One of Australia's largest retirement plans is rejecting activist demands to divest from some of the world's most-polluting companies and says its strategy of staying invested to exert influence is working.
Health Employees Superannuation Trust Australia, Melbourne, won't follow its larger offshore peers and set targets to cut carbon emissions across its A$55 billion ($36 billion) portfolio, CEO Debby Blakey said in an interview. Divesting from certain stocks and setting targets wouldn't achieve an orderly transition to a low-carbon economy, she said.
"We certainly are monitoring the carbon in the portfolio and we certainly are very mindful of it," she said. "But we still are extremely committed to engagement."
Pressure is mounting on Australian funds to follow the example of peers such as Stichting Pensioenfonds ABP, Heerlen, Netherlands, Europe's largest pension fund with €465 billion ($512.6 billion) in assets, which has pledged its investments will be climate-neutral by 2050. In the wake of Australia's deadly wildfires, environmentalists and some of the funds' own members have stepped up protests, demanding they divest from fossil fuels.
HESTA's Australian and international stock holdings were about 1% more carbon-intensive than its benchmark indexes as of June 2018 amid exposure to more emissions-intensive sectors, according to the fund's website. HESTA expects it to decrease over time, Ms. Blakey said.
To help it engage with companies, HESTA has joined the Transition Pathway Initiative, a global program that assesses a firm's readiness to shift to a low-carbon economy. The fund will use the data to support its discussions with companies to manage the transition, Ms. Blakey said.
"We've got actionable data that can help identify companies that are firstly doing it well and second of all, those, of course, who need to do more," Ms. Blakey said. "Before we get to divestment, it will inform our advocacy which I think is far more powerful."