POWERED BY MOMENTUM MEDIA
Retailer sourcing shift threatens super fund reputation
Australian retailers are failing to disclose labour and human rights (LHR) supply chain risks despite an increased trend towards sourcing imports from the least developed countries in Asia.
Australian Council of Superannuation Investors (ACSI) chief executive Ann Byrne said the issue was significant in light of increased disclosure requirements for superannuation funds.
"Poor management of risks by the companies in which funds invest inevitably impacts upon their reputation as responsible investors as well," she said.
A new ACSI report looked at the sourcing patterns and LHR risks for 34 countries in the consumer staples and consumer discretionary sectors of the S&P/ASX200 Index, where investor valuations and consumer confidence were important in maintaining prominent retail brand names.
It found companies had shifted sourcing from China to lower-skilled and lower-wage markets — heightening LHR risks in companies supply chains.
Imports sourced from Bangladesh, Cambodia and Vietnam increased 15-fold, six-fold and 2.7-fold respectively between 2006 and 2012.
Despite an increased risk of LHR issues, ACSI found that in most cases, Australian companies lagged their overseas peers in public disclosure.
Only 38 per cent of the 34 companies studied have a publicly disclosed labour and human rights supply chain policy; only 30 per cent of companies disclose their child labour and forced labour policies; and one third disclose supplier audits or risk assessments.
"The emerging risks in supply-chain labour and human rights have profound implications for long-term shareholder value," Byrne said.
Prior research undertaken by ACSI showed consumer staples and discretionary companies — particularly retailers — had high exposure to LHR abuses in their supply chains.
ACSI said it would pursue dialogue with companies regarding labour and human rights considerations.
"We acknowledge this is a complex area that needs investor attention and are supportive of companies that are proactive and transparent about their handling of these risks," Byrne said.
AUTHOR
Staff Writer
Money Management staff writers are writers who contribute to the website from time to time. If you would like to discuss the content contained within this article please contact us.
Recommended for you
Jim Chalmers has defended changes to the Future Fund’s mandate, referring to himself as a “big supporter” of the sovereign wealth fund, amid fierce opposition from the Coalition, which has pledged to reverse any changes if it wins next year’s election.
In a new review of the country’s largest fund, a research house says it’s well placed to deliver attractive returns despite challenges.
Chant West analysis suggests super could be well placed to deliver a double-digit result by the end of the calendar year.
Specific valuation decisions made by the $88 billion fund at the beginning of the pandemic were “not adequate for the deteriorating market conditions”, according to the prudential regulator.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Spire Oaktree Opportunities XI Second Close
61.07 3 y p.a(%)
2
Spire Oaktree Opportunities XI First Close USD
59.21 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.56 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
31.06 3 y p.a(%)
5
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
26.81 3 y p.a(%)
