Taking the carbon out of KiwiSaver

Pathfinder's new CareSaver KiwiSaver Scheme is the first actively managed KiwiSaver fund to assess and report the carbon intensity of its portfolio; Here's how it's going.

Tuesday, September 3rd 2019, 9:08AM

by Pathfinder Asset Management

By: Hamesh Sharma

New Zealand punches above its weight and is a global hitter when it comes to clean energy. The S&P Global Clean Energy Index has 11% allocated to New Zealand energy companies – in normal capitalisation-weighted indexes we make up approximately 0.1% of the global market.

Among the top five holdings is Meridian Energy, a company which prides itself on having 100% renewable energy sources. Meridian is one of the largest NZX holdings in our new KiwiSaver scheme, CareSaver, which launched at the start of August. Renewable energy is one of our unique portfolio investment themes, with others including water and data centres with a renewable energy focus.

The CareSaver KiwiSaver Scheme is the first actively managed KiwiSaver fund to assess and report the carbon intensity of our portfolio.

Our ethical KiwiSaver fund examines two dimensions of climate change risk alongside a range of ESG risk factors: carbon intensity of the portfolio through tonnes of carbon emitted for each $1 million of revenue generated, and how well the company is positioned for the transition to a low carbon economy.

The fund focuses on listed fixed income securities (green bonds or ESG bond issues in New Zealand or globally) and in unlisted fixed income securities where the issue or use of funds is consistent with our CareSaver ethical values. The fund also applies exclusions to a range of industries and activities including fossil fuel extraction and a range of other environmental, social and governance issues.

Carbon transition risk is defined as the ability of a company to adapt to an economy with carbon constraints, where consumers and regulators demand change and where the impacts of a warmer world are apparent. As always, engagement through lobby groups (like IGCC) and voting initiatives is critical to improve the behaviour of companies.

Outcomes are reported in line with their contribution to the UN Sustainable Development Goals. Since launching, the Pathfinder CareSaver Scheme has achieved a carbon exposure of ~74% below the benchmark.

At Pathfinder we like to think of ourselves as a “conscious investor". Conscious of getting the best possible returns. Conscious of protecting the planet. Conscious of doing the right thing for people.

Pathfinder is an independent boutique fund manager based in Auckland. We value transparency, social responsibility and aligning interests with our investors. We are also advocates of reducing the complexity of investment products for NZ investors. www.pfam.co.nz

Tags: ESG ethics investment KiwiSaver Pathfinder Asset Management