Responsible Investment News

‘ESG integration’ is only one of many factors that characterise responsible investment, according to investment manager Australian Ethical.

Aside from environmental, social and governance (ESG) integration, a number of other factors must be considered for responsible investment to truly live up to its name, according to Australian Ethical head of ethics Stuart Palmer.

Mr Palmer outlined a number of other "dimensions" to responsible investment, including negative screening, positive screening, the influence investors had on companies and governments, and the impact of the UN's 17 sustainable development goals.

In the first class of semester when I have a new bunch of university students studying business ethics, we always start with a quick task. I ask them which companies they think are “bad”. I then pick one, what we might call the worst of the worst. It’s usually Big Tobacco. Then we see what it would take to work for them.

As I raise the stakes, usually by offering a bigger and bigger salary, hands begin to rise indicating willingness. By $500,000 I can have a third of the class, with others seriously considering bending their own principles. But there are some who just won’t do it, ever. Not even if the salary is in the millions with a car thrown in.

Record growth sees NZ-based responsible global bond fund at nearly $500 million in half-year

In a burst of extraordinary growth, the NZ-domiciled Hunter Global Fixed Interest Fund has almost half a billion dollars under management less than six months after launching.

The oil and gas business has a strong future despite substantial divestment by the New Zealand Super Fund, the lead industry body says.

The $35 billion fund has substantially or completely withdrawn from 300 companies, including some of the world's biggest oil companies such as Exxon Mobil, Shell, BP and Statoil, calling them risky investments.

The move, affecting the fund's $14bn passive equity portfolio, involved about $950 million in shares.

It said it feared its value might be at risk if too much money was tied up in oil and gas.

The fund's chief investment officer, Matt Whineray, said there was a significant risk, which had not been factored into the market. The worry was that climate change jitters would dry up economic returns from oil and gas companies and cause their share prices to shrink over time.

The Petroleum Production and Exploration Association said that was just one opinion, however, and other investors thought oil and gas still had bright prospects.

The New Zealand Superannuation Fund has sold shares in some of the world's biggest companies to reduce exposure to firms emitting greenhouse gases.

The fund is quitting or reducing holdings in 300 firms as part of its "carbon transition". They include Exxon Mobil, Shell, BP and Statoil and local firms New Zealand Oil & Gas and Genesis Energy.

The firms are part of the Super Fund's huge passive investment portfolio - making up two thirds of the fund's total investments - and similar principles will be applied now to active investments.

KiwiSaver provider Kiwi Wealth says it will cut out investments in weapons, tobacco and whaling companies as part of a new responsible investment strategy as well as companies with a poor track record in environmental, social and governance areas.

The move comes a year after Radio NZ and the Herald highlighted controversial investments made by KiwiSaver providers.

There's been a dramatic increase in ethical investments since the public outcry over KiwiSaver investments send fund managers scrambling to dump millions of dollars in weapons and tobacco companies.

Investment in ethical funds that exclude such companies jumped 2500 percent to $42.7 billion by the end of 2016, up from $1.6bn in 2015, a Responsible Investment Association of Australasia (RIAA) report showed.

Fund managers must have a clearly-defined environment, social and governance (ESG) policy to attract institutional investors, according to Mint Asset Management chief, Rebecca Thomas.

Thomas said wholesale investors increasingly see comprehensive ESG policies as a must-have fund management item rather than simply a specialised portfolio ‘ethical’ option.

“Globally, fund manager responsible investment policies are now viewed as a hygiene factor by institutional investors,” she said, to be tested against international ESG benchmarks.

The NZ arms of many Australian-owned fund management groups are steering an independent line on socially responsible investing (SRI), head of the sector’s peak Australasian body says.

Simon O’Connor, Responsible Investment of Australasia (RIAA) chief executive, said a number of Australian-parented NZ fund managers – including BT/Westpac, AMP, ANZ, BNZ and Mercer – have kept local control of environmental, social and governance (ESG) policies.

“Notably, those (NZ) domestic organisations are formulating their own ESG approach rather than using one handed down from their Australian owners,” O’Connor said. “It’s pleasing to see them doing it on a NZ basis.”

Dr Robert Howell's presentation in Kaitaia on responsible investing drew a small audience but delivered a powerful message. Those who cared about future generations had to take more responsibility for who used their money, and the effect investments had on the planet, he told the audience at a Far North REAP (Rural Education Activities Programme) gathering recently. The international expert on responsible investment, and author of the recent-released book Investing in People and the Planet, invited the audience to think about who invested their money on their behalf.