Page 3229 - Week 08 - Wednesday, 22 August 2012
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It is telling that neither party was prepared to say why we should not have an independent board tasked with writing a policy for the way we vote on resolutions that is consistent with the other laws we have passed in this place. We have a law that says we will reduce our emissions by 40 per cent by 2020, yet we voted against a resolution to put to Woodside Petroleum to make them try and reduce their greenhouse gas emissions. But, as I said, it is good to see we are going to have some movement on that.
Another issue that is very important in all of this, often mentioned by those who are opposed to the idea of responsible investment, is the return that you will get. The only certainty in terms of debate on returns is that there is no definitive answer. The best conclusion is that there is no decline in returns from investing in this way. I will draw members’ attention to the Responsible Investment Association Australasia report for 2011. The 2012 one will be completed towards the end of the year. In that 2011 report it says:
Responsible investment funds have outperformed their benchmarks in every one of the 12 categories covered in this report—over one, three, five and seven years and across Australian shares, international shares and balanced …
The most comprehensive review of this issue that I could find was undertaken by Russell Research, one of the biggest fund managers in the world. They found that there was no loss in returns from investing responsibly. In fact, that report goes through each of the main arguments used against changing to responsible or ethical investing and explains why they are inaccurate and wrong.
On the question of whether or not we should be legislating in this area, the first point I would make when the argument is made that other countries have not legislated is that they have not needed to because the issue is not controversial in these places. In the US, for example, both sides of politics actively push the issue. In fact, many state pension funds are actually the ones driving the resolutions to make companies change the way they do things. Of course, we all know about the Norwegian fund, the world’s largest sovereign wealth fund. They have a similar model to what is proposed, where they appoint an independent panel that makes specific recommendations for the exclusion of particular companies they do not believe are consistent with their accepted values. These exclusions are applied by the ministry of finance without fuss and with a very good rate of return.
I would also make the point that in New Zealand the Labour Party in 2010 tried to legislate to improve their investment practices. The bill was supported by the Greens but rejected by the conservative government.
There is no reason why we should not legislate in this area. Just as this place determines what the community does and does not find acceptable for many other matters, this is the best place to determine exactly what our city thinks it is and is not okay to invest in. That is our job each and every day we are here, and this issue is no different. Certainly we have an obligation to fulfil our responsibility to future
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