11 September 2024
HESTA is urging the country’s biggest businesses to intensify their efforts on climate change, nature loss, gender equality and decent work to help build the retirement savings of the Fund’s more than one million members.
In its fifth annual letter to ASX300 chairs and CEOs, the $87 billion profit-for-member super fund has outlined the issues on which it will engage with companies in the 2024-25 financial year. HESTA is encouraging companies to demonstrate foresight and ambition by putting appropriate plans and targets in place to address risk and create long-term value.
HESTA CEO Debby Blakey said she valued deeply the ongoing engagement investors have had with companies, which has helped protect and enhance long-term investment value.
“Through constructive engagement with companies, investors have encouraged big emitters to act faster on climate and significantly improved gender diversity on boards and executive teams across the ASX,” Ms Blakey said.
“But more needs to be done. That’s why HESTA is encouraging companies to act now on climate change, nature loss, gender equality and decent work, supporting us to deliver strong, long-term investment performance.”
Ms Blakey said these four themes remain material issues as they present financial risks for companies, shareholders and the global economy.
“This year our engagement on climate action will focus on ensuring boards have the right mix of skills and capabilities needed to transition their business to a low-carbon future. We’re also looking for credible climate plans, especially from energy, resources and industrial companies, that bring forward investment in new technologies,” she said.
“On gender equality, this year we’ll be monitoring gender pay gaps closely and asking companies to set gender balance targets – at least 40 per cent women – not only at the board and executive level, but right across their organisation.
“Nature loss and decent work are emerging areas of concern for investors and we’re encouraging the ASX300 to prioritise these issues given the potential negative impact to long-term financial performance.”
Ms Blakey said it’s been encouraging to see progress made on gender equality and climate change over the years. In March 2023, 75 per cent of the ASX200 had committed to or were reporting against the Task Force on Climate-related Financial Disclosures framework, up from 66 per cent the year before.[1]
"Even before we started writing to companies five years ago, HESTA was voting against all-male boards and we continue to do so. Now just 30 more appointments of female directors are needed to hit gender balance in Australia’s top 200 listed companies,[2]” she said.
“More than one million Australians trust HESTA to look after their hard-earned retirement savings and expect us to do everything we can to protect and enhance the value of their investments.”
HESTA’s active ownership priorities for FY 2024-25:
- Balancing climate goals and practical steps
- Companies must balance climate ambition with an orderly transition to a low-carbon economy that’s in the best financial interests of members.
- HESTA will focus on ensuring boards have the right mix of skills and capabilities needed to transition their business to a low-carbon future.
- Especially in energy, resources and industrial sectors, HESTA wants to see credible climate plans align with the Federal Government’s sector transition pathways and that bring forward investment in new technologies.
- Connecting nature and climate
- Climate change worsens the loss of nature and biodiversity, which are our largest carbon sinks. Over half of global GDP is highly or moderately reliant on nature.[3]
- To cap global temperatures, we need to balance land use for food, industry and nature, and develop markets for nature-based carbon offsets.
- HESTA wants companies to understand their impact on nature, their dependence on nature, and take urgent action to halt and reverse nature loss.
- Accelerating gender equality
- Gender balance[4] in leadership can improve decision-making and company performance, which can benefit the retirement savings for HESTA members, around 80 per cent of whom are women.
- HESTA is encouraging companies to set public targets to achieve gender balance in their boardrooms, in executive teams, and across their organisations, and develop strategies to reach these goals.
- HESTA will monitor ASX300 gender pay gaps and engage with select companies on the drivers of these gaps.
- Promoting decent work
- HESTA believes companies that provide decent work, may experience stronger employee engagement and perform better over the long term.
- A new HESTA-commissioned report from Bankwest Curtin Economics Centre[5] shows Australian jobs post-pandemic have generally become more secure with better conditions and more flexibility, but work has become more stressful, especially for women.
- HESTA assesses decent work based on security, stress, conditions and flexibility, and will engage with large employers in sectors with weaker decent work outcomes to improve their disclosure and enhance job quality.
[1] https://acsi.org.au/wp-content/uploads/2023/08/Promises-Pathways-Performance-Climate-reporting-in-the-ASX200-August-2023.pdf
[3] https://www.pwc.com/gx/en/news-room/press-releases/2023/pwcboosts-global-nature-and-biodiversity-capabilities.html
[4] 40 per cent identifying as women; 40 per cent identifying as men; 20 per cent identifying as any gender.
[5] Bankwest Curtin Economics Centre, Dimensions and Prevalence of Decent Work in Australia, 2024.
Ends.
About HESTA
HESTA is one of the largest superannuation funds dedicated to Australia’s health and community services sector. An industry fund that’s run only to benefit members, HESTA now has more than one million members (around 80% of whom are women) and currently manages approximately $87 billion* in assets invested around the world.
*Information is current as at the date of issue.
Key Facts:
Attachments include:
- Media release
- Radio grabs featuring HESTA CEO Debby Blakey
- Image of HESTA CEO Debby Blakey
