Climate change
Climate change is one of the most significant risks and opportunities we face as an intergenerational, global investor.
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Visual: Anne-Maree O'Connor, Head of Responsible Investment Audio: Climate change has been a key focus for us for many years. We’ve always approached climate change from an investment perspective – seeking to understand and mitigate the risks it presents, and to identify the investment opportunities it is creating. On both counts, climate change is one of the most significant intergenerational risks and opportunities that we face as a global investor. Because of this we aim to lower the Fund’s exposure to investments that are most at risk from the transition to a low-carbon world and increase our exposure to investments that will contribute to this transition. We do this through our climate change strategy, which has four core elements:
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Audio: Having successfully applied this strategy over a number of years, we are confident that we can have a positive impact on climate outcomes whilst benefiting the portfolio’s investment returns. We have recently signed on to the Paris Aligned Investment Initiative’s Net Zero Asset Owners Commitment. To play our part in delivering the net zero transition, we will:
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Audio: While there is much more to do, and our focus on climate change will continue for decades, we have already made significant carbon cuts in portfolio emissions, and the Fund no longer has a material exposure to fossil fuel reserves. Compared to the market average, our fund is low carbon, well on track to achieving our goal of being net zero by 2050 – and continues to achieve excellent financial returns. Visual: Logo of NZ Super Fund, Te Kaitiaki Tahua Penihana Kaumātua o Aotearoa |
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Climate change presents material risks and opportunities for investors. These risks and opportunities come from multiple, interacting drivers, including physical and natural resources, regulatory action and technological innovations. The impact of climate change is felt in different ways across different investment sectors, geographies and asset classes. Some of these impacts are already inevitable.
The Guardians has a longstanding commitment to climate change. We signed the 2015 Paris Pledge for Action, which affirmed our commitment to a safe and stable climate in which temperature rise is limited to under 2 degrees celcius, and pledged our support to ensuring that the level of ambition set by the COP21 Paris climate agreement is met or exceeded.
We worked closely with the Treasury and the other Crown Financial Institutions (CFIs) to develop the Crown Responsible Investment Framework that was announced by the Minister of Finance in late 2021. This framework includes commitments to net zero by 2050 or sooner, reporting against common carbon metrics and a focus on climate change engagement.
The framework applies to the New Zealand CFIs: NZ Super Fund, the Accident Compensation Corporation (ACC), and the Government Superannuation Fund; and the National Provident Fund - which are among the largest institutional investors in New Zealand.
As part of this framework, we have signed up to the Net Zero Asset Owners Commitment, an investor pledge to decarbonise our portfolio by 2050 or sooner, increase investment in climate solutions, set interim targets and undertake advocacy and engagement in line with net zero goals.
The commitment is part of The Paris Aligned Investment Initiative, a global best practice framework to help achieve net zero carbon emissions by 2050. The forum supports investors to align their portfolios and activities with the Paris Agreement to limit global warming to 1.5ºC.
The NZ Super Fund has already significantly reduced its emissions footprint, and no longer has any material, long-term equity holdings with fossil fuel reserves. The commitment to decarbonising the portfolio represents a significant step forward. We believe that alignment with a 1.5ºC net zero emissions future is becoming best practice for leading institutional investors.
We report annually on:
- our plan and progress on delivering on our Net Zero Commitment
- progress and development of our Net Zero Strategy, and
- how we assess and manage climate-related risk and opportunities in our portfolio.
The report is based on reporting recommendations from the Taskforce on Climate-related Financial Disclosures (TCFD) and also updates the Fund’s emission reduction targets through to 2025.
Find out more
- Oct 2022 – Climate Change Report
- Sep 2022 – NZ Super Fund shifts $25 billion to low carbon indices in sustainability push
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Jun 2020 – How we invest white paper – climate change