Green investing

By Rosie Duff

On December 12, 2015, 195 nations convened in Paris to sign a universal agreement to drastically cut greenhouse gas emissions in the hopes of limiting the future impact of global warming.

Four years later in 2019, New Zealand passed its zero-carbon amendment which set a national target to cut the lion’s share of our greenhouse gases – except for methane from agriculture and waste – to effectively reach net zero by the second half of the century. The New Zealand Government just released its emissions reduction plan discussion document, which contains a message signed by the Minister of Climate Change, Hon James Shaw, acknowledging that we all have a role to play in the reckoning against high-emissions in Aotearoa. “While government policy will be crucial, so too are the plans and strategies you will develop to reduce emissions in your own organisations and communities,” the note reads. The financial sector in particular has a critical part to play in supporting Aotearoa’s climate goals. Investors are increasingly moving to consider environmental, social and governance (ESG) conditions into their stock market portfolios. According to the most recent annual report by the Responsible Investment Association Australasia, the responsible investment category grew by 28 percent to $142 million in 2020 – bumping its total market share up to 43 percent. However, there has been criticism surrounding the use of ESG by fund managers, due to the heightened risk of companies greenwashing – a form of marketing spin which misleads the public about an organisation’s environmental practices. Screening companies for misleading claims and unsustainable practices can be tricky. One important first step that individuals can take, is to assess the investments that their portfolios are made up of – whether that’s KiwiSaver or a group of other funds. The Mindful Money NZ website provides users with the lists of individual stocks, and their sectors in many of those funds. Businesses and individuals are also turning to carbon offset schemes to counterbalance their carbon-heavy activities via investment in environmental projects around the world. For example, airlines will often present consumers with the option to offset their share of a flight’s carbon emissions when purchasing an airline ticket. Though such initiatives can buy us time, environmentalists and activists have deemed this strategy as short-term mitigation, rather than long-term elimination in the race to reach net-zero. The transition to a green economy will require joint action on multiple fronts – from policy makers and institutional investors, through to businesses and individual consumers. Ultimately, we need to rapidly phase out fossil fuels – coal, oil and gas and transition to renewable energy sources. Through shifting capital to low-carbon technologies – specifically renewable energy assets – investors can expect better returns, as well as a future void from extreme climate events along with rising sea levels. While such commitments may prove to be challenging, it’s certainly well-within the realm of possibility.

Mindful Money New Zealand reports that KiwiSaver providers offering fossil fuelfree funds are:

•Bank of New Zealand •Booster •InvestNow •Medical Assurance Society •NZ Funds •Pathfunder •Simplicity •SuperLife •Westpac.

Data released by Mindful Money NZ reveals that earlier this year, KiwiSaver funds’ sold out of $331 million of their fossil fuel company investments – dropping from $1.85 billion to $1.54 billion in the six months ended March 31.

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