“We ask them their issues and discuss them together, in the end it’s for the boards of those companies whether they want to take the views of our fund or not.”
The chairman of Industry Super Australia, Greg Combet, this week said banks and other financial businesses needed to “think very carefully” about how they rebuild trust, as he also flagged a focus on environmental, social and governance matters.
Ms Ridout backed his sentiments by saying she believed business “gets its legitimacy from its role in the broader community,” and such concerns were not inconsistent with getting good returns.
“Community expectations are very important, and I don’t see why they are diametrically opposed to shareholders,” she said.
The debate over the role of super comes as more of the $2.7 trillion in retirement savings also appears destined to find its way into the hands of private equity managers.
Ms Ridout said AustralianSuper – which last year teamed up with private equity managers to make attempted takeovers of Healthscope and Navitas – had about 3 per cent of its assets in private equity, but this figure was likely rise.
The private equity peak body on Wednesday said Australian super funds on average had only 4.2 per cent of their assets in private equity, much less than the average of more than 8 per cent for United States pension funds. The Future Fund, which manages future public sector pension liabilities, has about 15 per cent of its assets in private equity.
Andrew Major, chair of the private equity body Australian Investment Council Board Chair, and a general manager at HESTA, said super would play a “critical role” in driving private equity’s expansion in Australia.
“There is certainly room to increase institutional investor allocations towards private capital given the proven performance of the asset class,” he said.
While the government has asked the Australian Prudential Regulation Authority whether it needed more powers to make sure super fund engagement with companies was in members’ interests, Ms Ridout said trustees were already well aware of their obligation to members.
“[Royal commissioner] Kenneth Hayne has reminded me as a trustee of AustralianSuper, and every other trustee of an industry fund or a retail fund, that we have this duty of care,” she said.
The fund also had strictly enforced policies for handling conflicts of interest, which would mean that a board member appointed by the ACTU, for example, would be recused if the board were discussing an ACTU campaign.
Clancy Yeates is a business reporter.