Annual Review 21/22

ACCR was incorporated in October 2012 - nearly a decade ago. Sometimes I get asked – what’s coming in the next decade? I say – all I can see are the intellectual forces at work.

ACCR’s purpose is to assist ‘ethical investors so that humanity may live more justly and within the carrying capacity of supporting ecosystems’. Every day, in pursuit of that purpose, we deal with people who are stewards of other peoples’ money – e.g. company directors, superannuation trustees.

So, the legal and intellectual framework behind the conduct of these stewards is vital to the nature and impact of our work. In the last few years that framework has started to shift.

The current/still dominant paradigm - ‘Modern Portfolio Theory’ - is reaching its shelf life. It dates back to the mid 1950s. It sees justice and the carrying capacity of ecosystems as given, irrelevant to financial risk and return and outside the sphere of influence of investors.

The new/challenger paradigm sees most investors as ‘universal owners’ – investors who own shares in many companies – investors whose best interests entail adoption of a stewardship approach which seeks to curtail activity undertaken by a company they own if it causes social and environmental costs, e.g. damages ecosystems. Even if restricting that activity could decrease returns at that company. Because such activity is likely to decrease aggregate portfolio return.

The future focus and impact of ACCR’s work will be heavily influenced by this paradigm shift (and the pushback against it) in process.

To illustrate I’ll give two examples. Divestment of fossil fuel intensive businesses often fails the universal owner test. Universal owners want actual GHG emissions genuinely cut not just owned by someone else but causing as much damage. In future ACCR will continue to focus on stewardship that results in genuine GHG emission cuts.

Company boards (directly or via trade associations or ‘revolving door’ postings) often seek to influence politics to enhance their company’s returns – to internalise profit and externalise cost. But their universal owner shareholders’ interests lie in a healthy democracy. In future ACCR will continue to focus on attempting to restrain corporate political activity that misuses shareholder funds for socially, environmentally or ‘body politic’ damaging purposes.

For getting ACCR to the point where we can think about the decade ahead, on behalf of the ACCR board, my thanks to our current Executive Director Brynn O’Brien, her predecessor Caroline Le Couteur, our staff, past board members, current and past research committee members and all our donors, grantors and ‘shareholder hub co-filer’ supporters.

Howard Pender
ACCR Convenor