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.”

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RE100 is a global initiative bringing together the world’s most influential businesses driving the transition to 100% renewable electricity. Led by the Climate Group and in partnership with CDP, our mission is to accelerate change towards zero carbon grids at scale. Companies in the commercial and industrial sector account for around half of the world’s end-of-use of electricity. We're switching this demand to renewable electricity.

Future Super is an organisation that encourages Australians to take climate action with their super. The organisation is on a mission to show Australians the power their super has to build the foundation for a planet worth retiring to. In 2019, they diverted 62,000 tonnes of carbon dioxide alone and have moved over $658 million out of fossil fuels and into climate solutions.

Read Future Super’s inspiring story from our discussion with Grace, Future Super's Chief Marketing Officer, here.

Can you tell us a bit about Future Super? 

Future Super is a super fund that encourages people to take climate action with their super. Money is power, and at $3 trillion, the super industry has the ability to create a sustainable future without waiting on politics. We’re proving that consumers can both get better returns and create a better future for our planet through divesting from fossil fuels and investing in clean energy.

Why is Future Super taking climate action?

The superannuation industry is a $3 trillion industry. It represents the third-largest pool of capital Australians have. If 7.7 percent of this money was put into renewable energy, our transition to clean energy would be completely funded by 2030.

We’re on a mission to show Australians the power their super has to build the foundation for a planet worth retiring into.

Can you share your commitments to climate action?

To name just a few:

• In 2019 alone, Future Super members collectively abated and avoided just over 62,000 tonnes of carbon dioxide. That’s the equivalent of:
  • Taking about 27,000 cars off the road.
  • Over 35,000 people holidaying locally rather than London and back via Singapore.
  • Nearly 60,000 people deciding to eat a plant-based diet.
• We’re also helping Australians move their super out of fossil fuels and into climate solutions. As of June 30 this year, Future Super members have moved $658,575,436 of their super dollars toward building a future worth retiring into. For perspective, that's just over Beyonce's net worth.
• In 2019, as shareholders, we voted on behalf of the Future Super Group to advance the ethical and environmental management of companies we invest in. We voted on 29 resolutions covering topics like: improving equity for women and minorities; setting more ambitious emissions or plastic reduction targets; and increasing transparency around the influence of business lobbying on politics.
• Our investment portfolio doesn't include BP or Rio Tinto (unlike many super funds) — and we couldn't be happier, especially following the proposed and actual destruction of Aboriginal sacred sites in the Pilbara.

Is there a project Future Super is currently working on that you are excited about?

We’re exposed to the effects of climate change in our daily lives, but most people don’t understand the link between fossil fuels and superannuation. Our daily work is to show people the impact their super investments can have on climate change and building a future that’s worth retiring into.

What real-world opportunities have you uncovered from taking climate action today?

Not Business as Usual was a campaign that we led in solidarity with the school students across the world demanding for change at the UN Climate Action Summit in New York.

It’s not business as usual for the world's children to skip school to get adults to pay attention to the climate crisis, nor is it business as usual for citizens to strike to get governments to make meaningful commitments to climate action.

So, in September 2019, we started an alliance of companies publicly pledging to allow their employees to protest on the 20th September without fear of retribution. More than 6,000 businesses pledged to be part of the alliance, including leading B-Corps, Atlassian, Wikipedia and Domain. More than 150,000 Aussie employees became part of the 3 million people worldwide who marched in support of climate action.

What action would you like to see Australia take on climate change?

The Australian Government currently hands out billions of dollars in taxpayer-funded subsidies to corporations. The fossil fuel industry receives some of the biggest subsidies. $12 billion went to coal, oil and gas companies last year.

Now is the time for the Australian government to start divesting from the fossil fuel industry and investing those subsidies back into its people to safeguard our communities and planet. By divesting from climate-damaging industries and investing ethically, we can create a more sustainable and prosperous planet.

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