The NZ Superannuation Fund (NZS) retained its ranking among the world’s top 25 “most responsible asset allocators” in a US-curated list that also included six Australian funds as ‘leaders’ or ‘finalists’.
In a follow-up to the inaugural 2017 Responsible Asset Allocator Initiative (RAAI) – a joint project of the New America think-tank and the Tufts University Fletcher School – the 2019 list selected the 25 top-of-the-class responsible investors from a pool of just under 200 sovereign wealth and government pension funds.
This year the RAAI ramped up the leaders list difficulty rating with “increased competition and a higher bar for inclusion”.
“In 2019, 197 asset allocators were rated compared to 121 in 2017,” the RAAI says. “Additionally, in 2019, asset allocators were rated on 20 criteria, eight more than in 2017, and a higher score was needed to qualify. Leaders in 2019 needed to score at least 94 to make the cut, versus a minimum score of 90 in 2017.”
Intended to highlight best-practice sustainable investment in government funds, the Leaders List is part of the RAAI push “to mobilize large pools of capital toward responsible investing”.
NZS shares the top 25 RAAI podium with two trans-Tasman entities – Australian Super and Victoria Funds Management Corp. Canada produced the most winners with five funds among the RAAI elite while the US contributed three to the top 25.
Matt Whineray, NZS chief, said in statement: “To be recognised globally for our responsible investment is an important accolade for us and a testament to a concerted, team-wide effort to integrate sustainability considerations into our overall investment approach.”
Japan and Malaysia also made the RAAI list (the Government Pension Investment Fund and Khazanah Nasional Berhad, respectively) along with one from South Africa and 10 European funds.
“The Leaders stand out for their commitment to responsible, long-term investing, integration of ESG risks into their portfolio decision-making process, and leadership in reflecting saver’s preferences on key issues such as climate change, gender equality, fair labor practices, sustainable infrastructure, education, and healthcare,” the RAAI report says.
In total the RAAI 25 leaders managed about US$5.9 trillion, which equates to a pool of capital larger than the GDP of every country bar China and the US.
If the 25 leaders devoted just 1 per cent of their collective capital “toward responsible investing and related sustainable development goals” that would create a resource larger than the GDP of 107 countries, the RAAI says.
Among a long list of top tips distilled from the RAAI 25 leaders, the report says funds should turn third-party consultants and investment managers into “allies on responsible investing”.
“Put your external managers on the front lines in working with portfolio companies,” the report says. “Give them uniform standards and ask them to report back on sustainability metrics for the companies they own on your behalf.”