First Super seeks risk advice
Industry superannuation fund, First Super, has sought risk advice from four equity managers it invests through on investing in franchise model companies following recent employment wage scandals.
The super fund has asked for a “please explain”, and has questioned the strategy of investing in companies which earned revenue from the franchise operating model following wage scandals at 7 Eleven and Domino’s Pizza.
First Super chief executive, Bill Watson said the fund was concerned about possible emerging investment risk.
“We are now very concerned about the sustainability of franchisee businesses, the implications for their staff and contractors, and what this means for investment risk,” he said.
“We believe that over the long-term, companies and organisations that adopt best practices across environment, social and governance [ESG] deliver better returns and can assist with risk mitigation.
”The fund has requested the Australian Council of Superannuation Investors, which advises super funds and international asset owners on ESG, to prioritise this issue when it advises on how to vote during listed company annual general meetings (AGMs).
The concerns follows reports on 7 Eleven which exposed the amount owning to under-paid franchise employees exceeded $100 million, while Domino’s share price had dropped following reports of wage exploitation
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