Dumbo Feather – February 2019

Going Against

the Grain

WORDS: PHIL VERNON

INSIGHTS FROM OUR PARTNERS

t was Gunns that did it for me. That was the piece of

corporate skulduggery that made me realise, once and

for all, that investors cannot avoid responsibility for the

behaviour of companies they own.

But first, some history. Gunns was a Tasmanian logging

company that went bankrupt in 2012. In 2004 the

company sued 17 individuals and three organisations

in the Victorian Supreme Court. Gunns, which at the

time was Australia’s largest export woodchipper, was

seeking $6.3 million for “ongoing damaging campaigns

and activities” by environmental activists against its

operations. The people who were sued became known as

The Gunns 20. Counted among their number was former

Greens Senator Bob Brown and, on a personal note,

a member of my family. The defendants were worried

about losing their homes and their livelihoods.

Bob Brown immediately described the legal action

as a “broad scale attack on our Australian right to

protest for the nation’s heritage.” Author Richard

Flanagan later wrote that the Gunns action would, if

successful, “have redefined the practice of democracy

as the crime of conspiracy.” This type of litigation is

known as a SLAPP (Strategic Lawsuit Against Public

Participation) and was most notably used by McDonald’s

against environmental activists Helen Steel and David

Morris in the UK McLibel case. In the Gunns case, both

the Australian public and the legal sector rallied to

the side of the defendants. The ensuing legal battle

lasted for five years and ended in victory for The

Gunns 20 after a series of claims were either thrown

out, settled or dropped by the logging company.

Throughout all of this I was working in mainstream

financial services at Perpetual, which happened to

be the largest shareholder in Gunns. There were calls

for Perpetual to divest but my initial position was that

we should retain our stake. My thinking at the time

was that Perpetual had an ethical fund as well as a

mainstream fund focused on delivering financial returns,

so customers could choose the one that worked for

them. But after witnessing the way Gunns was treating

the activists, including my family member, it became

less about environmental issues for me and more

about social justice. I couldn’t see why Perpetual, as an

investment house, wouldn’t care about the damage being

done to individuals—and I began to advocate for more

responsible investment practices within the business.

This was right in the middle of the global financial crisis,

and I felt that investment markets were operating

completely unsustainably. They were focused on the

short term and driven by individual self-interest with no

view of the collective impact that decisions were having

on the broader system. Many people were concerned

but were powerless to prevent it. I developed a belief that

given its increasing influence on the future of our planet

and society, global capital had a broader stewardship

responsibility and needed a “moral compass” to instil this

collective responsibility into individual decision-making.

There had to be a better way.

Ethical investment was still on the fringes of financial

services at the time but I quickly realised that was where

I wanted to devote my time and energy. So when the

opportunity to become the CEO of Australian Ethical

I

112 DUMBO FEATHER