Future Fund steps up stewardship, opposes boards on 12% of resolutions

The Future Fund signed the United Nations-supported Principles for Responsible Investment (PRI) in FY26 committing to mandatory PRI reporting from next financial year, along with approving a new stewardship model.

The PRI is a global network of investors committed to better understanding how environmental, social and governance (ESG) issues affect long-term investment outcomes. Future Fund's reporting against the PRI framework will commence from the 2026-27 financial year.

The new stewardship model comprises of three key elements: governance and strategy, responsible ownership, and monitoring and reporting. During the financial year, Future Fund exercised its voting rights in publicly listed Australian companies, participating in 252 Australian shareholder meetings and voting against board recommendations in 12.2% of all resolutions.

This was part of its multi-year program to uplift responsible investment capability and strengthen the connection between stewardship activity, investment priorities and reporting.

"Active engagement with boards and management teams is a key component of our investment stewardship program," the annual report read.

"Through engagement, we seek to understand and influence how investee companies manage material governance, ESG and climate-related risks and opportunities, supporting long-term performance, resilience and value protection."

Future Fund's engagement activities primarily focused on companies in ASX-listed equities portfolio.

"During 2025-26, we directly engaged with 60 ASX companies across 81 meetings...Issues discussed across the program included, but were not limited to, board composition, management quality, remuneration, regulatory compliance, workplace culture, diversity and inclusion, modern slavery, Indigenous engagement and cultural heritage, responsible technology, and climate change," the report read.

The fund delivered a 14.7% return in 2025-26, adding $37.4 billion to its portfolio as it marked 20 years with stronger climate transparency and expanded stewardship.

It reached a record $289.7 billion at 30 June 2026, more than tripling the government's initial contribution. Returns averaged 12% a year over the three years to June, generating a further $83.6 billion.

The results come as the Future Fund navigates geopolitical fragmentation, technological disruption and climate-related risks, with its latest annual report outlining how it is positioning the portfolio to withstand changing market conditions.

A spokesperson said the fund's diversified investment approach was designed to capture opportunities while managing risk across a range of potential scenarios.

"The Future Fund's returns of 14.8% over the past financial year has added $37.4 billion to benefit the country, while the six other funds invested by the board have contributed to a breadth of important policy areas," the spokesperson said.

The report also details the fund's first climate disclosure, setting out how climate-related risks and opportunities are identified, assessed and managed across its investments. The fund considers both the physical effects of climate change and the economic consequences of the transition to a lower-carbon economy.

The annual report also tracked progress under the governments revised investment mandate, including investments in infrastructure, the energy transition and housing supply where these align with the fund's obligation to maximise risk adjusted returns.

The board now manages $356 billion across seven public asset funds, supporting areas including disability services, medical research, disaster preparedness and housing, alongside the Commonwealth's long-term financial position.