HESTA: impact investing is part of our DNA
Industry super fund HESTA’s core purpose is to ensure member savings are invested to provide strong, long-term returns - but they also have to contribute to a better world.
Cindy Ponder - market strategist at the $52bn fund - will be exploring how they go about that during her session at FINSIA Summit 2019 in two weeks.
UN Sustainable Development Goals (SDGs) guide HESTA’s investment approach, according to Ponder.
“The SDGs focus our minds on investment opportunities with which HESTA can generate a meaningful financial return, while helping bring about a better world,” she says.
Ponder notes the importance of being an active, rather than activist, owner.
“Being a universal owner gives us the opportunity to be part of the solution and, through engagement, gives us a seat at the table to bring about change.
“As a universal owner investing for multiple generations of members, we have the ability to have ongoing, long-term discussions with companies on important issues that impact our members.”
An example is gender equality, and the economic and societal benefits that flow from equality.
Encouraging some of the world’s biggest emitters of carbon to transition their businesses to a low carbon future in line with the Paris Climate Change Agreement targets and linking executive remuneration to these targets are other goals HESTA is pursuing.
“HESTA has a very important role to play as a leader in impact investing in Australia. Through our impact program we’re investing in initiatives that aim to earn both appropriate market-based return and have a measurable social impact,” says Ponder.
“This aligns with our members’ values and these investments also help grow jobs and alternative sources of funding in the health and community services sectors in which they work.”
Examples include:
• Nightingale housing development in Melbourne: $20 million invested to create a development of six apartment blocks with 20 per cent set aside for key workers and social and affordable housing providers.
• Glenview - Australia's First Dementia Village: The project in based on the Netherlands' successful De Hogeweyk village model. The village in Glenorchy, Tasmania, has 12 eight-bedroom homes that will support 96 residents within a small town, complete with streets, a supermarket, café, beauty salon and gardens.
• Pharmaceuticals: HESTA is supporting the development of a drug that will help patients recovering from breast cancer chemotherapy treat menopause.
HESTA’s reach also extends to climate change. One example is HESTA’s participation in the Climate Transition Plan.
HESTA is also involved with Climate Action 100+, which is targeting more than 100 of the world’s largest greenhouse gas emitters to encourage emissions reduction and improve climate governance.
HESTA’s clients, customers and members want to know their money is growing and having a positive impact on big challenges like climate change and gender equality.
“They want to know more about how the people that are managing their money think, act and use their influence to contribute to a better world for them,” Ponder says.
“Our members and clients have choice and if these issues are important to them, they will gravitate towards investment firms, superannuation funds or other entities that will invest their money with purpose and in a way that’s aligned to their values,” she adds.
This is critical, as Ponder notes people want to feel comfortable their assets are in sounds hands with firms that are ethical and put their interests first.
“It’s important to build purpose-led organisations that align words and actions, in which customers, employees and stakeholders can trust,” she says.
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