The letter, addressed to the board chair and CEOs of the ASX 300, calls for an ambitious response on long-term systemic risks such as climate change, social inequality, and biodiversity.
“This decade is critical for managing a range of systemic risks that are relevant both to the companies we invest in and the overall management of our portfolio,” said HESTA CEO, Debby Blakey.
“That’s why we’re encouraging management and boards of ASX 300 companies to be ambitious in their responses to systemic risks such as climate change, social inequality and the loss of biodiversity,” she stressed.
This is the third annual letter HESTA — which boasts over 950,000 members with $68 billion of assets under management — has written to Australian companies.
The letter reflects on how companies are expected to increase their engagement regarding several key issues, starting with climate change.
“We urge Australian companies to deliver a verified climate strategy, with targets aligned to a 1.5C transition pathway,” Ms Blakey said.
“This should include careful consideration of the need to direct greater capital expenditure towards supporting a timely, equitable and orderly transition to a low-carbon economy.”
Ms Blakey explained that HESTA will examine how the items considered on the notice of meetings reflect the importance of the transition challenge.
Moreover, the letter asks companies to conduct gender pay gap analysis to better understand and implement opportunities for improvements.
“We are asking Australian companies to set gender balance targets for board and executive roles, and develop plans to achieve these targets,” Ms Blakey said.
HESTA continues to push the 40:40 Vision, an initiative aiming to achieve gender balance (40:40:20) in ASX 300 executive teams by 2030.
On social inequality, the fund urged companies to deepen the processes used to assess modern slavery risk, focusing on risk to affected people to ensure the management of human rights and human capital also extends to companies’ supply chains.
Ms Blakey cautioned companies that where HESTA considered there were growing investment risks, the fund may use its existing engagement escalation framework.
This, she said, may include one or a combination of tools such as votes against directors or consideration of divestment.
“We look forward to continuing to work proactively with the ASX 300 to enhance the long-term value of companies through the management of these systemic risks and transition to a more sustainable, equitable and prosperous economy for our members and all Australians,” Ms Blakey said.
Earlier this month, HESTA said it has created a watchlist of companies that it deems unconducive to its new goal to halve normalised emissions across its portfolio by 2030. The fund also announced possible divestments if the companies in question don’t clean up their act.
Maja Garaca Djurdjevic
Maja's career in journalism spans well over a decade across finance, business and politics. Now an experienced editor and reporter across all elements of the financial services sector, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies.
