NZ Super CEO Adrian Orr takes top central bank role

New Zealand Super Fund chief executive Adrian Orr, a global champion of Environmental, Social And Governance (ESG) investment principles, is to become governor of the country’s central bank, the Reserve Bank of New Zealand (RBNZ). 

After 10 years at the helm of the NZ Super Fund, Orr has resigned to return to his natural habitat, having trained as an economist and spent a previous spell as deputy governor at the RBNZ.

Orr will remain as CEO of NZ Super until late March 2018. Catherine Savage, chair of the board of governors of NZ Super, told AsianInvestor that the board intends to undertake a global search for his replacement: “We have a very capable leadership team in place and if a new CEO is not appointed by the end of March, it will be well-placed to operate with an acting CEO in place, until the global search process is concluded.”

A leading proponent of good governance and ESG screening as a whole, Orr was behind the NZ Super’s strong push into carbon-neutral strategies. Several of the executives AsianInvestor spoke to when researching our award for the year's best Individual Contribution to Institutional Investment (which Orr won) said Orr’s drive and vision were instrumental in making NZ Super a world leader in ESG.

Orr took this leadership vision into his additional roles as chairman of the International Federation of Sovereign Wealth Funds and of the Pacific Pension Institute (PPI). He was also a member of the 'Focusing Capital on the Long-term' initiative led by the Canadian Pension Plan and McKinsey, as well as of the 'Inclusive Capitalism' initiative led by the Rothschild Foundation.

As well as his advocacy on ESG, Orr was directly involved in the creation of the NZ Super Fund’s Investment Hub, to bring in capital and global skills to help stimulate local direct investment opportunities.

Credits and controversy

The change at the top of NZ Super comes at a time when the country's new coalition government has confirmed it will re-commence making capital contributions to the fund. The previous government suspended the contributions in 2009, which at the time were worth NZ$2 billion ($1.37 billion) a year. Further details of the new contributions to the fund are expected later this week when the NZ government issues its half-year fiscal update.

Grant Spencer is acting governor for the RBNZ during the transition of the new Labour/New Zealand First coalition. His tenure became effective on 27 September 2017 and will end on 26 March 2018. Previously Spencer held the position of deputy governor and head of financial stability from April 2007 until September 2017.

Orr paid tribute to the work done during his time as CEO: “The fund -- meaning its people -- has grown into a world-class investment institution, sitting amongst the most globally respected sovereign wealth funds. The operational independence of the fund’s mandate is a critical component of this ongoing success.”

The NZ$37 billion fund has returned 10.5% per year since its inception in 2003 and over the last five years that has grown to 16.2%. “Returns have been simply outstanding during Adrian’s tenure and achieved with a sensible asset allocation and risk profile,” Ross George, managing director of Auckland-based Direct Capital, told AsianInvestor.

“Adrian’s independence, investment thesis and ‘mana’ (the exertion of power and influence in Māori culture) during the [global financial crisis] stood out,” George said.

It hasn't always been plain-sailing in New Zealand waters for Orr, as the fund, like most politically-sensitive ventures, has had to fight against the public perception of fat cats being paid out of the public purse. When Orr received a 23% pay rise in February this year, taking his taxable income past NZ$1 million, then finance minister Bill English said he was not in favour of it.

The NZ Super Fund is a government savings vehicle to help pre-fund the future cost of universal superannuation.

Orr is returning to a role he is very familiar with, having had various chief economist roles during his career, including at the Organisation for Economic Cooperation and Development and as chief economist at Westpac Banking Corporation, before a four-year stint as deputy governor of RBNZ from 2003 to 2007, when he joined the NZ Super Fund.

Source: NZ Superannuation Fund