Why super funds need to lead from the front
The past year has shown how stark failures of leadership can impact on the community, environment and economy. HESTA CEO Debby Blakey believes super funds can play a central role in leading by example, to create a better world for their members in 2021.
When mining company Rio Tinto destroyed a 46,000-year-old Aboriginal rock shelter at Juukan Gorge in Western Australia, the reaction was swift and vocal. Australians were outraged that an organisation could act with such blatant disregard for the rights of Aboriginal people - and Rio effectively lost its social contract to continue operating with 'business as usual'.
But outrage alone doesn't guarantee change. Superannuation funds, whose members have a significant stake in Australia's economy, have real influence - and the responsibility to use it in holding companies to account. HESTA immediately called for Rio's board to address issues surrounding the company's treatment of traditional owners. We also identified a much broader systemic risk in how some mining and energy companies were routinely flouting heritage protection of sacred sites.
What emerged was a picture of disconnected leadership in which complacency at the top meant limited oversight of decisions taken below. The resulting risks - to the communities working with these companies, and the investments made in them - were clear. We responded by releasing a Statement on Working with Indigenous Communities, detailing our investor expectations around how companies manage risks associated with Indigenous heritage protection issues. It was a call to action: not only for big business but for us as investors to step up and speak out.
Supporting real and lasting change is not just the right thing to do. It's essential to protecting and building lasting value in investment portfolios for super fund members. And it relies on having the courage and vision to speak up and be clear about why these issues matter.
This is why we became the first major Australian super fund to commit to reducing the absolute carbon emissions in our investment portfolio by 33% by 2030 and to be 'net zero' by 2050. It's why we launched 40:40 Vision, an investor-led initiative that aims to see women fill at least 40% of executive roles in the ASX200 by 2030. Both changes would help future proof members' investments and the world into which they will retire.
It's why we work with other investors to prioritise engagement areas and why we meet directly with the companies in which we invest, using our seat at the table to call for change where it's needed.
2020's seismic changes are proof of how the world's fortunes turn on the strengths, and weaknesses, of our leaders. From climate change to public health crises and economic flux, only thoughtful and decisive action by those in power will make our world safe, prosperous and equitable.
Right now, our members are looking to us to help our economy rebuild. That's both a huge challenge and a real opportunity to contribute directly to a better, fairer tomorrow: to show what strong leadership can do. It's a moment all funds can use to create a future to which our members, and all Australians, can look forward.
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.