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NZ Super Fund Turns Its ‘$14 Billion Global Passive Equity Portfolio’ To Low Carbon



10/16/2017

“The low-carbon portfolio is based on a bespoke carbon measurement methodology for listed equities developed by the Guardians in concert with MSCI ESG Research”, reports, Vikas Vij.


Dailycsr.com – 14 October 2017 – The challenges thrown at our face by climate change has increasingly captured the attention of leading investors in the world as they consider the “long-term impact” of climate on the economy and business. In fact, there is already a shift of capital among the “major investors” towards supporting “a low carbon global economy”. Therefore, in order to achieve “larger goals of climate risk mitigation” carbon management has to be integrated into the “investment decisions”.
 
As a resulting, increasing the “resilience to climate change investment risks”, the NZ Super Fund of “NZ$35 billion” has turned its “NZ$14 billion global passive equity portfolio”, which represents 40% of the entire fund, into “low carbon”. With the said announcement made by the “Guardians of New Zealand Superannuation”, a significant step has been taken to reduce “Fund’s overall carbon footprint”.
 
Likewise, the intensity of carbon emitted by Fund has dropped down 19.6% as on the month of “June 2017”, while its “exposure to carbon reserves” also came down by 21.5%. While, as per the C.E.O, Adrian Orr, the strategy of Guardian has adjusted for matching the “Fund’s investment approach, horizon and needs”.
 
In the words of Vikas Vij:
“Chief Investment Officer Matt Whineray said that for investors with very long horizons, such as the Fund, reducing exposure to carbon emissions and reserves is a low-cost insurance policy. The low-carbon portfolio is based on a bespoke carbon measurement methodology for listed equities developed by the Guardians in concert with MSCI ESG Research. MSCI ESG Research also provided independent carbon data and company ratings”.
 
Moreover, some companies with its “high exposure to carbon emissions and reserves” will be held at Fund’s “passive portfolio”, wherein the “MSCI ESG Research” will rate the companies in comparison with “their peers” with “evidence of strong management engagement with the challenge of climate change”.
 
In this manner, according to Whineray, the Fund will be able to note the “upside” of the companies placed in a better position of succeeding in the “rapidly transforming energy sector”. Furthermore, Vij added:
“The transition to a low-carbon passive equity portfolio has taken the Fund a long way towards the Guardians’ Board-approved 2020 targets for reducing the Fund’s exposure to carbon”.
 
The above mentioned targets is to cut down “carbon emission intensity of the Fund by at least 20 percent”, along with reducing “the carbon reserves exposure of the Fund” minimum by 40% as oppose to the situation without any changes made.
 
 
References:
ethicalperformance.com





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