ESG and market returns

balance

 

 

No longer a 'nice to have' strategy, investing super fund members' money responsibly is crucial to creating long-term financial value for them.

HESTA chief investment officer Sonya Sawtell-Rickson explains why.


Sonya Sawtell-Rickson, HESTA Chief Investment Officer

 

When we talk about responsible investment, you might think it's about investing our members' retirement savings in a low risk and conscientious manner. While we do have a fiduciary obligation to protect and grow the retirement savings of our members, that's only one part of the story.

Responsible investing is about taking social responsibility and influencing corporate governance to make a real difference to the financial future of every member and the community they live, work and retire in.

 

At HESTA, we believe investing responsibly is important to an investment's long-term value. Understanding how an investment impacts on people and planet helps us understand an investment's risks, opportunities and long-term sustainability.

Snowtown 2 wind farm

 

 

We follow the United Nations' Sustainable Development Goals (SDGs) as a compass for how we invest, work and advocate. The third goal - good health and well-being - has guided our investments in financing an affordable housing development in Melbourne, investing in building homes for more than 100 Australians living with disability, and supporting a program that expects to support around 600 adults experiencing homelessness in Adelaide, just to name a few.
Read more about our affordable housing projects

A sustainable financial system, supported by well-governed institutions, is critical for protecting people and planet. So, when making investment decisions, we need to ensure companies we invest in have strong and diverse boards, fair remuneration, sound business ethics, transparency and fair payment of tax.


We are committed to meaningfully contributing towards seven strategic areas (framed within the SDGs) that are aligned with the fund's strategy and members' interests.

A sustainable financial system, supported by well-governed institutions, is critical for protecting people and planet. So, when making investment decisions, we need to ensure companies we invest in have strong and diverse boards, fair remuneration, sound business ethics, transparency and fair payment of tax.

As a responsible investor, part of our approach is to actively engage with companies on these issues. However, we also believe it's important to lead by example. Our newly launched 40:40 Vision is an ambitious investor-led initiative to achieve gender balance in executive leadership across all ASX200 companies by 2030. We see the lack of gender diversity in leadership as a financial risk. Companies that fail to consider 50% of the population for leadership positions risk missing out on the best people and the performance of the organisation will eventually suffer.

Our responsible investment approach is also guided by the Principles of Responsible Investment (PRI). The PRI requires investors to incorporate environmental, social, and governance (ESG) issues into investment decision making. ESG issues, like climate change and human rights, can impact investment risks and returns.

But by considering these risks and acting to mitigate them, we can improve the long-term investment returns for our members and the world they will retire into. We don't shy away from asking the tough questions of companies when we think they're not appropriately managing a risk that could impact member retirement outcomes.

We don't make these decisions or take these actions for purely altruistic reasons. We do this to make sure we're maximising investment returns for members - while aiming to ensure they don't come at the cost of the environment or society.

Responsible investment is a practice that is maturing, and HESTA is a leader in this space. We know there is no trade-off between a responsible investment approach and financial returns: they go together to enhance outcomes for our members.

 

This article was originally published in Money Magazine.

 

 

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