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Major NZ investors welcome Crown Responsible Investment Framework; commit to net zero by 2050.

The NZ Super Fund, ACC, Government Super Fund and National Provident Fund have welcomed the introduction of the Crown Responsible Investment Framework, announced today by Minister of Finance, Grant Robertson.

In response to the Framework the institutions have committed to transitioning their investment portfolios, which collectively total more than NZ$100 billion, to be aligned with a net zero emissions economy by 2050 or sooner.

All four investors have joined the Paris Aligned Investment Initiative’s Net Zero Asset Owners Commitment, under which they will make reductions in portfolio carbon footprint in line with a globally-accepted pathway. The investors will publicly report on the reductions they have made using common metrics.

Importantly, the funds will seek to invest in climate solutions in New Zealand and abroad, consistent with their respective investment strategies and commercial mandates. They will also use their collective influence as asset owners to engage with companies on climate change and emissions reductions, with the objective that all assets in their investment portfolios achieve net zero by 2050 or sooner.

Catherine Drayton, Chair of the Guardians of NZ Superannuation, the manager of the NZ Super Fund, said: “the Crown Responsible Investment Framework sets a strong and common foundation on climate action that is in line with global best practice for institutional investors. Confirming a net zero by 2050 target as a formal objective is a significant shift for the NZ Super Fund. We look forward to working with the companies in our portfolio to achieve this goal while maximising Fund returns over time. We will also continue to pursue commercially attractive opportunities to invest in climate solutions in New Zealand and internationally.”

Hon Steve Maharey, Chair of ACC, said: “The approach set out under the Crown Framework aligns with the Paris Agreement’s ambitions and a 1.5C limit on global temperature increases. For ACC, the Framework reinforces the commitment we have already made to both net zero by 2050 and investing in solutions that reduce New Zealand’s carbon emissions achieved through our Climate Change Impact Fund. The Framework will ensure New Zealanders see a faster reduction in our investment portfolio emissions by 2025.”

“Institutional investors have enormous influence globally and an important role to play as the world transitions to net zero,” Mr Maharey added.  “If the Paris Agreement commitments are to be met, however, companies, governments and policy makers around the world will also need to step up – achieving net zero requires collective, urgent effort.”

Anne Blackburn, Chair of the Government Super Fund, said: “This announcement represents a significant step forward in climate ambition and portfolio emissions reduction for the Government Super Fund. We’re pleased that the Framework, in setting out the Government’s expectation that we make steady progress towards net zero by 2050,  recognises that each fund has a different objective and investment style, and preserves our operational independence.”

Dr Edward Schuck, Chair of the National Provident Fund, said: “NPF supports the Framework and is confident it can align with its ambitions while continuing to act in the financial interest of its schemes’ members. We’re looking forward to collaborating with other investors to see emissions reductions achieved in the real economy.”

Dr Schuck said the announcement would send a strong signal to the broader New Zealand investment industry that best practice was aligning around net zero by 2050 emissions targets.

The four funds will respond to the Minister of Finance, and in the case of ACC, the Minister for ACC, by 31 December 2021, setting out how each will give effect to the Framework over the five years to 2025, and how they expect to transition to net zero between then and 2050.

The four Chairs welcomed the principles-based nature of the Framework, noting it provided each institution with flexibility in applying its own investment approach within the broader commitment to net zero by 2050.

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A media release from the Minister of Finance and Minister of ACC announcing the framework is available here.

The Crown Responsible Investment Framework for Crown Financial Institutions and Enduring Letter of Expectations to Crown Financial Institutions in Relation to Responsible Investment is available here.

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