This month on ACTU Super News Industry Funds Winners; Ethical Investor Focus On Workers; Ken Georgetti, President of the Canadian Labour Congress addresses ACTU Congress on pension fund issues.
ACTU Superannuation Trustees Network Newsletter
No.21 September/October 2003
Editor: Linda Rubinstein Fax: 03 96634051
Industry Funds Winners
The consistently stellar performance of industry funds has received more attention than usual this year because of generally lower returns.
It’s not just this year – over the last five years industry funds have done 2½% better than retail master trusts.
There is no one reason for this, but in general industry funds and other not-for-profit funds share these features:
infrastructure and private equity, which have produced strong returns;
or insurance company executives who manage retail funds;
As Alan Kohler said in The Australian: “…virtually every industry fund has performed better than every retail fund since 1998, but every industry fund costs about half what it costs to run every retail fund because there is no need for a profit for shareholders and those managing them earn smaller salaries.”
ACTU SUPER goes to member representatives on superannuation fund boards and other interested individuals. We are reliant on unions providing up-to-date information about the trustees of their members’ funds. Please email details to email@example.com
Ethical Investor Focus On Workers
A copy of the latest issue of ethical investor is included with this newsletter.
The September issue of the magazine addresses a number of important issues arising from the requirement for superannuation funds to disclose the extent to which “labour standards” are taken into consideration into investment decisions.
Articles on occupational health and safety, a global living wage, employee share options and an interview with ACTU officers make this an issue not to miss.
ethical investor is a useful resource for trustees. We hope you will consider taking out a subscription.
Georgetti Addresses Congress
Ken Georgetti is President of the Canadian Labour Congress and takes a special interest in pension fund issues. He is the chair of the union-sponsored Shareholder Association for Research and Education, which works with pension funds on investment and governance issues and also chairs the ICFTU committee on workers’ capital.
This is an edited version of Ken’s speech to ACTU Congress, which followed a small meeting with trustees and other interested delegates.
We have discovered that strengthening our pension funds can also benefit the union movement and the wider community we live in.
Three years ago in Canada we created a new labour centre – the Shareholder Association for Research and Education – to accomplish four important tasks to meet our goal.
First, we need to be able to influence the laws and regulations that affect our pension funds, and we need experts to develop policy alternatives.
Today we are more able to advocate strongly for new pension, corporate and securities laws that will make pensions more secure, and make the corporations we invest in more accountable, both to us as investors and to society.
The spectacular collapse of Enron, WorldCom and other companies that gun managers invested our pensions in has made trustees more aware than ever before that they need strong laws to protect workers’ savings.
Second, we know that the hundreds of labour appointed pension trustees across our country want more support and education than they get now, so we are expanding the training available to them.
Third, we wanted to make sure the power of our proxy votes at annual meetings was benefiting our plans. We drafted a model set of proxy voting guidelines to show what we think are best practices.
And every year we publish a survey of how Canada’s pension asset managers voted on 30 key issues.
Now trustees have a new tool to hold their managers accountable and fight back on issues like exorbitant executive compensation and conflicts of interest among board members, auditors and managers.
Finally, as investors, we have a responsibility to be active owners Better governed, more socially responsible companies are less risky for pension funds and, according to study after study, provide at least as good a financial return.
But investors must do more than decide to buy or sell a company. They must also be active owners.
Let me give you one example of how active owners can help make a good company better.
Four years ago labour investors approached Hudson’s Bay Company – Canada’s major clothing retail chain – and asked it to do three things:
First, to align its buying policies with the ILO’s core labour standards.
Second, to monitor how well suppliers complied with its policy and to work to improve compliance.
Third, to report to shareholders on its progress, in a credible and transparent way.
Union members don’t want their pension savings used to oppress other workers.
What is also important for union pension trustees is that companies who consumers believe benefit from sweatshops or child labour put their reputation at risk and that can hurt the value of the company.
Every year shareholders filed a proposal for voting on at the Hudson’s Bay AGM, and each year our efforts gained momentum.
Then last year we achieved a breakthrough when 37% of shareholders voted in favour of the pension funds’ proposal.
This year, Hudson’s Bay adopted the ILO standard and started reporting to shareholders about how it was implementing its policy.
We think that is a victory for investors, the company and workers.
That victory has been repeated in other annual meetings with other companies, on issues like expensing stock options, environmental reporting, auditor independence and many others.
More information about SHARE can be found on its website: www.share.ca