New Zealand Superannuation Fund

Product Name

New Zealand Superannuation Fund

Issuer

NZ Super Fund

Category

Sovereign Wealth Fund

Type

Superfund whole of fund

Target

Certified Since

2018

Certification Symbol

Responsible Investment

Asset Classes

Multi-asset

Markets

New Zealand

Investment Approaches

ESG Integration, Negative Screening, Climate change, Corporate engagement & Positive investment.

It Includes

  • Investment2 Social impact investments
  • Riaa icons 10 Renewable energy
  • Riaa icons 15 Social & community infrastructure
  • Riaa icons 30 Sustainable land management & agriculture
  • Default selected inclusion No specific inclusions

It Excludes

  • Riaa icons 35 Tobacco
  • Riaa icons 36 Armaments
  • Default selected exclusion No specific exclusions

Overview

The New Zealand Superannuation Fund was established to save now in order to help pay for the future cost of providing universal superannuation. In this way the Fund helps smooth the cost of superannuation between today’s taxpayers and future generations. The Guardians of New Zealand Superannuation, the Crown entity that manages the Fund, must manage and administer it in a manner consistent with best practice portfolio management; maximising return without undue risk to the Fund as a whole; and avoiding prejudice to New Zealand’s reputation as a responsible member of the world community.


Description


Our approach to Responsible Investment (RI) is governed by our Statement of Investment Policies, Standards and Procedures (SIPSP) which can be found on our public website here. The SIPSP includes a specific section on Responsible Investment, which states our policy, standards and procedures as they relate to responsible investment. It defines RI activities and embeds the RI Framework as the process for implementation. The RI Framework is also available on our website.

By law, the Fund is required to develop ethical and voting policies and procedures which are incorporated into its Responsible Investment (RI) Framework. The Fund has an investment belief that responsible investors must have concern to environmental, social and governance (ESG) factors because they are material to long term returns. The RI Framework includes ESG integration into investment analysis and due diligence, manager selection and monitoring, engagement, voting, exclusions and implementation of our Climate Change Investment Strategy. It also includes a commitment to positive investment which we define as investments which provide a financial return as well as a social or environmental benefit.

Companies that are directly involved in the following activities are excluded from the Fund:
• the manufacture of cluster munitions (zero tolerance);
• the manufacture or testing of nuclear explosive devices (NEDs) and nuclear base operators: (zero tolerance);
• the manufacture of anti-personnel mines (zero tolerance);
• the manufacture of tobacco (zero tolerance);
• the processing of whale meat (zero tolerance);
• companies involved in the recreational cannabis industry (main business caveat).

The Fund also excludes investment in the government bonds of any nation state where there is widespread condemnation or sanctions by the international community and New Zealand has imposed meaningful diplomatic, economic or military sanctions aimed at the government.

The Fund may also exclude companies for poor ESG practices, in particular, those that breach ESG standards like the UN Global Compact. Where companies are found to breach RI standards, we focus our engagement efforts by taking into account:
• Significance of the breach e.g. if it’s a priority issue
• Significance of the Fund’s holding in the company
• Ability to collaborate with other investors, engage directly with the company or through external managers or advisors
• Potential effectiveness of engagement (given context and responsiveness) 
• Resources required

Where companies have made sufficient progress, engagement ends and the company is monitored for further breaches. Where companies have not responded to engagement or engagement is unlikely to be effective, the Guardians may, in certain cases, decide to exclude companies. Exclusions for poor ESG practices are only applied in rare situations. If we exclude a company from the Fund then we make that decision public and give the reasons why.

Our Board has overall responsibility for the SIPSP and RI Framework.

Our investment beliefs can be viewed on our website here: https://www.nzsuperfund.co.nz/how-we-invest/beliefs.

Our approach to investing can also be viewed on our website here: https://www.nzsuperfund.co.nz/how-we-invest.