We take a strong, purposeful approach to integrating environmental, social and governance (ESG) considerations into investment decisions because, as stated in our Investment Beliefs, we consider them material to long-term returns. We see ESG considerations both as a source of investment opportunity and a means of managing risk.
“Our view is that ESG integration is both good for returns and for the advancement of our objective to be active owners and responsible investors. As such, we look to integrate responsible investment considerations throughout our investment process. We also acknowledge the wider beneficial impact on corporate practice, regulatory standards and the healthy functioning of capital markets from active, constructive engagement.”
CEO OF NZ SUPER FUND
Our approach to Responsible Investment (RI) is governed by our Statement of Investment Policies, Standards and Procedures (SIPSP) which can be found on our public website.
The SIPSP includes a specific section on RI, which states our policy, standards and procedures as they relate to responsible investment. It defines RI activities and embeds our RI Framework as the process for implementation. The RI Framework sets out in greater detail how we seek to enhance shareholder value and protect New Zealand’s international reputation. It guides all of our responsible investment decision making. Our Board has overall responsibility for the SIPSP and RI Framework. Both are reviewed annually.
More specifically, the RI Framework guides our activities relating to the integration of ESG considerations into investment analysis and due diligence and into manager selection and monitoring. It guides us on how we prioritise engagement activities, execute voting and exclusion decisions and implement our Climate Change Investment Strategy.
The RI Framework also includes a commitment to positive investment, which we define as investments that provide a financial return as well as a social or environmental benefit. The full Framework is available on our website.
In September 2018 the Guardians gained Responsible Investment certification for the Fund. The Responsible Investment Certification Programme is the first of its kind in the world and is owned and managed by the Responsible Investment Association Australasia (RIAA).
The UNPRI supports signatories’ efforts in their implementation of the Principles for Responsible Investment through an annual reporting and assessment process based on standardised indicators. Reporting is mandatory for all asset owners. Consistent with a Board approved strategic objective for the 2017/18 year, we were very pleased to receive an A+ rating from the UNPRI for overall RI governance and strategy and an A rating in the other categories in which we reported.
For the second year in a row, we gained internal assurance pre-submission of our annual response.
This year, our voting score improved from a B to an A, which reflects our move to bring voting in-house. However, our listed equity incorporation module decreased from A+ to A, as did the listed equity part of the ‘Indirect’ module. This was due to a greater requirement to report on voting outcomes. This is an area we have identified for improvement going forward, with the internalisation of global voting assisting this initiative
|Strategy and Governance||A+||A+||A+||A||29/30|
|– Listed Equity||A||A+||A+||B||36/39|
|– Fixed Income (Sovereigns/Supranationals and Agencies)||A||A||A||C||29/36|
|– Fixed Income (Corporate Financial)||A||nr||nr||C||29/36|
|– Fixed Income (Corporate Non-Financial)||A||A||A||C||29/36|
|– Fixed Income – Securitised||A||A||A||E||29/36|
|– Private Equity||nr||nr||A||–||–|
|Direct and Active Ownership:|
|– Listed Equity – Integration||A||A+||A+||A||Screening: 13/15
|– Listed Equity – Active Ownership||A||A||A||B||27/27|
nr= not reported