NZ Super Fund - Sustainable finance

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The Guardians has a developed a robust track record as a responsible investor over many years. Our approach has supported us in managing environmental, social and governance (ESG) risk, whilst delivering strong financial returns for New Zealanders.

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Stephen Gilmore, Chief Investment Officer

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The New Zealand Super Fund is committed to sustainable investing, and that commitment comes from our legislative mandate.

Our mandate asks us to be prudent, commercial. It asks us to pursue best practice portfolio management, to maximise returns without undue risk and to avoid prejudice to the reputation of the country.

Our legislation and the three legs for that legislation have really driven the shift in thinking about sustainability and that of course goes hand-in-hand with the growing expectations of New Zealanders.

Best practice is moving in that direction.

We also think that risks are very closely related to sustainability considerations and of course it's obvious that the reputational elements.

The New Zealand Super Fund's approach to responsible investment has evolved through time.

We now no longer really refer to responsible investment. We emphasise sustainable investment, and that's an important difference.

So historically, we were thinking about the external environment and how it impacted our portfolio.

With the change in thinking to emphasise sustainability considerations, we also think very much about the implications or the impact that our portfolio has on the external environment, and we think that's really important, not just from a reputational perspective.

So putting all those things together.

We came up with a very simple purpose statement: Sustainable investment delivering strong returns for all New Zealanders.

But that of course fits very much with the expectations of New Zealanders.

And for us, it's actually really important because in the end we've got people who will benefit from the Fund and part of that benefit is the external environment that they operate with, because our portfolio and our investing can shape the world.

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Logo of NZ Super Fund, Te Kaitiaki Tahua Penihana Kaumātua o Aotearoa

With changing stakeholder expectations, regulators and advances in global best practice, investment approaches are evolving rapidly.

In 2020 we undertook a comprehensive review of our responsible investment approach, with the aim of understanding what might need to change to ensure we remain at the forefront of good practice and continue to meet all pillars of our mandate.

This review indicated a substantial shift towards improved incorporation of sustainability across the finance sector. In order to meet our mandate and best position the NZ Super Fund for 2025 and beyond, we embarked on a multi-year plan to update our approach from a responsible investment to sustainable finance focus.

Whilst a responsible investment approach involves managing ESG risks in our investments, sustainable finance means taking into account ESG risks and the implications of our investments for the environment and society.

Against this backdrop of evolving global good practice the Guardians' Board approved a new purpose: 'Sustainable investment delivering strong returns for all New Zealanders', and a new Sustainable Finance Strategy, designed to see us through the next 10 years. The Strategy is built around 3 core concepts developed by Toitū Tahua, the New Zealand Centre for Sustainable Finance:

Changing mindsets - through our governance, leadership and communication
Transforming finance - by improving ESG performance over the long term
Financing transformation - investing for the impact that delivers positive sustainability outcomes

The Guardians has had a multifaceted climate change investment strategy in place since 2016. Designed to address climate change investment risks and opportunities over the long term, it remains a key element of our sustainable finance approach.

We collaborate and exchange sustainable investment resources with three other New Zealand Crown Financial Institutions: the Accident Compensation Corporation (ACC) the Government Superannuation Fund Authority and the National Provident Fund.

In addition to applying sustainable finance principles when making investment decisions, we aim to run the Guardians as an organisation in a way that demonstrates our commitment to sustainability and transparency.

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