Trust Waikato has emerged as the first community trust and the 20th overall signatory to the Aotearoa NZ Stewardship Code.
In a statement, Maggie Zhang, Trust Waikato finance and investment manager, said making a formal commitment to the Code would “challenge us to apply best practice for our investment strategy”.
“Despite being a smaller investor, we have signed up to the Code to promote sound investing and governance through the adoption of practices that lead to sustainable outcomes for our environment, society, and economy,” Zhang said.
The $4 billion plus NZ community trust sector has long been a leader in environmental, social and governance (ESG) investment, front-footing allocations to impact funds, for example.
Many trusts have also signed up to global responsible investment compacts, industry bodies and often collaborate on associated ESG issues such as the ‘Funders commitment on climate change’, which launched with 10 of the 12 official government-ordained community trusts early in 2022 (the same year the Stewardship Code went live).
However, community trusts – and asset owners in general – have been reluctant to ink the agreement to date due to “concerns about resourcing”, according to Jackson Rowland, Stewardship Code secretariat director.
Rowland said NZ some asset owners have also assumed the Code was targeted more to fund managers, who represent 18 of the current signatories (with the NZ Superannuation Fund and Trust Waikato considered asset owners).
He said asset owners make up more than 20 per cent of signatories to the UK Stewardship Code, which the NZ version was modelled on.
But the Trust Waikato example could spur others to join.
“Like many investors, Trust Waikato also has limited capacity and is very strategic about how it uses this,” Rowland said. “They recognise that stewardship does not need to be resource intensive, and is a crucial part of their responsible investment strategy regardless.”
Most large local bank-owned and boutique fund managers have signed on to the Code, which is a “comply or explain” agreement, he said, designed to encourage reporting against objectives.
The secretariat recently published the 2023 review of the NZ Stewardship Code in the “first full year” of signatory reporting.
“… we did not expect to see full reporting at this stage,” the review says. “Despite that, we were pleased to see the majority of the Signatories releasing some form of stewardship reporting. While this generally did not yet meet the full expectations of the Code reporting requirements, it is a positive first step on the journey.”
The 20 NZ signatories represent about $173 billion in assets under management while globally similar Stewardship Codes account for almost $2.7 trillion in total.