HESTA to use voting rights to push for climate action, gender diversity and decent work

Super fund HESTA has warned the largest listed companies it intends to vote against male directors of boards with low female representation.

Super fund HESTA has warned the largest listed companies it intends to vote against male directors of boards with low female representation.

In letters sent last week to the chairs and chief executives of the largest 292 ASX-listed companies it invests in, the $76bn fund said it would seek to engage on four “active ownership themes” ahead of the upcoming annual general meeting season.

This includes influencing corporate policies on climate, “decent work” and biodiversity loss.

The fund, which largely manages the superannuation of health and community services employees, in its fourth annual letter warned 129 companies that it would automatically vote against male directors if the companies met certain criteria.

HESTA told the companies it intended to vote against male directors in elections if the board shad less than 30 per cent female representation, and against the chair if their executive teams are male-dominated.

HESTA did not mention any companies, but according to the Chief Executive Women (CEW) 2022 Census, there were 46 companies with all-male executive teams among the ASX 300.

Those included retailers JB Hi-Fi, Breville, Lovisa, bathroom supplier Reece, and miner Silver Lake Resources.

“It doesn’t mean that (if you meet the criteria) we will vote in favour of all directors,” HESTA CEO Debby Blakey told The Australian. “If a company has evident culture and behaviour issues we will choose to consider those issues in the way that we vote.”

But Ms Blakey said she had seen “enormous progress” and more companies were now focusing on having good gender diversity. “Engagement is seeing change, it’s making a difference,” she said.

HESTA CEO Debby Blakey. Picture: NCA NewsWire / Ian Currie

HESTA has been pushing for gender diversity targets at ASX companies for several years. It had previously voted against all-male boards and has spearheaded the 40:40 Vision initiative. It aims to have women in 40 per cent or more of executive and board roles by 2030.

A recent study done by proxy adviser Ownership Matters found ASX300 boards are becoming more diverse, with a record 34 per cent of board positions held by women.

However, the study also showed female leadership remains significantly under-represented.

As the AGM season in October and November approaches, HESTA will also seek to engage with the companies on climate change, decent work, and natural capital and biodiversity loss.

In its letter, the fund also spells out its expectation for better disclosures of worker conditions, and addresses the “global challenge” of the rapid depletion of natural resources.

Ms Blakey said HESTA would encourage its portfolio companies to take action to understand nature-based impacts and dependencies within their operations and supply chains and put in place appropriate loss management practices.

“In the upcoming AGM season, companies will be engaged not only in their response to immediate risks and opportunities for performance but also in their efforts to promote a sustainable and inclusive economy, benefiting shareholders, members, and all Australians,” Ms Blakey said.

“HESTA’s 2023-24 active ownership priorities reflect a commitment to responsible investment and engagement for a growing, sustainable and inclusive economy so we can continue to deliver strong returns to our members,” she added.

HESTA is also asking executives and board directors to work towards a goal of halving greenhouse gas emissions by 2030 and achieving net zero greenhouse gas emissions by 2050, in line with the goals of the Paris Agreement.

It wants ASX300 companies to accelerate investment in the electrification and decarbonisation of the economy, and its voting at this year’s AGMs will “consider progress in these areas and whether board skills and composition demonstrate preparedness for the low carbon transition,” it said.

Originally published as HESTA to use voting rights to push for climate action, gender diversity and decent work