ESG Update as at 3 March 2020
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Australian and New Zealand ESG Updates
NZ bars fossil fuel producers from default superannuation options
The New Zealand government has banned fossil fuel and illegal weapons producers from its voluntary superannuation system’s default options. There are almost 700,000 New Zealanders in the KiwiSuper default account, with the changes to take effect from 1 June 2021.
In 2017 the $47 billion NZ Superannuation Fund removed over $3 billion in stocks that exceeded thresholds for emissions intensity or fossil fuel reserves. Performance was not affected by the changes.
UniSuper and HESTA member protests
University academics are protesting UniSuper’s fossil fuel expansion, with advocacy group Market Forces. The protest is organised to take place at a Universities Australia event sponsored by UniSuper in Canberra. Market Forces is pressuring the superannuation fund to align its investments with the Paris climate agreement, with the fund being the default superannuation fund for academics, scientists, researchers and university staff.
HESTA, the fund for medical professionals, held a protest against the fund to urge the fund to divest from fossil fuels.
Rupal J. Bhansali: why Phillip Morris makes the ESG cut
Ariel Investments chief investment officer Rupal J. Bhansali has shared her views on ESG investing at a Women in Super event, explaining why big tobacco company Phillip Morris makes the cut. Phillip Morris has developed a vaping product that reduces the risks of burning tobacco for smokers. The United States Food and Drug Authority (FDA) approved the product for sale in the US. Bhansali says if you engage with the company and encourage them to spend money on a new, better pathway, problems can start being solved. Phillip Morris was but one example. Bhansali has published a book on her approach, Non-consensus investing: Being right when everyone else is wrong.
Report says zero progress for women in funds management
When it comes to gender diversity in the managed funds industry over 20 years, a Morningstar report says there has been literally zero progress. In 2000, 14 per cent of fund managers were women. In 2019, 14 per cent of fund managers are women.
Some areas are ‘bright spots’, particularly in smaller markets such as Hong Kong, Singapore and Spain, where over 20 per cent of fund managers are women. Some larger financial centres are missing the boat, sitting below the global average: the United Kingdom is sitting at 13 per cent, while the United States is sitting at just 11 per cent.
The Morningstar headline was “More Funds Run by Daves Than Women”, because there were 108 UK funds run by managers called David or Dave, with only 105 funds run by women.
APRA developing climate change financial risk prudential guide
The Australian Prudential Regulation Authority (APRA) is publishing a climate change financial risk prudential practice guide to help companies to comply with their existing requirements. The guide on climate change will cover financial risks and recommendations from the Financial Stability Board’s Task Force on Climate-related Financial Disclosures, with elements covered being governance, strategy, risk management and disclosure. Climate change risk is firmly on the agenda, says APRA, to increase industry resilience and reveal vulnerabilities.
