By Nick Hedley
Australian superannuation fund HESTA, which has AU$68
billion (US$46 billion) in assets under management, plans to halve emissions
from its investment portfolio by the end of the decade.
The fund had previously set a 33% interim emissions
reduction target, but said it had raised its ambitions
due to the advancement of the climate crisis and the Australian government’s
firmer decarbonization targets.
“The science is now telling us this is a critical decade and
that mitigating climate change-related risks requires an accelerated transition
and a more rapid reduction in emissions,” HESTA CEO Debby Blakey said in a
statement.
As part of its plans to slash emissions, HESTA said it had
informed heavy polluters including AGL Energy, Origin, Santos and Woodside that
they had been placed on a watchlist and HESTA could divest of their shares if
they do not step up their climate ambitions.
In August, NGS Super, a smaller fund with AU$13 billion (US$8.8
billion) under management, said it had divested of oil and gas companies
Woodside and Santos as part of its plans to have a carbon-neutral portfolio by
2030. NGS Super’s chief investment officer, Ben Squires, told
Markets Group this move was partly aimed at reducing investment risk as the
clean energy transition gains momentum.
HESTA said companies on its watchlist were subjected to
closer engagement and monitoring. The fund would also consider voting on
climate-related shareholder resolutions.
“Each of these companies has a role in mitigating climate
risk and reducing emissions in Australia, which will help reduce the systemic
climate risk to our members’ portfolio,” Blakey said.
“HESTA has engaged with these companies since at least 2018.
While we’ve seen some progress, there’s evidence of a gap between the
companies’ commitments and their actions to transition their businesses in line
with Paris Agreement goals.”
In May, HESTA voted against the climate plans of both Santos
and Woodside, which were rejected by 37% and 49% of shareholders, respectively,
and wrote to the companies outlining its concerns.
Meanwhile, HESTA also announced that it would invest 10% of
its portfolio in climate solutions, such as renewable energy and sustainable
property, by 2030.
HESTA is the largest superannuation fund dedicated to
Australia’s health and community services sector. It has 950,000 members – more
than 80% of whom are women.
The fund is merging with Mercy Super, which has 13,000
members and AU$1.6 billion (US$1.1 billion) under management.
