HESTA has issued a blunt warning to the ASX 300 companies it invests in ahead of the upcoming AGM season: align with the super fund’s criteria on themes such as gender diversity and climate change, or it will use its voting rights to enforce change.
The fund, which manages $76 billion of retirement funds for health and community services employees, recently sent letters to the chairs and chief executives of the largest 292 ASX-listed companies it invests in, engaging them on the four active ownership themes that it identifies as important to managing externalities and ESG risks — gender diversity, climate change, decent work, and natural capital and biodiversity loss.
Supporting gender diversity
The letters gave notice that HESTA would vote against male directors of companies that have less than 30% female representation on their boards, and against the chairs of companies with male-dominated executive teams. Specifically, HESTA warned the 129 companies that meet the criteria that it would automatically vote against male directors.
Hesta CEO, Debby Blakey, emphasised that engagement on gender diversity is leading to change. She told The Australian, “If a company has evident culture and behaviour issues we will choose to consider those issues in the way that we vote” adding that its advocacy is “engagement is seeing change, it’s making a difference.”
HESTA is not new to advocating for gender diversity; it previously voted against all-male boards and has launched the 40:40 Vision initiative, targeting 40% or more women in executive and board roles by 2030.
Blakey didn’t name names, but the 2022 Chief Executive Women Census did identify 46 ASX 300 companies that have all-male executive teams including retailers such as JB Hi-Fi, Reece and Breville, as well as mining company Silver Lake Resources.
A report by proxy advisers Ownership Matters revealed that fewer than a handful of ASX 300 companies are led by female CEOs and chairs, although boards are becoming more diverse — a record 34% of the top 300 companies’ board positions are now held by women.
Ownership Matters director Dean Paatsch observed that, “The men are allowing record numbers of female directors into the tent, but are yet to meaningfully hand over the best paid chairing roles.”
Climate change in focus
Other areas of HESTA’s focus are engaging companies on climate change, decent work, natural capital and biodiversity loss. Decent work being the expectation that companies respect basic rights, promote job security, freedom from discrimination and provide fair and equal wages.
HESTA also plans to engage companies on the issues of climate change, and natural capital and biodiversity loss. The fund also seeks better disclosures on worker conditions and aims to address the global depletion of natural resources.
The super fund is pushing for greater alignment with the Paris Agreement goals — to achieve net zero by 2050 and halve greenhouse gas emissions by 2030. It encourages ASX 300 companies to invest in the decarbonisation of the economy and will consider a board’s preparedness for the low carbon transition in its upcoming AGM voting.