Sustainable finance
We should be used to hearing slight but important differences in the way New Zealand does things, but I wasn’t expecting to see the Managers of NZ’s two largest funds be called ‘Guardians’ However, isn’t what everyone in the Financial Industry should be called? And act like? Anyway….
The Guardians of New Zealand Superannuation invests government contributions into two funds: the NZ Super Fund and the Elevate NZ Venture Fund now worth approximately $58 billion, and having to date posted average annual returns of 10.6 percent since inception, are really clear about their mandate and purpose despite changing stakeholder expectations, regulators and advances in global best practice, investment approaches are evolving rapidly.
The Guardians has a developed a robust track record as a responsible investor over many years. Our approach has supported us in managing environmental, social and governance (ESG) risk, whilst delivering strong financial returns for New Zealanders
In 2020 they undertook a comprehensive review of their responsible investment approach, with the aim of understanding what might need to change to ensure they remained at the forefront of good practice and continue to meet all pillars of their mandate.
This review indicated a substantial shift towards improved incorporation of sustainability across the finance sector. In order to meet their mandate and best position the NZ Super Fund for 2025 and beyond, they embarked on a multi-year plan to update their approach from a responsible investment to sustainable finance focus.
Whilst a responsible investment approach involves managing ESG risks in their investments, they recognised that sustainable finance means taking into account ESG risks and the implications of their investments for the environment and society.
Against this backdrop of evolving global good practice the Guardians' Board approved a new purpose: 'Sustainable investment delivering strong returns for all New Zealanders', and a new Sustainable Finance Strategy, designed to see us through the next 10 years. The Strategy is built around 3 core concepts developed by Toitū Tahua, the New Zealand Centre for Sustainable Finance:
Changing mindsets - through our governance, leadership and communication
Transforming finance - by improving ESG performance over the long term
Financing transformation - investing for the impact that delivers positive sustainability outcomes
The Guardians has had a multifaceted climate change investment strategy in place since 2016. Designed to address climate change investment risks and opportunities over the long term, it remains a key element of our sustainable finance approach.
They collaborate and exchange sustainable investment resources with three other New Zealand Crown Financial Institutions: the Accident Compensation Corporation (ACC) the Government Superannuation Fund Authority and the National Provident Fund.
In addition to applying sustainable finance principles when making investment decisions, they aim to run the Guardians as an organisation in a way that demonstrates their commitment to sustainability and transparency.
