Speaking on the first episode of InvestorDaily’s ESG Summit Showcase, Fidelity portfolio manager Kate Howitt weighed in on her observations around environmental, social and governance factors for 2021.
A key theme for the fund manager last year had been executive remuneration, particularly in the aftermath of the COVID economic crisis. According to Ms Howitt, the issue has become more important in recent years, particularly as it contributes to a wider divide in society.
“We think that addressing inequality where we can is important,” she said.
“So we’re very live to the issue of executive remuneration, looking to the community, [where] it is inappropriately rewarding executives.”
Fidelity issued a letter to its investee companies globally in July, outlining standards, which included the expectation that they would forgo executive bonuses if they accepted government support.
But research has revealed that ASX companies have paid bonuses worth a combined $24.3 million to their executives after claiming JobKeeper subsidies.
“We’ve seen a range of companies here in Australia, who did end up taking JobKeeper, and then did turn around and pay bonuses. And so we’ve held up to this and we’ve voted against the [remuneration] reports there,” Ms Howitt said.
“Even though these are companies we only own… because we think that they’re well run, well governed companies.”
Fidelity has been having discussions with the companies in question, she added, with many having made other contributions to community support to balance out their actions.
“They have an argument that JobKeeper was about retaining employment and not letting unemployment get too high,” Ms Howitt said.
“And so it was kind of their part of their ‘Team Australia’ to take it up and retain employment. So in some cases, we’ve had to agree to disagree, where some boards feel like what they’ve done is appropriate. We just think the optics of it are just not right.”
Ms Howitt also touched on the fund manager’s thinking around Australia’s coal industry, decarbonisation and modern slavery as well as how ESG is evolving the investment industry. The episode is available to listen to here.
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