Responsible Investor

catalyst for influencing corporate change. The UN PRI principles focus on active ownership, including collaborative engagement and integration of environmental, social and governance factors into investment management. They also aim to improve corporate disclosure.

So how do we implement the UN PRI principles?

In practice, we are beginning to integrate responsible investment considerations into investment mandates, investment manager selection, and increasingly, we are expecting our investment managers to integrate consideration of these extra-financial factors into their own processes. Other share ownership activities include voting, engagement, and divestment. We exercise our voting rights across the portfolio to promote good corporate governance practice, and we have also joined collaborative initiatives such as the Carbon Disclosure Project to improve reporting by companies to their investors.
We are assisted in our portfolio monitoring and proxy voting activities by external agencies that highlight potential breaches of our responsible investment standards. The UN Global Compact, another UN standard, provides a benchmark against which we can monitor corporate behaviour. The Global Compact is the world’s largest global corporate-citizenship initiative, and outlines ten principles in the areas of human rights, labour, the environment, and anti-corruption.

What do we do if companies held in the New Zealand Superannuation Fund are found to breach our responsible investment standards?

We have a number of options for managing these situations including engaging with companies to improve practices, and in certain circumstances, divesting or excluding a holding, although this is not a decision we take lightly. As a shareholder, the Guardians preferred option is to engage with a company, in conjunction with other investors under the auspices of the UN PRI.
During 2007, we collaborated with other UN PRI signatories through the Clearinghouse on a number of issues. These included engaging with companies to address human rights and labour practices in the global steel industry, and to improve environmental, supply chain and employee practices in the retail sector. Another collaborative initiative is encouraging UN Global Compact compliance. We are also actively involved on the UN PRI Board and working groups.

How applicable is such a framework to the Asia context?

Both the UN PRI and UN Global Compact are standards that are suitable for Asian institutional investors and companies. The UN PRI now has 79 signatories in the Asia-Pacific region, dominated by Australia, Japan and South Korea. The UN Global Compact has over 400 Asian companies as signatories with China, India, Japan and Pakistan amongst the top 20 countries by business participation.
Asia is of prime importance to global investors’ responsible investment policies. Increasing exposure to the Asian capital markets is highlighting a lack of information on environmental, social, and governance issues, and how these are managed. Lower regulatory

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