by Andrea Malcolm
Fifty respondents including asset owners, fund managers and wealth managers covering $331 billion in assets under management took part in the second annual survey by the Aotearoa New Zealand Investor Coalition for Net Zero.
Results revealed the local industry lagging behind its Australian counterpart when compared to a parallel survey across the Tasman by the Investor Group on Climate Change (IGCC). The data showed New Zealand behind on virtually every measure, including net zero targets, engagement, governance, scenario analysis, and climate measurement and reporting.
The sample size for wealth managers and advisers was small (six respondents) but covered $65 billion, including several of New Zealand’s largest managers. Survey authors say wealth managers face particular challenges in implementing climate targets, given potentially decentralised portfolio management across many financial advisers.
By sector none of the wealth managers had yet to set net zero emissions targets compared to 58% of fund managers and 42% of asset owners. Results showed evidence of climate-related factors being incorporated into governance structures at certain wealth management firms, which were at a similar rate to fund managers and asset owners but still remained lower than it should be given the materiality of climate transition to investors’ business. On climate reporting, some wealth managers reported an ambition to take further action in future, including for example voluntary CRD (which is baked on global TCFD standards) reporting.
Overall the survey found most asset owners are not proactively setting mandates for fund managers to incorporate climate risk and opportunities, investors lack climate governance, and investment in climate solutions and associated targets is low. On the positive side, investors of all sizes are progressing with annual climate reporting, even those not covered by upcoming climate-reporting regulation, and more than half (58%) of investors now have a climate policy in place. Examples of good practice and progress cited were Bay Trust, AMP Wealth Management, New Zealand Super Fund, Pathfinder, Climate Venture Capital Fund, and BT Funds Management.
The Aotearoa New Zealand Investor Coalition for Net Zero comprises Toitū Tahua: The Centre for Sustainable Fiance, Mindful Money and The Investor Group on Climate Change.
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