Commonwealth Bank statement to 60 Minutes

Friday, 28 November 2014

The Commonwealth Bank of Australia recognises that we play an important role in enabling economic and social development, and that we also have a responsibility to understand and respond to environmental and social issues that may arise for companies that we invest in, and to use our influence to encourage companies to respond appropriately to any issues.

We view the ‘Banking on Shaky Ground’ report as one of many useful sources to inform our approach to responsible investment and appreciate the work of Oxfam in bringing these issues to our attention. This report and similar reports from NGO’s has helped, and will continue to help, inform our approach in this area.

We don’t comment on individual companies however our position and commitment to responsible investment remains the same. 

Our approach to responsible investment and stewardship has been recognised internationally. This approach is based on the careful consideration of environmental, social and corporate governance (ESG) issues in our investment analysis and decision-making. We believe a failure by companies to manage such issues can not only result in the destruction of shareholder value but also produce unacceptable social and environmental outcomes.

Investment in Bunge

CFSGAM investment as at 17th November 2014:

Total CFSGAM exposure = $9.03m (via the Global Soft Commodity Share Fund and the Real Index Global Share Fund)


Bunge Market Capitalisation = $13bn

% of company owned = 0.07%

Bunge is a leading agribusiness and food company, which has operations in 40 countries. It has a market capitalisation of $13bn and is listed on the NYSE.


Oxfam found CBA is lending to companies that have been accused of illegally buying property overseas. How do you justify this? And what is your connection with Bunge?

  • We view the ‘Banking on Shaky Ground’ report as very useful source to inform our approach to responsible investment and we appreciate the work of Oxfam in bringing the matter to our attention. We have met with Oxfam multiple times to discuss these issues.
  • We recognise that all companies face issues and challenges and CFSGAM are committed to using their influence as shareholders to encourage companies to continually improve and thus minimize the risks associated with poor practices. Where there is an allegation or suspicion of breaches of environmental or social standards including human rights we would engage with the company and other stakeholders to understand the issue and assess the company’s response. Based on this assessment we would review our holding of the company.
  • With regards to agribusiness company Bunge, with which Commonwealth Bank is connected through investment by its wealth management business Colonial First State Global Asset Management (CFSGAM):
    • CFSGAM has engaged with Bunge on the specific allegations made in the report. Following direct engagement with Bunge, we understand that the company does not own or lease the land subject to the reported dispute, but have inherited contractual obligations to purchase sugar cane from the current landholders.
    • Following this engagement, the company has informed us (and publically stated) that they will not renew the purchase contracts which will all expire by the end of 2014.
    • The company has also informed CFSGAM that they have taken a variety of steps to improve their internal governance and due diligence processes to prevent a reoccurrence of such issues.
    • CFSGAM has considered the circumstances and Bunge’s response and is satisfied that the action the company is currently taking is appropriate. CFSGAM is also satisfied with the various governance improvements the company is undertaking.
    • CFSGAM will continue to monitor the progress that Bunge’s is making going forward.
  • In addition:
    • CFSGAM is in the process of reviewing its internal practices and will now be asking at-risk companies if they have any Indigenous (or other) claims on lands they own or source from, prior to investment.
    • CFSGAM will continue to monitor ESG concerns through tools that provide CFSGAM with comprehensive company research on environmental and social factors to help our investment teams better assess ESG risks.

Has CBA engaged with communities in Jatayvary, Brazil who have been impacted by land grabbing linked to Bunge?

  • The Commonwealth Bank is connected to Bunge through investment by its wealth management business Colonial First State Global Asset Management (CFSGAM).
  • CFSGAM did not meet with the local community as, based on discussion with Bunge, it was satisfied that Bunge had recognised the issue and were taking steps to deal with it. Bunge bought a mill which had contracts with sugar growers who were operating on the land which is being disputed.
  • Bunge doesn’t own or lease the land in question and inherited the contracts from the previous owner of the mill. Once the issues became apparent Bunge refused to renew contracts with sugar growers until they resolve the dispute with the local community. The company has also taken a variety of steps to improve their internal governance and due diligence processes to prevent a reoccurrence of issues like this.

Has CBA committed to efforts to support compensation for communities in Jatayvary?

  • CFSGAM has made it clear to Bunge that its expectation is that they resolve any disputes in good faith and improve their due diligence in relation to potential land grabs and human rights issues in their supply chain. The company has advised CFSGAM that they have been in regular contact with Oxfam and other parties in relation to the issue and have committed to not renewing any contracts until the disputes are resolved.

Will the bank commit to Oxfam’s asks to ‘Know and Show’; ‘Commit’; and ‘Advocate’? (p.52-53 of the ‘Banking on Shaky Ground’ report)

  • We are in an ongoing dialogue with Oxfam about the issue of land grabs, including discussion of how we can most effectively address this issue within risk management processes.

How many complaints has CBA received about this issue?

  • We have received over 2000 complaints. The vast majority of these were from-emails generated by customers via Oxfam’s website.

Why did the CBA invest in Bunge considering it (the CBA) was a signatory to the United Nations Principles for Responsible Investment and the United Nations Global policy?

  • It is important to understand the United Nations Principles of Responsible Investment has six principles. The second principle is to actively engage with companies where environmental, social or corporate governance issues come to light. In this case we have used our influence as a shareholder to encourage Bunge to resolve these issues and ensure they have adequate policies and procedures in place going forward to prevent a reoccurrence.
  • As responsible investors, we believe that we shouldn’t walk away from these types of issues when they occur and should engage with companies to achieve better social and environmental outcomes.