HESTA recognises that environmental, social and governance (ESG) factors are important to an investment’s long-term value.
Responsible investment or investment considering ESG factors help us to more fully understand an investment’s risks and opportunities particularly over the longer-term.
Some examples include:
Greenhouse gas emissions
Pollution and waste
Workplace health and safety
Supply chain labour standards
Board structure and independence
ESG factors are important because they can affect the value of an individual asset, whether it be a company, property, infrastructure asset etc. And so, can impact long-term returns to members.
These impacts could include things like loss of reputation and share value, fines from regulators, or changing regulatory standards.
ESG factors are particularly important for super funds for two key reasons: