Harbour Asset Management challenged portfolio companies on more than 100 environmental, social and governance (ESG) issues last year, according the group’s inaugural sustainability report published last week.
In the first of a planned annual series, the Harbour 2021 review says “we conducted 40 ESG-related engagements on ad hoc issues in addition to the 61 engagements we conduct annually as part of our Corporate Behaviour Survey process”.
“The ad hoc engagements were primarily focused on NZ companies, representing 28 out of the total 40 conducted,” the report says. “This reflects the fact that our portfolios are either constrained to the NZ market or have a proportionately larger weighting to NZ companies compared to Australia.”
As well as detailing its corporate engagement record over the year, the Harbour paper outlines how the manager approaches ESG across investment strategies and in-house.
Andrew Bascand, Harbour chief, says in the report that: “Our belief is that capital can be purposeful through integration and engagement. Being a meaningful shareholder means holding company management to account, and gives us a unique position to influence and encourage better behaviour.”
Fund managers in NZ and elsewhere are coming under greater scrutiny over ESG claims with regulators – including those here and in Australia – pushing back against so-called ‘greenwashing’ of investments.
Last month, for example, the Australian Securities and Investments Commission (ASIC) issued a greenwashing guide, cautioning superannuation and managed funds disclosure and promotional material to:
- use clear labels;
- define the sustainability terminology they use; and,
- clearly explain how sustainability considerations are factored into their investment strategy.
ASIC commissioner, Sean Hughes, said in a statement: “In weighing up investment options that suit their values, we encourage consumers to look out for vague or ambiguous language or exaggerated marketing claims that lack a reasonable basis to support them.
“This is clearly an evolving area, which is attracting attention from investors, funds and policy-makers alike.”
The Financial Markets Authority (FMA) is also expected to release an updated guide this month on ESG funds – or ‘integrated financial products’ as per the regulator’s favoured term.
With managers facing increasing regulatory pressure to justify claims of sustainability (and the like) and new climate-change reporting obligations ahead, more disclosure material à la the Harbour report likely lies ahead for NZ investors.
Bascand says the Harbour sustainability “report is an evolution of our responsible investing dialogue with investors, who increasingly demand that their fund managers pay attention to non-financial risks and focus on [ESG]”.