UN ethics to guide Govt super investment Clean portfolio wanted

By Cathy Alexander
The Canberra Times
Canberra, Australia: Thursday, 18 October 2007


The ACT Government will apply United Nations principles on ethical investment to try and clean up its superannuation portfolio.

The Canberra Times revealed in March that the ACT Treasury's cash reserves worth $1.4 billion had been invested in tobacco companies, nuclear power producers and weapons firms which made cluster bombs.

Money had also been invested in Iraq war investor Halliburton and disgraced wheat exporter AWB.
The profits are used to pay public servants' super. Yesterday, Chief Minister Jon Stanhope said the Government would formally incorporate ethical governance factors into the way it invested its money, by adopting the UN's Principles for Responsible Investment.

This means "advocating, agitating and persuading" companies in which the Government has invested to be ethically responsible. Adopting the principles does not stop the Government from buying into firms which have ethically questionable investments. But the Government will now have to engage a third party to lobby such firms, use a proxy vote at annual general meetings and work with other investors to change companies' behaviour. It is working on hiring such a third party. The new investment rules will cost the Government about $500,000 a year to implement.

Revelations of the Government's dirty investments sparked a debate about whether governments should focus on getting the best returns for their investments, or whether they should be more responsible about what they were making money from. Mr Stanhope commissioned a review of his Government's share portfolio back in March, when news of the dirty investments broke. The Finance and Investment Advisory Board did the review and Mr Stanhope said he had accepted all the recommendations. He defended the Government's decision to continue investing in questionable firms, noting the decision "means that the territory still has some exposure to stocks that some Canberrans may consider 'unethical"'.

Mr Stanhope said is Government's approach aimed to change corporate behaviour, instead of just screening out some companies.
"Screening arguably unethical investments out of a portfolio does not necessarily influence the behaviour of the companies involved.
"Advocating, agitating and persuading, in the boardroom and at the AGM, have been shown to have a good chance of effecting real and lasting change."
Mr Stanhope said the ACT might be able to team up with other institutional investors to lobby for change.

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