NZ Super updates sustainable investment policy

The Guardians of NZ Super has published an updated set of Sustainable Investment policy documents, using a new standalone framework to describe the policies, standards and procedures that underpin its sustainable investment activities.

The update was flagged by the manager of the $94 billion fund following a verdict finding two of its policy documents were not formulated in accordance with the relevant statutory requirements.

The updated Statement of Investment Policies, Standards and Procedures (SIPSP), which establishes the framework for the governance and investment of the fund, including the integration of ESG considerations into its investment decisions and the ongoing monitoring of portfolio under ESG issues.

The new policy also processes for engagement with investee companies and, in certain circumstances, excluding securities from the portfolio to reduce exposure to investments with significant ESG risk, Guardians said.

Guardians said it also applies those procedures against the backdrop of "its statutory independence from the Crown, its status as an autonomous Crown entity, and its commercial mandate to invest the fund on a prudent, commercial basis."

That context also significantly mitigates risk to New Zealand's reputation as a responsible member of the world community arising from our investment activities, it said.

Further, the Sustainable Investment Policy sets the UN-backed principles for responsible investment "as our performance benchmark for sustainable investment."

These include policy statements covering the integration of ESG considerations into investment decision-making; active ownership, including prioritisation of activities, portfolio monitoring, engagement, exclusions, participation in class actions, and the retention, exercise and delegation of voting rights acquired through investments (including in the context of securities lending); climate change investment activities and setting reduction targets; and sustainable investment communication and reporting.

The Guardians will review the companies named in the Nazzal proceedings using the updated policy framework and will provide a further update once that process is complete but will require time for "proper consideration".

Commenting, NZ Super general manager corporate affairs Cristina Billett said the new standalone policy clarifies the components underpinning the Guardians' sustainable investment activities.

"Our approach continues to place significant emphasis on integration of sustainable investment considerations into investment analysis and decision-making, monitoring, engagement and exclusions," Billett said.

"Human rights considerations remain integral to the Guardians' Sustainable Investment Policy. Our policy documents now explicitly record our long-standing position that human rights is a key ESG issue for us."