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Hesta sets net-zero portfolio emissions target by 2050

The A$52 billion industry superfund has set a target to achieve net zero emissions in its portfolio by 2050, as part of a broader Climate Change Transition Plan.

Hesta has committed to reducing the absolute carbon emissions in its investment portfolio by 33 percent by 2030 and to reaching net zero by 2050.

The not-for-profit industry superannuation fund, which has its origins in the health sector, is one of the largest superfunds in Australia to commit to such a target. Hesta has approximately A$52 billion ($36 billion; €32 billion) in assets under management.

The target is part of a broader Climate Change Transition Plan the fund has launched to ensure its investment objectives are aligned with the goals set out by the Paris Agreement.

As well as aiming to achieve net zero emissions by 2050, Hesta said it will introduce carbon reduction targets for its portfolio and seek further investments in “opportunities arising from the low-carbon transition”. It will monitor and report progress on these targets on an annual basis.

The superfund will also “pursue real-world economy change” by engaging with material holdings and its fund managers to better address medium-term climate change transition risks and opportunities.

Hesta’s current investments in agriculture are limited, although it first made a commitment of an undisclosed size to one of Stafford Capital Partners’ timberland fund of funds in 2006.

It has also invested in Generation Investment Management’s Sustainable Solutions Fund, which focuses on late-stage venture capital and growth-orientated businesses with a sustainable focus. The fund’s mandate allows it to invest across a range of sectors including agriculture.

Hesta’s default MySuper option has a strategic asset allocation to infrastructure of 12 percent. The firm’s Stafford Timberland investment sits within this allocation, and the firm has a further 8.5 percent allocation to alternatives.

In a statement on the emissions targets, 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 CCTP have been thoughtfully and carefully designed to provide an effective and tangible response.

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

Hesta did not respond to when asked whether the new target could lead to an increase in agriculture investments.

Dan Miller, the founder of crowdfunding platform Steward, told sister publication Agri Investor in April that the coronavirus pandemic had increased venture capital interest in regenerative agriculture.

Macquarie Infrastructure and Real Assets head of agriculture Liz O’Leary said this week that the firm’s future ag fund mandates would explicitly include sustainability and regenerative farming themes. “Hopefully, if covid has taught us one thing in terms of our response, it’s that collaboration within the industry is powerful and maybe we need to go faster and accelerate further on some of these aspirations, as we all get a little more comfortable that pace is important and cadence matters,” she said.