Investors are aware of crucial role in climate change but need help

In a year in which New Zealand has already witnessed climate change devastation, the Centre for Sustainable Finance and charitable organisation Mindful Money will focus on informing investors on how to decarbonise their portfolios.

Thursday, February 2nd 2023, 11:33AM

by Andrea Malcolm

The direction follows a survey last year in which investors cited lack of data, tools and definitions around climate investing and net zero strategies as the biggest barriers to more climate-aligned investing. The survey also found that despite a local flurry of net zero pledges in 2021, momentum on pledges slowed over 2022.

The Climate Change Commission estimates $34 billion of additional investment across key areas of the economy is required by 2035. Mindful Money founder Barry Coates says for New Zealand to meet its net zero by 2050 commitments, billions of dollars of private capital are needed alongside public funding.

Jo Kelly, Centre for Sustainable Finance chief executive, says investors recognise they have a crucial role to play, but certain system shifts are needed to get money moving into climate solutions at the massive scale and speed required.

The Centre will work to advance critical enablers for unlocking financial flows into New Zealand, much of which will come from offshore. These include: establishing common, credible data and definitions of sustainable activities; innovative models for equitably funding and financing climate solutions, including renewable energy and infrastructure, and the wider net zero transition; and direct and collaborative engagement by investors with companies – as part of wider investor stewardship – to ensure that companies’ capital allocation and investment decisions accelerate their path to net zero.

Kelly says it’s worth noting that the survey found a very strong desire across the industry for more collective engagement with New Zealand companies.

Coates says Mindful Money’s 2023 programme will include enhanced disclosure of investment policies and practices on climate change. This includes new data on the portfolio holdings of all KiwiSaver and retail investment providers and their stewardship activities. Mindful Money will also work with the finance sector to scale up investment in climate solutions and engage with consumers to build demand.

The survey’s 50 respondents — New Zealand asset owners, fund managers and wealth managers —collectively manage $331bn in assets; equivalent to an estimated 73% of the total assets under management in New Zealand. A full report of the Net Zero in Aotearoa New Zealand survey can be found here.

Tags: Climate Change