Four major Crown financial institutions must now have carbon neutral portfolios by 2050, but is that fast enough? Marc Daalder reports
The NZ Super Fund and ACC have been directed to reduce carbon dioxide emissions from their portfolios over the coming decades, with an aim of carbon neutrality by 2050.
The two Crown financial institutions, alongside the Government Super Fund and the National Provident Fund, manage more than $100 billion in investments on behalf of New Zealanders, Finance Minister Grant Robertson said. Now, they will be subject to a new Responsible Investment Framework requiring them to measure and report the emissions resulting from their investments, reduce those emissions and invest in transitioning New Zealand to a low-carbon economy.
In a letter to the four institutions, Robertson and ACC Minister Carmel Sepuloni wrote, “Climate change is one of the greatest challenges of our time. The recently published Sixth Assessment Report from the Intergovernmental Panel on Climate Change found unequivocal evidence that the global economy’s reliance on fossil fuel consumption is causing temperatures to rise, leading to drastic changes in the atmosphere, ocean and land.”
The move is a victory for Green Party MP Chlöe Swarbrick, who pushed Robertson to issue such a directive to ACC in 2019. At the time, the agency had estimated it had invested nearly a billion dollars in fossil fuels. While ACC now says that result was a result of a miscalculation, it still had $210 million in fossil fuel companies in mid-2020.
In response to Swarbrick’s questions in 2019, Robertson had said the Government needed to maintain an “arm’s-length relationship” with Crown entities.
Now, however, Robertson is more willing to give orders to the big Crown financial institutions (CFIs).
“The leadership of the CFIs have assured me they recognise the level of ambition we expect, and I am confident they will meet their goals. However, we reserve the right to use other tools to strengthen our expectations should this be required in the coming years,” he said on Thursday.
Swarbrick told Newsroom on Friday that it was unfortunate it had taken Robertson this long to issue such a directive.
“It’s kind of a bit gutting that we’ve waited three years,” she said.
“I reminded him at that time of his powers under the Crown Entities Act which would enable him to direct investment or divestment or to create some broader parameters. Obviously where they’ve landed is somewhere in between, but it’s demonstrated that they always could have done this.”
Newsroom has contacted Robertson’s office for comment and will update this article with any response.
Swarbrick added that this was a step in the right direction, but the new framework should be explicit about requiring divestment from fossil fuels – it instead mandates that “investment portfolios must be carbon neutral by 2050” and that interim targets must be set every five years to chart a credible course to the 2050 goal.
“The reduce framework refers implicitly to the need to divest from fossil fuels, but I just can’t understand for the life of me why we’re not just being explicit.”
That argument was backed up by 350 Aotearoa, which campaigned for ACC to divest from fossil fuels in the past.
“The new investment framework is a good starting point, by requiring targets to be set to minimise the impact investments on the planet. However, it fails to explicitly require divestment from fossil fuels,” Alva Feldmeier, 350’s executive director, said.
“The most effective way we can stop the worst impacts of the climate crisis is by keeping polluting fossil fuels in the ground. In order to do this, we need to stop the flow of money that enables fossil fuel projects to go ahead. It’s simple. Our public funds should be invested in public good, and meet a standard that reflects the urgency of the climate crisis.”
Is 2050 soon enough for a complete divestment from fossil fuels?
“I think if you were to speak to any of the hundreds of thousands of young people who took to the streets two years ago in the School Strike for Climate, they would tell you no,” Swarbrick said.
The four CFIs said in a statement on Thursday that they welcomed the directive.
“Institutional investors have enormous influence globally and an important role to play as the world transitions to net zero,” ACC chair Steve Maharey said.
“This long-term commitment to decarbonising the NZ Super Fund represents a significant maturation of our existing climate strategy,” Matt Whineray, chief executive of the Guardians of the NZ Super Fund, agreed.
By the end of the year, each of the institutions will be required to respond to Robertson and Sepuloni, outlining their 2025 interim targets and the path to achieve them.