Risk, return, and responsibility: our updated responsible investing policy

At BNZ, we’re constantly reviewing and refining our approach to responsible investing, that’s why we’ve recently updated our responsible investment policy. As you’d expect, we have a long-standing commitment to not invest in companies involved in manufacturing cluster munitions, landmines, nuclear weapons, or tobacco.

More recently, we’ve raised the bar even higher for our fund managers around how we expect them to act for our investors. We’ve also taken a fresh look at our approach to carbon, and the effect of carbon investments on future returns from some market sectors.

Our responsible investing policy excludes:

• Oil and gas companies that generate more than 20% of their revenue from oil and gas projects within the Arctic or Antarctic or from tar sands oil extraction.
• Thermal coal companies that generate more than 20% of their revenue from the extraction or burning of thermal coal.
• Companies that manufacture tobacco or tobacco products.
• Companies that hunt whales for commercial purposes, or process whale meat.
• Companies that produce or develop cluster munitions and anti-personnel mines, manufacture or test nuclear weapons, manage facilities used to assemble or refurbish nuclear weapons and manufacture delivery systems for nuclear weapons.
• Companies that manufacture assault weapons for civilian use.

Our new position on carbon-based investments

Some of these decisions are in line with our membership of the NZ Climate Leaders Coalition, an organisation dedicated to promoting collective action on climate change. Here are a few examples. We’re removing investments in companies heavily reliant on extracting or burning thermal coal from all BNZ KiwiSaver Scheme and YouWealth funds. The same goes for investments in companies heavily reliant on the extraction of oil via tar sands projects – a particularly emissions-intensive form of oil extraction. Besides helping the world in its goal to limit total global warming to 2 degrees, it will also reduce the risk of losses to our customers brought about by the reduction of investment in these sorts of carbon-resources and their infrastructure.

We’re backing the move to a low-carbon economy

Globally, fossil fuels continue to keep economies moving, the lights on, and people warm. But a transition to cleaner energy is underway, and BNZ supports this. However, this change won’t happen overnight, so we haven’t removed all companies involved in the extraction or burning of fossil fuels just yet – and many of them are involved in developing alternative energy sources. But it does make sense for us to reduce our investment exposure to the companies most likely to be impacted by the transition to a low-carbon economy.

Our other investment no-go areas

As you’d expect, we don’t believe it’s appropriate to invest our customers’ money in the companies that make assault weapons for civilian use. Of course, this is in line with the recent law change in this area. We’ve also explicitly excluded investments in companies that are involved in commercial whaling. We made this move because Japan recently resumed commercial whaling operations. Because there’s now the possibility companies involved in this activity could appear on stock exchanges we want to be sure we don’t invest in them.

BNZ Investment Services Limited is the issuer and manager of the YouWealth Scheme and the BNZ KiwiSaver Scheme. Product disclosure statements for each scheme are available on bnz.co.nz or at any BNZ branch.

Investments in YouWealth and BNZ KiwiSaver Scheme are not bank deposits or other liabilities of Bank of New Zealand (BNZ) or any other member of the National Australia Bank Limited group. They are subject to investment risk, possible delays in repayment, possible loss of income and possible loss of principal invested. No person (including the New Zealand Government) guarantees (either fully or in part) the performance or returns of YouWealth or BNZ KiwiSaver Scheme or the repayment of capital. National Australia Bank Limited, the ultimate owner of BNZ, is not a registered bank in New Zealand but a licensed bank in Australia and is subject to the supervision of the Australian Prudential Regulation Authority.

The information in this article is provided for general purposes only, and is a summary based on selective information which may not be complete for your purpose.  To the extent that any information or recommendations in this article constitute financial advice, they do not take into account your financial situation or goals and is not intended as personalised financial advice. While BNZ has made every effort to ensure that the information provided is accurate, you should not rely on this information to make any financial decision without first having sought advice specific to your circumstances from an authorised financial adviser. Neither BNZ nor any person involved in this article accepts any liability for any loss or damage whatsoever which may directly or indirectly result from any advice, opinion, information, representation or omission, whether negligent or otherwise, contained in this article.