KiwiSaver fund managers pledge to go 'net zero' and others plan to follow
Wednesday, 3 November 2021
KiwiSaver managers are pledging to become net zero carbon fund managers, and have joined a newly-formed coalition to encourage others to follow suit.
Barry Coates, founder of the Mindful Money ethical KiwiSaver research service, said fund managers which did not join the Aotearoa New Zealand Investor Coalition for Net Zero risked losing their appeal with investors.
The coalition launched with a report showing four KiwiSaver providers had pledged to become net zero carbon fund managers: BT/Westpac, Mercer Investments, Pathfinder Asset Management, and Russell Investments.
Coates said he hoped the coalition would “create a sense of FOMO” for KiwiSaver managers who had not yet pledged to go net zero, or join it.
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“It’s a way to encourage fund managers to step up and do this,” Coates said.
Fund managers could become net zero emitters by measuring their carbon emissions, including the emissions of the investments they owned, and then reducing and off-setting them, he said.
The concept of net zero fund management was based on the United Nation’s goal of net zero emissions globally by 2050 or sooner.
The coalition surveyed large fund managers, and large asset owners like government agencies and community trusts, on their climate actions and plans.
The survey, undertaken between in September and October, got responses from 75 per cent of the estimated total New Zealand funds under management, Coates said.
All the banks’ fund management operations responded, as did half of all non-bank retail fund managers.
It revealed five pledges from fund managers to go net zero, including the four KiwiSaver managers and QBE Insurance.
Together they managed about $40 billion.
But since the survey, several crown financial institutions had pledged to net zero emissions by 2050, Coates said.
These were the New Zealand Superannuation Fund, the Accident Compensation Commission, the Government Superannuation Fund and the National Provident Fund, which collectively look after about $110b.
On October 28, the NZ Super Fund announced its intention to go net zero.
Matt Whineray, chief executive of the Guardians of NZ Superannuation, said: “We have already significantly reduced the Fund’s emissions footprint, and no longer have any material, long-term holdings of fossil fuel reserves.”
“Climate change continues to present a long-term risk to investment portfolios, and it is clear that commitments to achieve net zero by 2050 and align with a 1.5 degrees Celsius net zero emissions future are becoming best practice for leading institutional investors,” he said.
Many fund managers who responded to the survey, but had not made the net zero pledge said they intended to reduce the carbon intensity of their funds.
But only half of the fund managers surveyed were measuring the carbon emissions of their funds.
Fewer than one in 20 fund managers said they had no plans to calculate the carbon intensity of their funds, the survey showed.
It was not only among retail investors that fund managers would need to be able to demonstrate climate credentials, Coates said.
“This is a way for New Zealand fund managers to brush up their credentials to play on the world stage, because increasingly you are not going to be able to access global capital unless you do things like this,” he said.
Globally, net zero pledges covered trillions of dollars of funds, he said.
Only a small minority of fund managers surveyed said they did not eventually plan on making a net zero pledge.
The coalition is holding a webinar launch event on Thursday.