s largest businesses are now refusing to provide banking, insurance and consulting services to an increasing number of firms who just support through contracted services to the mining sector and the coal sector in particular, which is the nation’s second-largest export sector,” Morrison said
“I think some of our largest corporations should listen and engage with their quiet shareholders, not just the noisy ones.”
An Aberdeen spokeswoman said the company had a “critical role to play in financing the transition to a low-carbon economy, and the adaptation to climate change impacts through our products and investment decision”.
“We see environmental, and particularly climate, risks as financially material to the businesses that we invest our clients’ money in and that is why it is a strong focus of our analysis,” she said.
The company is among shareholders in BHP who delivered large votes in favour of a resolution proposed by activist investor group the Australasian Centre for Corporate Responsibility that, if passed, would have forced the mining giant to quit the Minerals Council of Australia and other lobby groups with a track record inconsistent with the company’s position on the climate crisis.
“Like many large asset owners and asset managers, we actively engage with companies and much of this engagement is done ‘quietly’, in that it is conducted privately between ASI and the company,” the spokeswoman said.
“We believe this is generally the most effective way to influence change. However, we strongly believe that there is also a place for ‘noisy’ action where other forms of engagement have been ineffective, and where the issue of concern is not aligned with the company’s broader strategy.
“Shareholders, noisy or quiet, are not faceless institutions. As shareholders, it is our responsibility to represent the interests of our clients in generating sustainable long-term returns.”
She said Morrison’s remarks would have no effect on the group’s strategy.
“Our engagement and investment activities are informed by our disciplined investment approach, and we will continue to engage with companies, quietly or otherwise, where we believe that company strategy does not adequately address material environmental, social and governance issues – including climate change,” she said.
Asked about the government’s attack on Market Forces, which is associated with environment group Friends of the Earth, she said that protesting was “an effective and vital part of a democracy”.
“At the end of the day, companies are commercial organisations that will not be influenced by activist groups unless they can see a commercial benefit,” she said.
Under questioning from Labor’s treasury spokesman, Andrew Leigh, and the Greens deputy leader, Adam Bandt, at a parliamentary hearing on Friday, the Westpac chief executive, Brian Hartzer, and his counterpart at the Commonwealth bank, Matt Comyn, both denied they felt bullied by climate activists.
Leigh took Hartzer to Westpac’s climate commitments, asking: “Is it fair to say you made these decisions in your own business interests rather than being bullied into it?”
“Yeah,” Hartzer replied.
He said Westpac made its decisions after taking into consideration its role in society.
“We do that independently,” he said.
Asked if the law needed to be changed as foreshadowed by Morrison, he said: ‘No, but I’m not sure what’s specifically proposed there.”
Bandt put it to Comyn that it didn’t sound like the CBA was being “bullied”.
“Yes, that’s right,” Comyn said.
He said that to his knowledge the bank had never asked the government to change the law because of campaigns people ran that affected its business.
The Commonwealth Bank’s deputy chief executive, David Cohen, said that the bank’s “experience has been that engaging with some of the environmental groups has been to our benefit”.
He said it had helped shape the bank’s thinking on environmental, social and governance issues.
“I think that’s enriched our own thinking over time,” he said.
Liberal backbencher Jason Falinski asked Comyn if the bank had been subjected to shareholder activism by groups that bought small parcels of shares in order to put motions or be disruptive.
“One of the unique and positive features of the AGM is that people, regardless of their shareholding, are able to get up and ask questions of the chairman,” Comyn said.
He said the number of questions on the environment had increased recently, mirroring wider debate in the community.
“It’s not unreasonable and as I said in many ways positive that small shareholders are able to stand and ask questions of the board and management of their company,” he said.