Responsible investment advanced with new Stewardship Code

Investors and the people who manage their money have been given clear guidelines on how to deal with non-financial matters such as climate change and sustainability.

Thursday, September 29th 2022, 6:00AM

by Eric Frykberg

It came with the release of a Stewardship Code by the organisation, Responsible Investment Association of Australasia at a conference in Auckland.

It is intended to create and preserve inter-generational value,as well as to direct capital to where it is most needed for a resilient economy.

It aims to bring transparency and accountability and to influence a company towards sustainable outcomes, and a decarbonised economy.

The code was two years in the making and was organised by the business community, rather than Government.

It will be administered by a secretariat jointly managed by Toitū Tahua: Centre for Sustainable Finance (CSF) and the Responsible Investment Association Australasia (RIAA).

Several companies or organisations have already signed up to it, including Harbour Asset Management, Milford Asset Management, Kiwi Wealth, Devon Funds Trust Management, Westpac New Zealand and the NZ Super Fund.

“New Zealand joins about 20 other countries to have such a code.

The Code’s nine principles guide investors to incorporate ESG matters in their investment design, to vote responsibly at shareholder meetings, and to disclose the nature and outcomes of their stewardship.

Erica Miles is an ESG consultant who chaired the establishment committee for this document and says the code is voluntary, but still carries a lot of weight.

“You will need to meet the requirements of the code or robustly explain why you don’t to your clients or beneficiaries,” Miles said.

“This is a code driven by industry for industry.”

Miles said at the end of the day, investment managers would write a report on how well their investments had performed against the code.

“You submit it to your clients, to your Mum and Dad consumer …… a lot of companies are already producing a responsible investment report and you can put your response to this code into that report.

“So it is not an additional report, it is an expansion of what might already be happening.”

Miles said the whole scheme was aimed at protecting three main things: securing long term value for clients, developing a more sustainable environment and ensuring the efficient allocation of capital.

Tags: responsible investing