Our approach to responsible investment

The purpose of the scheme is to help members provide for their long-term financial security. Therefore, we have a fundamental responsibility under the Trusts Act 2019 to act in the best financial interests of members. When it comes to our investment policy, any consideration of responsible investment must be viewed through the lens of this fiduciary responsibility. Increasingly, that means assessing the financial risks and opportunities associated with climate change and other environmental, social and governance factors.

Our beliefs

The trustee’s investment beliefs constitute the investment philosophy of the scheme and guide the investment of UniSaver’s assets. One of these beliefs is that responsible investment can reduce risk and impact returns positively. We also recognise the increasing impact of climate change as an investment risk. You can read more about our investment beliefs in our  [external link]statement of investment policy and objectives [PDF, 119 KB].

Our policy

We have adopted a policy on responsible investment in line with our investment beliefs and to avoid reputational risk for the scheme’s sponsors. Our policy is that we will:

• seek to avoid, where practical, investment in companies whose activities are materially contrary to the intent of New Zealand legislation – these activities currently include cluster munitions, anti-personnel mines, nuclear explosive devices and tobacco
• require our investment manager to be a signatory to the United Nations-supported Principles for Responsible Investment (PRI)
• require the investment manager to incorporate environmental, social and governance considerations (ESG) into its investment process, with the trustee receiving regular reporting on these considerations.
• require the investment manager to address climate change risk specifically as a component of ESG considerations, and to provide the trustee with regular reporting on how climate risk is factored into investment decisions and the carbon intensity of the scheme’s portfolios.

As a responsible asset owner, we also expect our investment manager to seek to improve the ESG practices of the companies that we invest in through share voting and engagement. Exclusion is usually a last resort, but a company may be excluded from the portfolio if it is determined that engagement and voting is unlikely to lead to positive change.

Sustainable investment

Consistent with our investment belief on climate change as an increasingly significant investment risk, approximately half of the scheme’s global share portfolio is invested in Russell Investments’ Sustainable Global Shares Fund. The fund follows a strategy which reduces exposure to carbon and to fossil fuel reserves and increases exposure to companies with a high responsible investment rating and to those participating in the transition to renewable energy.

Principles for responsible investment

Russell Investments manages the portfolio, selects the managers within each asset class and monitors investment performance. Russell Investments is a signatory to the United Nations-supported PRI. These are the six principles:

• We will incorporate environmental, social and governance (ESG) issues into investment analysis and decision-making processes.
• We will be active owners and incorporate ESG issues into our ownership policies and practices.
• We will seek appropriate disclosure on ESG issues by the entities in which we invest.
• We will promote acceptance and implementation of the principles within the investment industry.
• We will work together to enhance our effectiveness in implementing the principles.
• We will each report on our activities and progress towards implementing the principles.

Read more about the PRI [external link].

Russell Investments’ approach and philosophy

Russell Investments incorporates responsible investing practices into its manager evaluation process, portfolio management, advisory services and portfolio implementation. Their responsible investment beliefs and practices are outlined in Our Responsible Investing Practices [PDF, 4.7 MB] [external link].

Russell Investments is committed to researching, measuring, reporting and considering climate change risks and opportunities as integral parts of the investment practice and of business operations more generally.

Active ownership is the use of shareholder rights to advocate for good corporate governance and improve the long-term value of a company. Russell Investments sees active ownership as a fundamental part of their responsible investing strategy. Active ownership is the use of shareholder rights to advocate for good corporate governance and improve the long-term value of a company. Russell Investments believes that they have a responsibility to exert influence on corporate governance, social and environmental practices through the exercise of proxy voting rights and engagement activities.

In April 2021 Russell Investments committed to achieve net zero carbon emissions for all investment portfolios by 2050 and set the goal of reaching net zero in their own business operations by 2030.  They also joined the Net Zero Asset Managers [external link] (NZAM) initiative. This is an international group of asset managers committed to supporting the goal of net zero greenhouse gas emissions by 2050 or sooner, in line with global efforts to limit warming to 1.5 degrees Celsius; and to supporting investing aligned with net zero emissions by 2050 or sooner.

Russell Investments is also a signatory to Climate Action 100+ [external link], an investor-led initiative to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change. Through this initiative they are engaging companies on improving climate change governance, cutting emissions and strengthening climate-related financial disclosures.

Russell Investments is a signatory to the United Nations-supported Principles for Responsible Investment (PRI) and is recognised as a Responsible Investment Leader 2023 by the Responsible Investment Association Australasia [external link] (RIAA).

Russell Investments is a founding signatory to New Zealand’s inaugural stewardship code [external link]. The code establishes a clear framework for investors to engage on environmental, social and corporate governance issues and consideration of an ao Māori worldview.