HESTA has issued a blunt warning to the ASX 300 companies it invests in - align with the fund's criteria on gender diversity, climate change, decent work and natural capital and biodiversity loss or face the consequences.
Ahead of the upcoming AGM season in October-November, the superannuation fund, which manages $76 billion largely for health and community services employees, will engage investee companies on the four active ownership themes that it identifies as important to managing externalities and ESG risks.
The fund's action represents a significant shift towards responsible investment, challenging companies to adopt sustainable practices that benefit not only shareholders but also the broader Australian community.
It recognises that companies which respect basic rights, promote job security, freedom from discrimination and provide fair and equal wages are positioned to perform better over the long term.
Focus on gender diversity
In correspondence sent last week to chairs and chief executives of the largest 292 ASX-listed companies, HESTA revealed it would automatically vote against male directors in firms with less than 30% female representation on boards.
Voting against chairs with male-dominated executive teams is also on the agenda. The fund's CEO, Debby Blakey, emphasised that engagement on gender diversity was leading to change.
Blakey told The Australian, “If a company has evident culture and behaviour issues we will choose to consider those issues in the way that we vote”, adding that its advocacy is “engagement is seeing change, it’s making a difference”.
HESTA is not new to advocating for gender diversity; it previously voted against all-male boards and has launched the 40:40 Vision initiative, targeting 40% or more women in executive and board roles by 2030.
A handful of female CEOs and chairs
While Blakey hasn’t named any names, the 2022 Chief Executive Women Census identified 46 ASX 300 companies that had all-male executive teams. These include Silver Lake Resources, Reece, JB Hi-Fi and Breville.
A recent report by proxy advisers Ownership Matters found less than a handful of ASX 300 companies were led by female CEOs and chairs, although their boards were becoming more diverse, with a record 34% of the top 300 companies’ board positions now held by women.
Ownership Matters director Dean Paatsch said, “The men are allowing record numbers of female directors into the tent, but are yet to meaningfully hand over the best-paid chairing roles.”
Towards net zero
As the AGM season approaches, HESTA also plans to engage companies on climate change, decent work, natural capital and biodiversity loss. Decent work is the expectation that companies respect basic rights, promote job security, freedom from discrimination and provide fair and equal wages.
The super fund is also pushing for ASX 300 companies to align with the Paris Agreement goals, to achieve net zero by 2050 and halve greenhouse gas emissions by 2030. The fund will consider whether a board’s skills and composition demonstrate preparedness for the low-carbon transition.
“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,” Blakey said.