Auckland-based fund manager, Pathfinder, has released an inaugural sustainability report in a bid to raise the quality of environmental, social and governance (ESG) disclosure in NZ.
John Berry, Pathfinder chief, said with the increase in ESG and sustainability labels among KiwiSaver schemes (and other investment products), clients deserve better reporting from managers to substantiate those claims.
“Funds labeled as ESG [etc] need to clearly disclose what they mean by that in ways investors can easily understand,” Berry said.
He said Pathfinder published the 2021 sustainability report as an example of ESG-like disclosure, using a variety of metrics including portfolio carbon exposure, exclusion policies, corporate voting, engagement and tilts to companies creating “positive benefits”.
“We also measure our investments against the United Nations Sustainable Development Goals,” Berry said.
The report also details the Pathfinder approach to ‘ethical’ investment that rests on external benchmarks as well as input from a dedicated internal committee.
“By definition, an ethical investment policy will be subjective as it will reflect the views and beliefs of its authors. The Pathfinder Ethical policy is deliberately set with a high bar and reflects both the ethical beliefs of staff at Pathfinder as well as meeting the highest standards of local and international best practice,” the report says. “We receive considerable feedback from our investors and value this. Often investors raise new issues with us or provide information that we did not previously have.”
However, as per the most common ESG complaint, Berry said it remained a challenge to access consistent and meaningful data.
“We source data from several providers but we spend a lot of time cleaning it up,” he said.
The Pathfinder report also measures the portfolio against the Taskforce for Climate-related Financial Disclosures (TCFD), which will form the basis of new mandatory fund (and other institutional) NZ reporting standards expected to be in place for the 2023/24 financial year.
“Over time we want to go deeper with measuring and reporting what we do and the difference we make through investing and engaging,” the Pathfinder report says.
Pathfinder offers several ethically flavoured funds including a KiwiSaver scheme (formerly known as CareSaver) launched in 2019. Over the last financial year the Pathfinder KiwiSaver scheme was one of the fastest-growing schemes, albeit from a low base: as at March 31 the scheme counted almost 2,300 members and $73 million under management, up from 750 and $18 million, respectively, 12 months prior.
Last month another KiwiSaver scheme rebranded to tap into the ethical trend. As of September this year, the shariah-investing compliant Amanah scheme changed its name to the Always Ethical KiwiSaver Plan. The underlying owner, Amanah Trust Management, also switched brands to Always-Ethical at the same time.
Founded by Berry and John Brownsey in 2009, Pathfinder is now wholly owned by Alvarium Wealth Management NZ following a restructure this year. Brownsey and Berry collectively own 30 per cent of the NZ entity, which is also part-owned by global Alvarium group.
The Alvarium global company listed on the Nasdaq in September this year in a joint venture with US private equity firm Tiedemann Group. Now known as Alvarium Tiedemann, the firm listed via a special-purpose acquisition company (SPAC) deal with the Cartesian Group.