New Zealand’s Sovereign Funds to Evaluate Climate Disclosures of Major Companies in the Country
New Zealand’s sovereign funds, the New Zealand Superannuation Fund and the Accident Compensation Corporation (ACC), have announced that they will evaluate the climate disclosures of major companies in the country. The move is part of a broader effort to address climate change and promote sustainable investment practices.
The evaluation will focus on the companies’ reporting on climate risks and opportunities, as well as their strategies for reducing greenhouse gas emissions. The funds will also consider the companies’ alignment with the goals of the Paris Agreement, which aims to limit global warming to well below 2 degrees Celsius above pre-industrial levels.
The evaluation will be conducted by the funds’ investment managers, who will engage with the companies and assess their disclosures and strategies. The results of the evaluation will be used to inform the funds’ investment decisions and engagement with the companies.
The move by the sovereign funds is significant, as they are major investors in New Zealand’s economy. The New Zealand Superannuation Fund has assets of over NZD 50 billion (USD 34 billion), while ACC has assets of over NZD 50 billion (USD 34 billion). The funds have a long-term investment horizon and are committed to sustainable investment practices.
The evaluation of climate disclosures is also in line with global trends in sustainable investing. Investors are increasingly demanding greater transparency and accountability from companies on their environmental, social, and governance (ESG) performance. This is driven by concerns about the impact of climate change on the economy and society, as well as the potential financial risks and opportunities associated with the transition to a low-carbon economy.
New Zealand has also been taking steps to address climate change and promote sustainable investment practices. In 2019, the government passed the Climate Change Response (Zero Carbon) Amendment Act, which sets a target of net-zero emissions by 2050. The government has also established the Green Investment Fund, which aims to mobilize private sector investment in low-carbon projects.
The evaluation of climate disclosures by the sovereign funds is a positive step towards promoting sustainable investment practices in New Zealand. It sends a strong signal to companies that they need to take climate change seriously and be transparent about their risks and opportunities. It also demonstrates the importance of ESG considerations in investment decision-making and the role that investors can play in driving positive change.
In conclusion, the evaluation of climate disclosures by New Zealand’s sovereign funds is a welcome development in the country’s efforts to address climate change and promote sustainable investment practices. It highlights the growing importance of ESG considerations in investment decision-making and the role that investors can play in driving positive change. It is hoped that other investors will follow suit and demand greater transparency and accountability from companies on their ESG performance.
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