We engage with companies to use our influence as a shareholder or investor to encourage them to improve how they manage and report on their environmental, social or governance (ESG) risks.
We believe that by improving ESG performance a company can improve its long-term financial performance and deliver positive sustainability outcomes – in turn creating value for long-term investors. Engaging with companies helps to encourage them to make long-term improvements.
We use a portfolio monitoring service to identify companies that have breached – or might breach – recognised ESG standards. We then assess this information, along with data from other sources, to determine whether we should include the company in our engagement programme. We join collaborative engagement initiatives or we may engage directly with companies.
One of the key factors we consider when prioritising our engagement efforts is whether the breach is of international standards or represents a high/significant ESG risk, i.e. if it is: long-term or short-term; historic or ongoing; isolated or endemic; a potential reputation risk internationally or nationally.
Other factors we take into account include:
- Our ability to participate in collaborative engagements through international initiatives;
- Our ability to engage directly with the company;
- The potential effectiveness of the engagement; and
- The resources required.
As a result of engagement programmes by the Guardians and other investors around the world, companies are increasingly aware that investors are analysing their ESG performance and expecting them to address ESG issues responsibly.
The Guardians, along with fellow New Zealand Crown Financial Institutions (CFIs) the Accident Compensation Corporation (ACC) and the Government Superannuation Fund Authority, has appointed Columbia Threadneedle Investments (CTI) to provide responsible engagement services for our global equities holdings. CTI engages on behalf of clients with more than US$1 trillion in assets under management globally.
The additional resource provided by the responsible engagement service increases the reach and effectiveness of our global engagement. As well as engaging with companies on individual issues, it carries out thematic and industry-wide engagements on topics such as human rights, work rights, climate change and environmental harm.
Engagement on climate change
We engage with companies on climate change both in New Zealand and globally. Much of our global engagement is carried out on our behalf by the Columbia Threadneedle responsible engagement overlay service. We also take part in global collaborations.
In New Zealand we are part of a collaborative engagement with the CFIs, engaging with large listed companies.
Details are included in the Climate Change Engagement page.
Social media collaborative engagement
In response to the 15 March 2019 Christchurch mosque terror attacks that killed 51 people and injured 40, the Guardians and other Crown-owned investors, began a collaborative effort to engage the world's three largest social media companies (Facebook, Alphabet and Twitter). The objective was to strengthen controls to prevent the livestreaming and dissemination of objectionable content such as the attacks. The engagement, which was supported by 105 local and global investors representing approximately NZD $13.5 trillion, concluded in 2021.
The social media collaborative was awarded the Stewardship Initiative of the Year at the United Nations-supported Principles for Responsible Investment (PRI) 2021 Awards.