July 2022
Debby has held many positions across the financial services industry, and has been with HESTA since 2008. She has been the CEO of HESTA since 2015, during which time she has directed the Fund to contribute positively towards sustainable development goals. Debby proudly told us about HESTAs Climate Change Transition Plan, wherein they are targeting total portfolio cuts in emissions of 33% by 2030 and ‘net zero’ by 2050.
Climate change is a public health issue that will have a direct impact on the working lives and the world our members retire into. As the super fund for Health and Community Services, we are as equally excited to collaborate with our sector partners as we work together to improve the health sector’s resilience from climate change impacts.”
Australia has so much to gain from taking a leadership position in the global push to decarbonise. As investors we see that lowering emissions has the potential to boost business and job creation. It’s now up to us as a country to grasp the opportunity.”
Better Futures wanted to learn more about Debby’s experience with HESTA, and what motivates her in taking climate action within the superannuation industry.
Advancing gender equality.
Australia has a world-leading retirement income system, Debby explained, but it’s tied to continuous paid work. This creates significant inequalities in retirement incomes for those who provide unpaid care. For many working Australians, superannuation will supplement the Aged Pension and provide a better quality of life and greater financial security as they age.
Many Australian women have paid the ‘motherhood penalty’ for the time they take out of the workforce to care for children, Debby says. “Paying super on paid parental leave is an easy and obvious fix.”
Over the last 2 years, the combination of insecure work and COVID shutdowns have created a significant deterioration in employment, particularly for young Australians, who suffered the large cumulative job losses during 2020 COVID lockdowns. For many years, HESTA has been focused on the direct and indirect impacts of climate change to its investment portfolio, its performance, the broader economy and the world its members will retire into.
The systemic nature of climate-related risks is now so broad, it intersects with other global systemic issues like modern slavery and gender equality. Our vision is that by encouraging action on climate change, we’re aiming to lower the systemic risk of our members’ investments that span the Australian economy.”
With climate targets in place, HESTA has extended current processes to integrate carbon targets into investment decision-making. Their decisions include consideration of these four dimensions – risk, return, cost and responsible investment, Debby explained.
Climate Change Transition Plan
Debby believes that undertaking this action will allow HESTA to manage key financial and reputational risks, as well as target investment in opportunities from the low-carbon transition. This integration provides the Fund confidence that they will achieve their carbon reductions while ensuring optimal return outcomes for their members.
We are most excited about delivering on the ambitions of our Climate Change Transition Plan (CCTP). We have developed a three pronged approach for implementing these ambitions.”
HESTA has integrated portfolio-wide carbon reduction targets across all its investments. They have also aligned company strategy, governance and disclosure with the Paris Agreement. Debby also told us that HESTA wants economy-wide net zero targets by 2050, and they support an orderly and equitable transition to a net-zero economy.
The IEA states that global annual clean energy investment must increase by 3.5 times – from $1.2 trillion to $4 trillion to achieve net zero emissions by 2050.”
Australia will need to triple its supply of renewable electricity to get to net zero, as coal, oil and gas are phased out. Battery technology sits at the heart of this shift: the growth of electric vehicles (EVs), and renewable power generation/storage, will increase demand for a range of raw materials. It’s estimated that the global EV stock will reach 245 million vehicles by 2030 – more than 30 times above today’s level.
A rapid ramp-up of such technologies will require a concurrent increase in the materials used in them.”
Debby outlined how the Climate Action 100+ (CA100+) benchmark identified key next steps that companies need to take to turn their commitments into action. As of March 2022, 57% of companies have disclosed transition plans, however none of the Australian companies have explicitly committed to align capital expenditure plans.
The IPCC Report identifies that bridging this divide requires the creation and strengthening of regulatory environment and institutional capacity to scale up financing, improved access to capital markets, as well as upstream financing, R&D and venture capital for development of new technologies and business models, Debby explained.
Australia’s more than $3 trillion in superannuation savings and the investment expertise that manages it, is an incredible national advantage for Australia that can help power the national transition to a low carbon future.”