The NZ$16.2bn (€8.8bn) New Zealand Superannuation Fund is looking at ‘Positive Investment’ – where social and environmental impact sits alongside investment performance.
“Positive Investments are those that deliver strong environmental or social returns in addition to sufficient investment returns,” the fund said in its new annual report. “We are developing a plan to integrate Positive Investment opportunities into investing.”
It said some of its existing investments such as NZ Timber and the Morrison & Co Public Infrastructure Partnership Fund (social infrastructure) would meet “PI” objectives. The fund has around NZ$2.5bn, or just under 16% of its total portfolio, in infrastructure and timber.
“We will report on our progress on this strategy in future Annual Reports,” the fund added in its new report.
The fund also revealed that it is looking into the carbon footprint of its entire investment portfolio.
It said: “We are conscious that an institutional investor’s environmental footprint extends beyond its direct consumption of resources and production of waste.”It also includes investee companies, especially those where the investor has an influential position. “The Guardians are working on this issue and we will report on our progress in the 2011 Annual Report.”
The fund has an internal team looking into issues such as the potential impact of the proposed New Zealand Emissions Trading Scheme and the climate change mitigation being undertaken by other large funds.
The fund had a total of 345 separate engagements (250 on climate change disclosure) with companies in the past year. There were 19 additions to its “red list” where it has concerns. During the year NZ Super integrated Responsible Investment into its standard due diligence questionnaire for selecting asset managers.
It’s also emerged that the fund is finalising responsible investing property guidelines for its property investments. The fund’s real estate advisor is already required to include ESG factors in its manager selection criteria. The fund has also scrapped its Responsible Investment Committee following a board decision in October 2009 because RI policy is now embedded across the fund.