HESTA today announced the development of an ambitious Climate Change Transition Plan (CCTP) that will see the $52 billion industry super fund commit to reducing the absolute carbon emissions in its investment portfolio by 33% by 2030 and to be ‘net zero’ by 2050.
HESTA is the first major Australian superannuation fund to make carbon reduction commitments of this scale as part of a broader CCTP that seeks to effectively align the Fund’s actions and investment portfolio with the goals of the Paris Agreement.
“Our Climate Change Transition Plan is set to be one of the most comprehensive of its kind undertaken by a superannuation fund, mapping out how we’re going to manage climate risk, align our actions to a below-two-degrees world and support the transition to a low-carbon economy,” Ms Blakey said.
“Climate change presents a financial risk to the HESTA investment portfolio and the world in which our members will retire. An urgent response is required and the actions within the Climate Change Transition Plan have been thoughtfully and carefully designed to provide an effective and tangible response.”
“This is an exciting piece of work that reaffirms our ongoing commitment to leadership in responsible investment and can help protect and enhance the long-term performance of our members’ investments, while driving meaningful change and contributing to a healthier planet and society.”
Rolling out elements of the Climate Change Transition Plan, HESTA said it will:
- introduce carbon reduction targets for the HESTA investment portfolio to manage key financial risks while seeking further investment in opportunities arising from the low-carbon transition;
- pursue real-world economy change through engaging with material holdings and managers to address medium-term transition risks and opportunities; and
- align HESTA’s investment portfolio with the aim of the Paris Agreement to be net zero by 2050.
Ms Blakey said the CCTP would underpin investment decision making across the portfolio and would be informed by ongoing research and developments in investment practice.
“We’re at the start of this journey, and we acknowledge that there is still a lot of work to be done,” Ms Blakey said.
“We are confident the CCTP can position our investment portfolio well into the future to help us achieve our ambitious investment objectives and continue to deliver strong, competitive, long-term returns for HESTA members.
“We know our members in health and community services care deeply about climate change and that’s why we’re committed to sustained, long-term action to transition our investment portfolio for a low-carbon future.”
HESTA proposes to monitor and report progress against its emissions reduction targets on an annual basis.
HESTA was the first major Australian super fund to place a thermal coal mining restriction across all investment options and recently extended this restriction to further eliminate the financing of potentially stranded assets.
Underpinning the CCTP and the significant amount of work and innovation needed to ensure its effectiveness is HESTA’s commitment to the critical goals of the United Nations Intergovernmental Panel on Climate Change. The IPCC says global emissions need to reach net zero by 2050 to create a reasonable chance of limiting global warming to 1.5°C above pre-industrial levels.
“If efforts to improve the current trajectory of global warming are not successful, then we can expect an increase in the severity and frequency of damage from the physical impacts of climate change. There is no doubt that the social, environmental and economic cost of inaction is going to be far greater than the cost of responding to climate change, Ms Blakey said.”