BT regularly engages directly with policy-makers and regulators on a range of topics that impact the wealth management industry in Australia, and our business. This includes regulatory changes relating to superannuation, financial advice, insurance or other investment products as well as in regards to specific issues or concerns, of example climate change and human rights.
In 2019 BT contributed to a number of collective engagements relating to ESG issues in Australia, this included submissions to and discussion with the Department of Home Affairs by the FSC and RIAA in regards to information and guidance for implementation of the Commonwealth Modern Slavery Legislation and the Investor Group on Climate Change (IGCC) in regards to Energy and Climate Change Policy developments in Australia.
Regnan's engagement on public policy or with regulators has included:
- CPS511 submission (not yet released by the regulator at the time of writing, will be available at https://www.apra.gov.au/consultation-on-remuneration-requirements-for-all-apra-regulated-entities)
- Australian Sustainable Finance Initiative (ASFI) Developing an Australian Sustainable Finance Roadmap: Progress Report Summary https://www.sustainablefinance.org.au/
- Attended the PRI Sustainable Finance Policy Conference, an input to its whitepaper Taking stock: Sustainable finance policy engagement and policy influence available from the link at https://www.unpri.org/pri/pri-blog/pris-first-sustainable-finance-policy-conference-heres-what-we-discussed
EOS at Federated Hermes (EOS) contributes to the development of policy and best practice on environmental, social and governance matters and shareholder rights to protect and enhance the value of the shareholdings of its clients over the long term.
In 2019, in relation to environmental concerns, Saker Nusseibeh, CEO of Hermes Investment Management, and Bruce Duguid, head of stewardship at EOS, attended a two-day Vatican summit on the energy transition, along with CEOs from major oil companies, asset managers and asset owners. The summit highlighted the need for urgent action on the climate emergency and focused on three key issues: a just transition to a low carbon economy; introducing reliable and meaningful carbon pricing; and transparency in reporting climate risks. Mr Nusseibeh signed two accords on behalf of Hermes on carbon pricing and transparency of financial risks, showing its commitment to taking genuine action on the climate crisis.
EOS is also an active member of the PRI’s Plastics Investor Working Group, advising on strategy and engagement. EOS gave feedback on the research for three PRI reports published in 2019, setting out what investors would find useful. The three reports explore why plastic is a problem, plastic value chain risks and opportunities, and how the plastic landscape is changing. The aim is to help investors identify where and how their portfolios might be exposed to plastic, so they can engage at the corporate and policy levels accordingly.
With regard to social issues, EOS responded to the UK Home Office’s consultation on potential revisions to the Modern Slavery Act and argued for a requirement to report on all six of the currently recommended areas, instead of adopting a ‘comply or explain’ approach. It supported the creation of a registry to enable stakeholders, including investors, to access companies’ modern slavery statements. It argued that a central registry should include a list of the companies caught by the Act’s reporting requirement, regardless of whether they had submitted a compliant statement.
EOS supported ‘Find It, Fix It, Prevent It’, a collaborative initiative to combat modern slavery. This calls on UK-listed companies to increase their efforts to address this issue and to support the provision of remedy to victims. And as an advisory committee member of the PRI cobalt supply chain collaborative engagement, EOS was the only investor representative to attend an OECD-led field trip to the Democratic Republic of Congo to see first-hand the human rights challenges, particularly around artisanal-scale mining. EOS also participated in an on-site OECD roundtable, sharing its perspective and experience with local and international stakeholders.
In relation to governance, EOS contributed to several reviews and consultations looking at ways to overhaul the UK audit sector, including the Competition and Market Authority’s study, the Business, Energy and Industrial Strategy consultation and the Brydon Review. In the consultations EOS expressed its concerns about audit quality, and called for more professional scepticism, with auditors prepared to challenge management, rather than taking a tick-box approach.
In the US, following moves by the Securities and Exchange Commission (SEC) to restrict rights relating to shareholder proposals and regulate proxy adviser activity, EOS wrote to the SEC pointing out that proxy advisers are contractual agents of institutional investors, not of the companies who are the subjects of their research.
EOS also joined an Asian Corporate Governance Association delegation to South Korea to engage with regulators, government departments and businesses on ways to improve corporate governance there. During the trip EOS urged stakeholders to do more to stimulate the economy and encourage entrepreneurialism, without diluting corporate governance standards. EOS argued against the proposed introduction of dual-class share structures, which may threaten minority shareholder rights. EOS also expressed the need for clearer guidance on the so-called 5% rule, whereby shareholders with a 5% stake in a company must state if they plan to influence management. The law was conceived as an anti-takeover measure but there are concerns it could make some asset owners reluctant to adopt the country’s stewardship code due to uncertainty about the legitimacy of engaging with companies on corporate governance.