HESTA has urged companies it invests in to deliver a climate strategy and management plan around social inequality and biodiversity risks, highlighting growing investor concern around the impact of these risks on businesses.
Ahead of the upcoming AGM season, the $68 billion industry super fund has outlined its engagement themes for the 2022/2023 financial year in a letter to chairs and chief executives in Australia’s largest 300 companies – up from last year’s top 200 – to deliver better returns for their members and broader economic resilience to Australia.
“Delivering good returns to our members requires a strong and stable economy and strong performance of our portfolio companies against their strategies,” HESTA’s chief executive Debby Blakey said.
The letter also asked companies to come up with gender balance targets for board and executive roles, explaining how gender inequality affected the fund’s portfolio, the Australian economy and the retirement outcomes of its members, 80 per cent of whom are women.
Focus on climate
Climate change remains crucial for the fund. “In addition to posing a financial risk to the value of our members’ investments, climate change is also relevant to the work our members do in health and community services,” Blakey said in the letter.
The super fund has been more vocal around environmental issues in portfolio companies. Earlier this year, its public opposition to AGL’s proposed demerger of its coal-fired and renewables power assets helped topple the plan.
The fund has also expanded its investment team to focus on responsible investing, chief investment officer Sonya Sawtell-Rickson said at the Fiduciary Investment Symposium in June.
According to data from the Responsible Investment Association of Australia, responsible investing in 2021 in Australia hit a record $1.54 trillion in assets under management, underscoring growing investor appetite in this space.