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Tēnā koe i runga i ngā āhuatanga o te wā,
 

As we turn the page on another challenging year, I want to acknowledge the support and contribution of our partners as we have navigated through the significant global upheaval brought on by COVID-19.
 

For our team and our community based in Tāmaki Makaurau, as in many parts of the world, the pandemic has meant the merging of our work and home lives as we continued to operate during what has become our longest lockdown period yet.

While we needed the lockdown in order to protect New Zealanders, there is no doubt it has been a challenging period for our team, and in this context I’d like to thank our partners and stakeholders for their continued support and contribution to the Guardians over this period.

Our people

In 2021 we farewelled two Board members, our former Chair, Catherine Savage, and Simon Botherway, and we welcomed two new Board members, Kirsty Mactaggart and David McClatchy. Catherine Drayton took over the role of Chair from 1 April. 

Despite disruptions, we have welcomed 30 new team members to the Guardians so far this financial year. We are continuing in our strategy to recruit for growth and are currently recruiting for roles across the team. For more information about available roles, please visit our Careers website.

We have also made some good progress on several organisational priorities, including:

  • Achieving the DVFREE Tick certification by SHINE, demonstrating the Guardians’ commitment to a family violence-free workplace.
  • Completing an independent review of our Diversity, Equity and Inclusion (DE&I) practices. We will use these findings to help shape a longer term DE&I strategy.
  • Implementing the first phase of a cloud-based Human Resources Information System.

Investment updates

This year we committed to achieve net zero carbon emissions by 2050 or sooner and joined the Net Zero Asset Owners Commitment. A recent global study examining pre- and post- commitment equity and fixed income trends found that climate pledges do not cost companies money in the short run. In fact, over the medium to long term, companies with net-zero pledges have significantly outperformed their peers.

We have been implementing our Climate Change Investment Strategy since 2017, and the reduction in our portfolio emissions intensity and reserves has had a significant positive impact on investment returns in that time.

External Investments and Partnerships
 
To help meet our climate change ambitions, this quarter we’ve committed more than one-third of a billion dollars to two managers who have a focus on climate change technology and energy system change:

Fifth Wall Climate Change Technology Fund: decarbonising the Real Estate industry
 

In November we committed US$100 million to the Fifth Wall Climate Technology Fund. This is an early-stage fund, managed by leading real estate technology venture capital firm Fifth Wall, that seeks to invest in new technologies to decarbonise the global real estate industry.
 

Copenhagen Infrastructure Partners Energy Transition Fund

We committed up to €125 million (NZD208 million) into Copenhagen Infrastructure Partners’ (CIP) Energy Transition Fund. The Fund is focused on developing industrial-scale sustainable energy infrastructure, known broadly as Power-to-X (power-to-hydrogen, power-to-ammonia and power-to-methanol). Investments will be focused in OECD markets in Western Europe, North America and Asia-Pacific.

Direct investments

Domestically NZ Super Fund has almost $9 billion invested in New Zealand making us one of the largest investors in the local stock market, as well as a major private market investor with stakes in Kaingaroa Timberlands, Fidelity Life, NZ Gourmet, Kiwibank, Hobsonville, Datacom, Asia Pacific Healthcare Group, a portfolio of hotels, urban land and rural farmland. Recent additions include:

Kaha Ake (Stronger Together) – tackling the housing crisis

Partnering with Tauranga-based Classic Group, we recently established a new land development company, Kaha Ake. Through this commercial partnership we will use our scale and capital to increase housing supply in New Zealand. Classic Group currently has a land pipeline of approximately 3,000 sections across New Zealand. We look forward to working with them.

Expansion of Tourism Portfolio

Auckland’s QT hotel has been acquired by NZ Hotel Holdings, a partnership between NZ Super Fund, The Russell Property Group and Lockwood Property Group. The acquisition completes a busy year for the partnership, which aquired the Sofitel Queenstown, and has Rydges Wellington under contract. These hotels join a portfolio that includes Four Points by Sheraton and Adina Apartment Hotel in Auckland, Breakfree Hotel in Christchurch, and the Holiday Inn Rotorua.

Other highlights include:

  • The Responsible Asset Allocator Initiative named us a world leader in a ranking of responsible investing practices adopted by the world’s top sovereign wealth funds and government pension funds. After assessing 251 asset allocators from 63 countries with assets of $26 trillion to identify institutions attaining the global standard in responsible investing, it appointed NZ Super Fund to its prestigious ‘Leaders List’ of the 30 highest scoring asset allocators.
     
  • We concluded the Social Media Investor Initiative, which came together following the Christchurch terrorist attack to encourage Facebook, Alphabet and Twitter to strengthen controls to prevent the livestreaming and dissemination of objectionable content. The Initiative found progress has been made by the companies, but a continuous focus on the evolution of preventative safeguards is needed – more details here.
     
  • Alongside  ACC, Government Super Fund and National Provident Fund, we welcomed the introduction of the Crown Responsible Investment Framework. The Framework underpins our net zero 2050 commitment, encourages investment in in climate solutions in New Zealand and abroad, and encourages us to use our collective influence as asset owners to engage with companies on climate change and emissions reductions.
     
  • And finally - the NZ Super Fund celebrated its 20th birthday!

Despite all the challenges of 2021, the Guardians remains in good heart and the NZ Super Fund is continuing to perform very well, returning 27.19% (unaudited, after costs, before NZ tax) over the 12 months to 31 October 2021.

The investment environment is characterised by uncertainty driven by the pandemic, the global response and the ongoing recovery from the economic shock experienced in 2020, with the spectre of both inflation and interest rate rises looming in 2022, which will make it difficult to repeat the unusually strong investment performance of the past 18 months. We look forward to updating you again in early 2022.

Thank you again for your support during the year. We wish you and your loved ones a relaxing and safe holiday season. 

Hei konā mai,

Matt Whineray
Chief Executive Officer
Guardians of New Zealand Superannuation

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