Super Fund goes greener
The NZ Super Fund has shifted about 40% of its overall investment portfolio to climate-sympathetic investments.
Monday, September 19th 2022, 4:03PM
by Eric Frykberg
It says these align with the 2015 Paris Agreement on climate change.
This sought to limit warming to a maximum of 2.5 degrees above pre industrial levels and to aim for a 1.5 degree increase.
The changes apply to the Super Fund's index-tracking Reference Portfolio benchmark and amounts to $25 billion of passive investments in global equities.
In addition to reducing the Fund’s exposure to carbon emissions, the changes will reduce the number of publicly listed companies that the Fund owns directly.
“A smaller, more concentrated portfolio will be cheaper to run, and more manageable for us when looking to identify and engage on responsible investment issues,” said its chief investment officer, Stephen Gilmore.
Gilmore insisted the changes would not be detrimental to investment returns. They were decided on after months of technical analysis weighing up a range of risk, return, cost and implementation considerations.
“We’re confident Fund performance will not be adversely affected and see both cost and efficiency benefits,” he said.
The Fund began reducing its exposure to carbon emissions and reserves in 2017, and no longer holds any material, long-term exposure to fossil fuel reserves.
Gilmore said in the interim, returns had been strong. He added the Fund would be reporting on progress towards net zero emissions annually under an agreement with the Government.
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