Australian superannuation fund HESTA announced today its new Climate Change Transition Plan (CCTP), involving significant reductions in the carbon exposure of its investment portfolios, and a commitment to reach “net zero” by 2050. The HESTA super fund services the health and community, with $52 billion AUM.

Under the CCTP, HESTA has committed to introducing carbon reduction targets for its investment portfolios as a risk-management measure, while seeking to find investment opportunities arising from the low-carbon transition. HESTA is targeting a reduction in the absolute carbon emissions in its portfolio of 33% by 2030. The fund also announced it will engage with companies and managers to address transition risks and opportunities. Most significantly, HESTA announced that it will align its investment portfolio with the Paris Agreement target of achieving net zero carbon by 2050.

In making these commitments, HESTA becomes the first Australian superannuation fund to align with the Paris Agreement. HESTA was also the first to place a thermal coal mining restriction across all investment options, recently extending this restriction to eliminate the financing of potentially stranded assets.

The Paris Agreement is a multi-nation pact developed by parties to the United Nations Framework Convention on Climate Change (UNFCCC) to combat climate change, with a goal to limit the global temperature increase in this century to below 2 degrees Celsius above pre-industrial levels, and to work toward limiting the increase to 1.5 degrees.

Introducing the new CCTP plan, HESTA CEO Debby Blakey said:

“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.

“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.”

Ms. Blakey added, “We’re at the start of this journey, and we acknowledge that there is still a lot of work to be done.”