HESTA has written to the board chair and chief executives of ASX 300 companies with its four key priority expectations ahead of the 2023–24 annual general meeting season.
The super fund’s active ownership themes focus on climate change, gender equality, decent work, and natural capital and biodiversity loss.
“HESTA’s 2023–24 active ownership priorities reflect a commitment to responsible investment and engagement for a growing, sustainable and inclusive economy so we can continue to deliver strong returns to our members,” commented Debby Blakey, HESTA’s CEO.
This was the fourth annual letter HESTA has written to Australian companies, with the fund looking forward to working alongside firms to address systemic risks that can impact long-term returns for members.
As its first priority, climate change remains a fundamental focus for the fund, particularly in the ways it impacts the healthcare and community services sectors that majority of its members work within.
HESTA encourages companies on the ASX 300 to contribute towards the global goal of halving greenhouse gas emissions by 2030 as well as achieving net-zero emissions by 2050. This parallels the Paris Agreement’s aim to limit warming to 1.5 degrees Celsius.
As a participating investor in Climate Action 100+, the fund also called on firms to accelerate investment in:
Electrification and decarbonisation.
Commercialisation of hydrogen through a concerted focus on technological breakthrough.
Switching to low-carbon energy products through both capital expenditures to develop new products.
Moreover, they called on companies’ commitment to closing or ceasing development of emissions-intensive assets.
Over the next few years, the fund will seek to engage with firms on the gendered factors that contribute to the pay gap, such as workplace discrimination and the under-representation of women in leadership roles.
“HESTA has an ambition to see gender balance achieved in ASX 300 leadership structures, including board and executive teams, by 2030,” the release stated.
In the upcoming voting season, it will vote against director re-elections at companies where the board has less than 30 per cent female representation.
HESTA expects changes to its voting policy to align with the gender balance of 40 per cent who identify as women, 40 per cent identifying as men, and 20 per cent any gender (40:40:20) at both board and executive levels.
The fund observed differing levels of disclosure when it comes to fair pay and working conditions, making it difficult to assess the quality of jobs at listed firms.
However, the publication of ‘Measuring What Matters’, Australia’s first wellbeing framework, establishes relevant metrics at a national level. HESTA encouraged ASX 300 companies to explore how their disclosure can align with this framework.
Natural capital and biodiversity loss
Finally, the fund highlighted the rapid depletion of natural resources as a global challenge with significant economic consequences.
The statement added: “Over the coming months, we will be encouraging our portfolio companies to take the necessary action to understand the nature-based impacts and dependencies within their operations and supply chains and to put in place appropriate loss management practices.”
HESTA currently manages more than $76 billion in assets under management for over 1 million members.