Read our correspondance with HESTA

Below is our correspondance with HESTA, and our analysis of the responses which are our personal opinions only.

Us to Hesta

  June 2021

To: Debby Blakey, CEO,  HESTA

PHASE OUT FOSSIL FUELS OR COMMUNITY SECTOR WORKERS WILL ROLLOVER 

Dear Madam,

As Community Sector Workers we demand that Hesta publish a plan to divest from all fossil fuel investments by 2025 or we will rollover to a committed fossil fuel free fund. It is no longer acceptable to have an “eco” option while the remainder of the fund drives climate change.

We recognise that the impacts of Climate Change will be felt hardest by women and children, the homeless and our first nations people, less developed nations and others who experience structural disadvantage.  In addition continuing to invest our money in fossil fuels is a gross intergenerational injustice. We watch in horror as fossil fuel driven climate change continues to steal more of the future from our children and their children.

Close to the start of what scientists declared, the “critical decade” for climate action the Government abolished a price on carbon and drove emissions upward. We are now compelled to make steep emissions cuts this decade. Hesta and First State Super’s recent decision to divest only from coal, and only by 2030, is a grossly inadequate response to the climate emergency we face.  We choose to no longer collude with fossil fuel ‘business as usual’ and invite you to do the same.

We know there are alternatives that reflect a safer climate economy. We want our money pulled out of the fossil fuel industry and invested in clean energy.   We the undersigned (and future recruits) demand

  1. You publish by 12/11/21 a plan to have a fossil free portfolio by 2025. If you fail to do this we will publicly and collectively rollover to a committed fossil free fund ie. Future Super, Australian Ethical etc, on November 28th, 2021
  2. We demand you divest from all pureplay fossil fuel companies by 12/11/21
  3. Immediately rule out using member’s money for any new gas investments in the so called “gas-fired recovery” from Covid 19.

Yours sincerely the undersigned,

(Signed by 10 members of Community Sector Climate Action, inc. their;Name; Hesta Member No.;Qualification; Role; Union Membership (if any).

HESTA TO US JUNE 2021

Our analysis;

  • interesting, responsive, plenty of greenwashing and it almost sounds like an openness to concede on their gas investments?
  • Our demand of divestment v’s their chief defence for their fossil fuel investments ie. their policy of “engagement” with Fossil fuel cos – ie. by remaining invested we can influence them to behave… given the fossil fuel expansion that so many of Hesta’s invested companies engage in – their “engagement” is an utter failure
  • Their 33% emissions target is utter greenwash – an accounting trick where they conveniently ignore the actual emissions from the end use of the coal/oil/gas (technically known as “Scope 3” emissions). Even if it was a target with integrity – it’s well below the steep cuts required by science for 2030.

Dear Bernard

Your Complaint

Thank you for your recent email regarding HESTA’s approach to climate change and our investments.

HESTA’s position

We share your concern about climate change. HESTA takes very seriously its responsibility to protect the interests of members now and the future planet they will retire into. In 2020, HESTA announced our commitment to transition the investment portfolio to net zero carbon emissions by 2050, with a 33% reduction by 2030, as part of our Climate Change Transition Plan (CCTP).

We agree that climate change presents a clear financial risk to our investments. Committing to ‘net zero by 2050’ is crucial if we are to continue to deliver strong financial returns for our members – and a more sustainable world for them to retire into.

Climate-related risks exist across the whole economy and cannot be addressed by simply divesting from high emitting companies; selling HESTA shares doesn’t remove or reduce carbon from the atmosphere. As noted in the recent ACCR report https://www.accr.org.au/downloads/2021-01-31-accr-report-cutting-carbon.pdf, responsible owners meet with companies to try and change business practices and contribute to real world outcomes on global cooling.

Our CCTP maps out how we manage climate risk and opportunities and support the transition to a low-carbon economy that is consistent with the goals of the Paris Agreement. Achieving the targets will require a combined effort across three pillars:

  • Investment– looking for more opportunities to invest in the low-carbon transition, including using carbon metrics to guide asset valuations and new investments. HESTA is one of the biggest investors in renewable energy and cleantech private equity among Australian superannuation funds, and our CCTP aims to increase our exposure to low carbon investments.
  • Active ownershipengagingwith companies we own on behalf of members to improve the way they manage climate-related risks and/or generate opportunities from the transition to a low-carbon future. By remaining invested, we retain the ability to engage with those companies contributing the most to climate change and we can influence their transition strategies and their progress towards achieving these strategies.

To mitigate climate change risk, we need to achieve change in the real economy. Therefore, we prioritise engagement with high emitters and other industries dependent on fossil fuels to encourage them to transition their businesses for a low-carbon future. We are already in ongoing dialogue with oil and gas companies about the steps they can take to further transition their businesses and operations for a low carbon future.

An important part of our Active Ownership approach is advocating for economy-wide targets of net zero emissions by 2050 and support for an orderly and equitable transition across the economy. As a large superannuation fund, we recognise our influential position in the market and our responsibility to use our voice responsibly to address systemic issues like climate change.

We also advocate with government to adopt strong climate change policies. We conduct this engagement as an active member of an Australian coalition of investors, the Investor Group on Climate Change (IGCC). We are also a part of a global voice on climate change with the Global Investor Coalition on Climate Change (GICCC) and in 2020, HESTA signed up to the Transition Pathway Initiative (TPI). The TPI is an asset owner led initiative that assists investors with determining a company’s readiness for the transition to a low carbon future.

Alongside these organisations, we also work closely with global investors through Climate Action 100+ to use our combined weight of ownership to push the world’s largest corporate emitters to cut emissions. For example, by cooperating with other investors, we’ve successfully pushed for companies like BP to set emission-reduction targets and link these to executive pay. It is very unlikely these commitments would have been made without sustained shareholder pressure.

Avoid– We understand that to manage stranded asset risk that as a last resort there is a place for reducing exposure to assets and industries that are not aligned to the Paris Agreement. This is why we have an exclusion over pure play thermal coal.

The aim is to accelerate the move to a less carbon-intensive future, while seeking to ensure this transition is just and ordered. Divestment removes our key source of influence as investors and owners of assets. Ownership provides leverage which greatly increases the impact of our engagement. Accordingly, we believe ongoing engagement on climate change is more effective than one-off divestment at changing the behaviour of companies in our portfolio.

We continue to invest in gas in our investment portfolio as we believe gas has a role to play in the transition to a low-carbon economy. We do believe, however, the role of gas in the transition is limited, particularly when it comes to replacing coal to provide baseload energy needs. We believe gas should be considered as necessary in the short-term for firming up renewables and providing supply to industrial processes. However, we remain concerned about the emissions impact. We are continuing to discuss these issues with gas companies, including stressing the importance of considering the full emissions impact and encouraging these companies to manage their climate change risks and link emissions reduction targets to executive remuneration.

Nonetheless, we are cognisant we cannot continue dialogue indefinitely. That’s why the work we’re doing through the CCTP includes how we can thoughtfully protect the portfolio from transition risks when appropriate change does not occur.

We are confident that the CCTP can position the 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.

Our website has information about our climate change actions and if you haven’t already you can read more at https://www.hesta.com.au/climatechange 
We are currently preparing our first climate change report that will detail the actions of the CCTP. The report will be made available on our website in the coming months.

As we’ve outlined, our approach to climate change is carefully considered and informed by a wide breadth of investment expertise and research. We believe this approach can most effectively support a timely, just and ordered transition to a less carbon-intensive future that we all want.

We further wish to advise the date of this letter serves as the date of Trustee final decision, which we are required under legislation to advise you.

Should you have further feedback or wish to discuss any aspect of our response, please call us on 1800 813 327 or email hesta@hesta.com.au

If you are not satisfied with any decision we have made in relation to this issue you may lodge a complaint as follows:

Australian Financial Complaints Authority (AFCA)
Online:               www.afca.org.au
Email:                info@afca.org.au
Phone:               1800 931 678 (free call)
Mail:                  Australian Financial Complaints Authority
GPO BOX 3
MELBOURNE VIC 3001

This independent body helps members, their beneficiaries and authorised third parties to resolve specific super complaints. If your complaint is the type they look after, they’ll work on resolving it for you.

Time limits may apply so you should act promptly if lodging a complaint with AFCA. You can consult the AFCA website to find out if or when the time limit relevant to your circumstance expires.

Kind regards

Charlie Alford
HESTA Complaints Officer

Our response

  July 23 2021

Debby Blakey, CEO,  HESTA  

PHASE OUT FOSSIL FUELS OR COMMUNITY SECTOR WORKERS WILL ROLLOVER  

Dear Ms Blakey,

Your recent response (21/6/21) to the letter from the supporters of Community Sector Climate Action exposes the weaknesses in Hesta’s claim “to protect… the future planet they will retire into” by its’ policy of “engagement” with polluting corporations it invests our money in.

Hesta did in fact publicly engage with Rio Tinto to demand the resignation of the CEO after the blasting of the Juukan Caves in 2020.

But we have not heard any public protest from Hesta about the activities of  companies it invests in, whose activities do not align with the Paris agreement, who are impacting traditional owners, who are busy expanding fossil fuels and also derailing the steep cuts required in this, the climate emergency decade.

Right now Origin Energy is about to frack gas in the Beetaloo Basin in the NT and is being fought by indigenous youth and elders for the damage it will cause to climate and country.

Right now Santos is about to frack gas in Narrabri, NSW, and is being fought by a broad community alliance from farmers to indigenous people. 

Woodside is being fought in WA for its massive gas expansion. Hesta invests in, but  has not called out, AGL – Australia’s biggest polluter, due to its coal-power stations.

It is unclear, but Hesta seems to say in their letter to our group that they’ll only divest if two criteria are met;

  1. They can no longer guarantee making longer term money from investments (ie. investments may become “stranded assets”), and
  2. The companies do not align with the Paris Agreement

Does this mean Hesta fully intends to remain invested in the 20 remaining fossil fuel involved companies who are not aligned with Paris, because they believe they won’t become stranded assets? Also did  Hesta only divest of three coal companies in June 2020 because they looked like becoming stranded assets? Or because they failed to align with Paris? Or both?

We also note that Hesta’s claimed 33% emissions reduction across its’ portfolio by 2030 does not account for ‘scope 3’ emissions ie. emissions from the actual burning of the fossil fuels mined. This target is not only inadequate but grossly misleading.

As Hesta members and concerned citizens we look forward to your response.

Yours sincerely,

(Signed by 10 members of Community Sector Climate Action, inc. their;Name; Hesta Member No.;Qualification; Role; Union Membership (if any).

HESTA RESPONSE TO US JULY 2021  (our analysis: dry, unresponsive, ingoring our concerns, bureaucratic and prepped by an admin subcontractor?)

HESTA Communications Team
Mon, Jul 26, 6:01 PM

Dear Bernard,

Thank you for your email.

In regards to your message about our investment approach to fossil fuels, we share your concern about climate change.

The Board takes very seriously its responsibility to protect the interests of members. It undertakes this responsibility by overseeing long-standing policies, including HESTA’s Climate Change Policy, designed to direct our investments and guide our active ownership activities. We believe this approach will lead to a timely, just and ordered transition to low-carbon economy. An important element of the Policy is the broad restriction on the funding of new thermal coal developments, as we believe these projects have the highest risk of becoming stranded assets – posing financial risk to our members.

As a responsible investor, HESTA seeks to engage with companies it owns on behalf of members to improve the way they manage environmental, social or governance risks arising from their business operations. We believe that this engagement is more effective than divestment at changing the behaviour of companies in our portfolio and moving them towards a future where planet warming is within an additional 2 degrees Celsius above pre-industrial levels. While still at an early stage, there is significant evidence that company engagement is having a positive impact on the transition to a low carbon economy.

Our engagement activities have produced a number of positive outcomes. This includes improvements in strategies to manage and reduce climate change risk and enhanced disclosure of transition strategies and related risk metrics, including carbon emissions.

We’re also apart of supporting the solutions. HESTA was among the first Australian superannuation funds to disclose the carbon footprint of our listed equities portfolios. In Australia and globally, these listed equities portfolios have lower carbon footprints than the relevant index. So, they’re already less carbon intensive than the broader equities market, in addition to this, information on our investment options top holdings is disclosed on our on our website here and full voting records are published every six months here. This demonstrates our continuing, long-term commitment to providing appropriate and relevant disclosure to our members.

Contact us

If you have any questions email us at hesta@hesta.com.au or call us on 1800 813 327. If calling from overseas phone +61 3 9200 4714. Our contact centre operates between 8am-8pm AET Monday to Friday.Kind regards

The Team at HESTA

This information has been prepared by Australian Administration Services Pty Limited (ABN 62 003 429 114) on behalf of H.E.S.T. Australia Ltd ABN 66 006 818 695 AFSL No. 235249, Trustee of Health Employees Superannuation Trust Australia (‘HESTA’) ABN 64 971 749 321. Before making a decision about HESTA products you should read the relevant Product Disclosure Statement (call 1800 813 327 or visit hesta.com.au for a copy), and consider any relevant risks (hesta.com.au/understandingrisk).

Complaint to HESTA 

Dear Hesta,

I was a signatory of a letter to Hesta emailed on 23/7/21 from  Community Sector Climate Action. This letter was attached to an email sent by our coordinator. Hesta Communications Team replied with an email on  26/7/21  using information from  a third party (Australian Administration Services)  that failed to address any of the particular issues about how Hesta’s investments are  impacting on communities and country around Australia.

Like you claim, we also take climate change very seriously.

I have reiterated the points in this email so you can send me a proper response to the serious issues raised.

I am making a formal complaint to Hesta because as members who give Hesta large anounts of our money, we expect you on this occasion to actually address the issues;

I firstly refer to Hesta’s response (21/6/21) to the letter from the supporters of Community Sector Climate Action in which Hesta claims to engage with polluters. The information I have included below exposes the weaknesses in this policy of  “engagement”.

Hesta did in fact publicly engage with Rio Tinto to demand the resignation of the CEO after the blasting of the Juukan Caves in 2020.

But we have not heard any public protest from Hesta about the activities of  companies it invests in, whose activities do not align with the Paris agreement, who are impacting traditional owners, who are busy expanding fossil fuels (contradicting the recent recommendations of the International Energy Agency) and also derailing the steep cuts required in this, the climate emergency decade.

Right now Origin Energy is about to frack gas in the Beetaloo Basin in the NT and is being fought by indigenous youth and elders for the damage it will cause to climate and country.

Right now Santos is about to frack gas in Narrabri, NSW, and is being fought by a broad community alliance from farmers to indigenous people. 

Woodside is being fought in WA for its massive gas expansion. Hesta invests in, but  has not called out AGL – Australia’s biggest polluter, due to its coal-power stations.

It is unclear, but Hesta seems to say in their letter to our group that they’ll only divest if two criteria are met;

  1.       They can no longer guarantee making longer term money from investments (ie. investments may become “stranded assets”), and
  2.       The companies do not align with the Paris Agreement

 The above mentioned companies have business plans whose projected emissions cannot align with the Paris Agreement and definitely are not making the steep cuts required by 2030.

Can Hesta please explain why they are not divesting from these companies?

We also note that Hesta’s claimed 33% emissions reduction across its’ portfolio by 2030 does not account for ‘scope 3’ emissions ie. emissions from the actual burning of the fossil fuels mined. This target is not only inadequate but grossly misleading. Can Hesta please explain why it ignores scope 3 emissions when it claims to take climate change seriously?

As Hesta members we look forward to your response.

Yours sincerely,

HESTA’s response to the complaint 

Thank you for your email regarding HESTA’s approach to climate change and your interest in our investments.

We share your concerns about climate change. HESTA takes very seriously its responsibility to protect the interests of members now and the future environment and society they will retire into. That’s why we’ve restricted any new investment in thermal coal for over 7 years now. And in 2020, we announced our commitment to transition the investment portfolio to net zero carbon emissions by 2050, with a 33% reduction by 2030, as part of our Climate Change Transition Plan (CCTP).

Climate change presents a clear financial risk to our members’ investments. Climate-related risks exist across the whole economy and cannot be effectively addressed by simply divesting from high emitting companies. By selling shares in these companies, HESTA doesn’t remove or reduce carbon from the atmosphere. As noted in the recent ACCR report, responsible owners need to meet with companies to try and change business practices and contribute to real world outcomes on global cooling. If we were not a shareholder, we wouldn’t be able to effectively push for change and our members would remain exposed to the broader economic impact of climate change.

Our CCTP maps out how we manage climate related risk and identify opportunities that will support an orderly and equitable transition to a low-carbon world that is aligned with the goals of the Paris Agreement. We encourage you to read our climate change report, which embodies the CCTP and how it intersects with our regulatory obligations while continuing to support the achievement of  strong, sustainable, long-term returns for HESTA members. You can find the report on our website alongside other information on our approach to climate change.

As detailed in the report, our approach is carefully considered and informed by a wide breadth of investment expertise and research. We understand there are a broad range of views among our more than 900,000 members on a variety of issues. However, we believe this approach to climate change can most effectively support a timely, just and orderly transition to a less carbon-intensive future that we all want.

The date of this email serves as the date of the Trustee’s final decision, which we are required to inform you of under legislation.

Should you have further feedback or wish to discuss any aspect of our response, please get in touch with me directly on 1800 701 145 or email me at complaints@hesta.com.au

Alternatively, you may contact our Contact Centre on 1800 813 327 between the hours of 8am and 8pm (AET).

If you are not satisfied with any decision we have made in relation to this issue you may lodge a complaint as follows:

                         Australian Financial Complaints Authority (AFCA)

Online:               www.afca.org.au

Email:                info@afca.org.au

Phone:               1800 931 678 (free call)

Mail:                  Australian Financial Complaints Authority

                        GPO BOX 3

                        MELBOURNE VIC 3001

This independent body helps members, their beneficiaries and authorised third parties to resolve complaints. If your complaint is the type they look after, they’ll work on resolving it for you.

Time limits may apply so you should act promptly if lodging a complaint with AFCA. You can consult the AFCA website to find out if or when the time limit relevant to your circumstance expires.

Kind regards

Steen James

HESTA Complaints Officer

Request to speak at the HESTA members meeting

To: Steen James (HESTA Complaints Officer) <hesta@hesta.com.au

cc: HESTA Impact & Responsible Investment teams <responsibleinvestment@hesta.com.au>

Dear Steen,

Thank you for your email.

We are still dissatisfied with your response, however, and would like to take this complaint further. Your team has not addressed our concerns nor answered our questions.

Firstly, you still haven’t adequately explained why HESTA hasn’t divested from the companies I mentioned in my previous email. Companies like Santos and Woodside—despite claiming to have net zero emissions targets—are planning to expand their oil and gas production in a manner consistent with the failure of the Paris Agreement. Why is HESTA still invested in these companies when they clearly have no plans to make the required steep emissions cuts needed this decade in order to curb climate change? You note that “divestment does not remove the carbon from the atmosphere” and that your approach is “focused on affecting real world change.” To date, HESTA’s engagement with polluting companies clearly hasn’t been creating the “real world change” we urgently need, and keeping members’ money invested in companies like Woodside and Santos is supporting them to put more carbon into our atmosphere. Further, HESTA actually voted against shareholder proposals calling on Woodside, Santos and Oil Search to manage down oil and gas production in line with the Paris climate goals, removing all credibility from the claim that the fund is pursuing strong climate action through engagement.

Secondly, the emissions reduction targets in HESTA’s Climate Change Transition Plan don’t account for scope 3 emissions. Woodside’s Scarborough gas project will be one of the most climate-destructive projects ever built in Australia, and will result in the emissions equivalent of 15 coal-fired power stations running for 30 years. The vast majority of these emissions will not be properly captured in HESTA’s portfolio emissions reduction targets. Does HESTA genuinely believe it can positively influence a company like this when we need steep emissions cuts this decade? Can HESTA please explain why it ignores scope 3 emissions and fossil fuel reserves in its climate disclosures and targets?

Thank you for your offer to set up a meeting with the Impact & Responsible Investment teams, too. Based on the unsatisfactory answers Community Sector Climate Action has received to our questions, however, I don’t think a meeting like this would resolve any of our concerns.

Instead, we note that the Annual Member Meeting will be held on 30 November 2021. In lieu of a meeting with the Impact & Responsible Investment teams, we kindly request that one of our representatives be given the opportunity to ask a question (via live video stream) to the panel of board members and executives present at the meeting. Acknowledging that we have informed you our group will be divesting on 28 November (unless the fund meets our demands), we would consider holding off on taking and publicising this action in order to attend the meeting and raise our concerns directly with the panel, if the fund gives us the opportunity to do so.

I also understand that the panel of board members and executives present at the meeting will be answering questions submitted through the online meeting platform, and questions not answered in the live stream will be noted and answered in the meeting minutes. There will be several Community Sector Climate Action group members (and our supporters) attending the meeting, and should our representative not be able to pose a question directly to the panel, please keep in mind that we will be asking climate-related questions that will need to be addressed.

I look forward to hearing from you.

Kind regards,