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How responsible investment creates value for super fund members

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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.

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.

sponsored hesta responsible investment

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.

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.

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.

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. Read the Product Disclosure Statement at hesta.com.au/pds and consider if it's right for you.

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Sonya Sawtell-Rickson is the chief investment officer at HESTA. Sonya oversees the investment program and has extensive experience in investment markets, including portfolio strategy and design, and has managed exposures across both traditional and alternative asset classes. Sonya holds a Masters of Applied Finance, Bachelor of Arts (Economics & Political Science), is a Graduate of the Australian Institute of Company Directors and is a Fellow of the Financial Services Institute of Australasia.
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