“Having member representatives on the board – people whose skin is very much in game representing hundreds of workers who have their money in our fund – is a very grounding proposition,” she said.
“Whilst it has its own issues and challenges, I think it has served the industry super network very well.”
‘Trust the governance model’
Ms Ridout called for the government to stop playing politics and said the union backgrounds of industry fund board members did not compromise the role they play as trustees of the fund, including meeting the legal duty to put members’ interests first.
“Superannuation should have a bipartisan approach, because it is a long term investment by Australians and long term issue for Australia. We shouldn’t be dragged into political debates,” Ms Ridout told 1500 directors gathered at an Australian Institute of Company Directors conference in Sydney on Monday.
“They are cats and dogs, employers and unions. The government doesn’t like the trade union movement. They have probably said it’s antithetical to everything they believe in…But you have to trust the governance model, you have to trust the ethics and integrity, you have to trust regulators.”
Ahead of a federal election campaign where the governance of superannuation funds will remain a key battleground, Ms Ridout acknowledged industry super funds must hire experts with investment and technology skills to back up board members with union backgrounds but defended their ability to work for members.
“We will not be dragged into industrial relations. Representatives of unions and employers, when they walk into the board room of AustralianSuper, take off their hat and become a trustee of Australian Super. They have fiduciary duties to members of that fund and as chair of that fund, I have seen hats taken off.”
Short-term thinking at the heart of scandals
Ms Ridout and ANZ Bank chairman David Gonski also backed a call by Greg Combet, chairman of Industry Super Australia, for investors to more focus on environmental, social and governance matters in the interests of long-term value creation.
“At AustralianSuper, we put an investment lens over most of our ESG decisions and when you put that over, they usually line up. Good returns, good management, good culture tend to line up.”
Mr Gonski said it was the failure to think enough about the long term that tripped the banks up at the royal commission.
“There is absolutely no doubt – and we weren’t alone in this – in thinking from time to time short term and finding things to fix quickly.. but we didn’t think through in the longer term.”
He also defended the approach of AustralianSuper as an investor, saying “every singe shareholder is entitled to have their view and put it to us.
“I find AustralianSuper an excellent shareholder,” he said. “You have first rate people who do their homework before they come in. But the ultimate decision is ours as the board of directors.”
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