HESTA calls out key engagement issues with ASX 300

The $87 billion fund is encouraging companies to put appropriate plans and targets in place to address risk and create long-term value.

In its fifth annual letter to ASX 300 chairs and CEOs, HESTA has outlined the issues on which it will engage with companies in the 2024–25 financial year.

Namely, the fund is asking Australia’s largest businesses to intensify their efforts on climate change, nature loss, gender equality, and decent work to help build the retirement savings of its more than 1 million members.

HESTA CEO Debby Blakey said she values the ongoing engagement investors have had with companies, which has helped protect and enhance long-term investment value.

“Through constructive engagement with companies, investors have encouraged big emitters to act faster on climate and significantly improved gender diversity on boards and executive teams across the ASX,” Blakey said.

“But more needs to be done. That’s why HESTA is encouraging companies to act now on climate change, nature loss, gender equality and decent work, supporting us to deliver strong, long-term investment performance.”

Expounding on the four themes identified by the HESTA, Blakey said that they remain material issues as they present financial risks for companies, shareholders, and the global economy.

“This year our engagement on climate action will focus on ensuring boards have the right mix of skills and capabilities needed to transition their business to a low-carbon future. We’re also looking for credible climate plans, especially from energy, resources and industrial companies, that bring forward investment in new technologies,” she said.

“On gender equality, this year we’ll be monitoring gender pay gaps closely and asking companies to set gender balance targets – at least 40 per cent women – not only at the board and executive level, but right across their organisation.”

Moreover, HESTA has identified nature loss and decent work are emerging areas of concern for investors and is encouraging the ASX 300 to prioritise these issues given the potential negative impact on long-term financial performance.

Looking at gender equality and climate change in particular, Blakey said it is encouraging to see the progress made in these two realms in recent years.

Namely, in March 2023, 75 per cent of the ASX 200 had committed to or were reporting against the Task Force on Climate-Related Financial Disclosures framework, up from 66 per cent the year before.

“Even before we started writing to companies five years ago, HESTA was voting against all-male boards and we continue to do so. Now just 30 more appointments of female directors are needed to hit gender balance in Australia’s top 200 listed companies,” she said.

“More than 1 million Australians trust HESTA to look after their hard-earned retirement savings and expect us to do everything we can to protect and enhance the value of their investments.”