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This post was proudly sponsored by HESTA. 

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 your investment.

That’s because you’re effectively an owner of these companies through your super. So, we want to make sure we’re maximising your returns but that it doesn’t come at the cost of the environment or society.

As a very long-term investor, we know that, if a company isn’t making profits fairly, then this will eventually damage its value and impact the broader wellbeing of our members and the community.

Improving your investments and the way companies behave

When our investment experts identify a potential risk to a company, we meet with their Board and management to see what action they’re taking. Where we don’t see appropriate steps being taken, we can use share voting to push for change.

“We’ve seen a lot of recent examples where poor corporate practices and culture have revealed clear financial risks to a company’s long-term value,” says HESTA Head of Impact, Mary Delahunty.

“By using our influence as a shareholder, we can achieve improvements at that company but we can also send a strong signal to other companies that can improve corporate behaviour more broadly.

“The aim is to achieve better long-term performance across your investments and encourage a fairer and more equitable society that benefits HESTA members and all Australians.”

Taking a stand to protect Aboriginal heritage

A recent example is the action we took when mining company Rio Tinto destroyed a 46,000-year-old Aboriginal rock shelters at Juukan Gorge. HESTA immediately called for Rio’s Board to address issues surrounding the company’s treatment of traditional owners. But we also identified a much broader systemic risk in how mining and energy companies were working with Traditional Owners when it came to heritage protection.

We released a Statement on Working with Indigenous Communities detailing our investor expectations around how companies manage risks associated with Indigenous heritage protection issues.

“As a result of the destruction of the Juukan Gorge caves, we’ve embarked on a direct engagement program with companies in the mining and energy sectors to ensure fair and sustainable outcomes for Indigenous communities. This not only helps protects priceless heritage, but also our members’ investments,” says Mary.

HESTA is now working with others to push for Rio to conduct an independent review of all it’s agreements with traditional owners.

“We will continue our work to get Rio and, if necessary, other mining companies to improve their practices. We want to ensure companies have respectful and sustainable long-term partnerships with Indigenous Communities and that agreements provide fair outcomes to all parties,” says Mary.

There’s financial risk when companies don’t act fairly

We expect the companies we invest in on your behalf to maintain a strong sense of fairness, particularly when it comes to their employees.

Not doing so, exposes companies to financial risk, which can detract from their long-term value. Financial risks include lower employee engagement, an inability to attract and retain talent, and more broadly not meeting societies’ expectations.

Our investment experts assess whether a company is managing for these risks by looking at gender equality and diversity as indicators of fairness. That’s because there’s a lot of evidence that companies with strong cultures that foster inclusion and diversity have better decision making, which leads to stronger long-term performance. And this will have a positive impact on our members’ investments and their financial future.

In early October, HESTA launched 40:40 Vision: an investor-led initiative to achieve gender balance in executive leadership across Australia’s largest 200 listed companies.  Already we’ve had investors representing more than $1 trillion in assets support our vision to achieve a target of at least 40% women, 40% men and 20% of any gender across the senior leadership of all ASX200 companies by 2030.

We believe targets like this are needed because progress towards more women in leadership has been so slow. Just 30 ASX200 companies achieved gender balance (at least 40% women) in 2020. If we don’t act now, it will be another 80 years before we see equal representation of women and men at CEO level, and similarly in executive leadership.*

Bankwest Curtin Economics Centre’s Gender Equity Insights 2019 report

We’re creating better futures for our members. Find out more about HESTA Impact. Start here. 

Issued by H.E.S.T. Australia Ltd ABN 66 006 818 695 AFSL 235249, the Trustee of Health Employees Superannuation Trust Australia (HESTA) ABN 64 971 749 321.

This information is of a general nature. It does not take into account your objectives, financial situation or specific needs so you should look at your own financial position and requirements before making a decision. You may wish to consult an adviser when doing this. Before making a decision about HESTA products you should read the relevant product disclosure statement (call 1800 813 327 or visit hesta.com.au for a copy), and consider any relevant risks (hesta.com.au/understandingrisk).