25 September 2023
HESTA outlines four key expectations for ASX300 companies in 2023-24 AGM season
HESTA has written to the board Chair and CEOs of ASX 300 companies outlining its four key priority expectations ahead of the upcoming 2023-24 AGM season.
For 2023-24, HESTA’s priority active ownership themes are climate change, gender equality, decent work, and natural capital and biodiversity loss.
HESTA CEO Debby Blakey said HESTA had written to ASX 300 companies to underscore its commitment to responsible investing and active ownership.
“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,” Ms Blakey said.
“In the upcoming AGM season, companies will be engaged not only in their response to immediate risks and opportunities for performance but also in their efforts to promote a sustainable and inclusive economy, benefiting shareholders, members, and all Australians.
“The Fund looks forward to working with companies to address the systemic risks that can impact long-term returns for our members. In doing so, we seek to benefit our members by enhancing the long-term value of Australian companies and pursuing a growing, sustainable, and inclusive economy.”
This is the fourth annual letter HESTA has written to Australian companies.
HESTA manages the retirement savings of more than 1 million members working predominantly in the health and community services sector, with over $76 billion of assets under management.
Ms Blakey said HESTA greatly valued the direct conversations with board directors and senior executives on behalf of HESTA’s members and was optimistic of a favourable response in 2023-24.
“We look forward to working with ASX 300 companies to address these systemic risks as part of pursuing a growing, sustainable, and inclusive economy,” Ms Blakey said.
“In doing so, we seek to benefit our members by enhancing the long-term value of Australian companies.”
HESTA will focus on seeking further engagement with priority ASX 300 companies on the four active ownership priorities identified for 2023-24.
HESTA’s four active ownership priorities for 2023-24
1. Climate change
- Climate change remains a crucial focus for HESTA, acknowledging its financial risks and its profound impact on the healthcare and community services sectors.
- HESTA encourages ASX300 companies to work towards the global goal of halving greenhouse gas emissions by 2030 and achieving net zero greenhouse gas emissions by 2050, in line with the goals of the Paris Agreement to pursue efforts to limit warming to 1.5°C.
- As a participating investor in Climate Action 100+, HESTA calls on ASX300 companies to accelerate investment in electrification and decarbonisation; accelerate investment in the commercialisation of hydrogen through a concerted focus on technological breakthrough, complemented by positive policy advocacy; and accelerate investment in switching to low-carbon energy products through both capital expenditures to develop new products, and commitment to close or cease development of emissions-intensive assets.
- As part of determining votes for upcoming AGMs, HESTA will consider progress in these areas and whether board skills and composition demonstrate preparedness for the low carbon transition.
2. Gender equality
- Over the coming year, HESTA will seek to engage portfolio companies on the gendered factors that contribute to the pay gap, including workplace culture and discrimination; the underrepresentation of women in leadership; and the gender segregation of industries.
- HESTA has an ambition to see gender balance achieved in ASX300 leadership structures, including board and executive teams, by 2030.
- For the upcoming voting season, HESTA will vote against select director re/elections at ASX300 companies where the board has less than 30 per cent female representations and against board Chairs of companies employing single gender executive leadership teams.
- As we progress toward 2030, there will likely be further changes to our voting policy to ultimately align with gender balance of 40 per cent identifying as women, 40 per cent identifying as men, and 20 per cent any gender (40:40:20) at both board and executive levels.
3. Decent work
- HESTA's commitment to decent work is reflected in its framework encompassing security, control, conditions, and fair pay.
- As we have sought to assess these aspects of decent work in Australia, we have observed mixed levels of disclosure, which makes it difficult to make an aggregate assessment of the quality of jobs offered at portfolio companies.
- Positively, however, the publication of Australia’s first wellbeing framework, ‘Measuring What Matters’ has now established relevant metrics at the national level.
- We believe that there is value to investors for companies to explore how their disclosure can align with this framework.
4. Natural capital and biodiversity loss
- The rapid depletion of natural resources is a global challenge with profound economic implications.
- 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.