Good Policy and Policy for Good: Public Investment Funds Are Going Net Zero

Mindful Money welcomes the announcement today by the Government and the Crown Financial Institutions (CFIs) to reflect the goal of a carbon neutral New Zealand by 2050.

Mindful Money founder and CEO, Barry Coates commented: “This decision to align public investment with the government’s net zero commitments sends an important signal to the financial sector. This is not just good climate policy, in an era of severe climate risk this is also sound financial policy.”

The CFIs – New Zealand Superannuation Fund, Accident Compensation Commission, Government Superannuation Fund and the National Provident Fund – manage around $110 billion. Today they have pledged to achieve net zero emissions by 2050.

Barry Coates commented, “These investment portfolios are now going to be managed within a specified framework for the Net Zero Asset Owners Commitment. That means they will need to ensure the pathway to net zero is credible, verified and transparent. Pledge and forget is not an option.”

“Public disclosure will be crucial. Guidance for implementation specifies there will be short and medium-term targets, reviewed each five years, as a basis for monitoring progress. They will be required to publish an action plan for how they will achieve their targets and annual reports on progress.”

“Advice from experts calls for action on net zero to be front-loaded. CFIs need to take practical steps early. They should divest from fossil fuel companies in the light of evidence from the International Energy Agency that that no new fossil fuel development will be required.

“As New Zealand’s only investors at a global scale, the CFIs should add to the commitment by institutional investors managing US$15 trillion to divest from fossil fuel production.”

“Initial steps to establish climate impact funds by the Super Fund and ACC should be scaled up to invest in climate solutions, such as renewable energy, the circular economy and zero emissions transport.”

“Real emissions reductions will be required, not just offsets. Guidance for pledges requires that emissions from investments should be reduced to the lowest level possible, with any offsets required to be transparent, measurable, long term, additional and verified.”

The Super Fund has started down the road to implement targets. In their first progress report they not only announced they exceeded the target, but also that their financial returns were $800 million higher than they would otherwise have been. Public finances benefited from their initial steps on climate change.

Barry Coates concluded: “This is an important step forward for CFIs. Surveys by Mindful Money and the Responsible Investment Association of Australasia show that around three quarters of members of the public want to avoid fossil fuels in their investments. This net zero policy is sound financially, responsive to public wishes, important for re-orienting investment, and a signal to the broader financial community to follow with net zero targets.”

Contact: Barry Coates

Founder and CEO, Mindful Money www.mindfulmoney.nz

E: barry@mindfulmoney.nz M:021 365 165

Mindful Money and Toitū Tahua: the Centre for Sustainable Finance will host an event on Net Zero at 3pm on Thursday 4^thNovember with speakers including Adrian Orr, Governor of RBNZ; Matt Whineray, CEO NZ Super Fund; Laura Clarke, British Ambassador to New Zealand; and leading investment managers that have pledged to net zero. See https://www.sustainablefinance.nz/nz-investor-event