NZ Super rolls out plan to improve social impact of investments
In recent months, sovereign investor the New Zealand Superannuation Fund (the NZ Super Fund) has begun implementing its first formal company-wide diversity, equity, and inclusion (DE&I) strategy, as part of a broader effort to improve the social impact of its investing and composition.
“This will be the first time [the NZ Super Fund] has a formal strategy that incorporates a range of current and future initiatives,” Rachael Le Mesurier, who was hired in March 2022 as the fund’s first head of diversity, equity and inclusion, told AsianInvestor.
“Most of my time since I started here has been spent working with staff to incorporate their ideas into the strategy,” she said. “More recently, I have focused more on working with the board and those managers who are already leading – and those who will be leading – the implementation of the strategy.”
BAKING IT IN
Le Mesurier said the strategy would have particular application to domestic projects, pointing to a proposed offshore wind farm off New Zealand’s South Taranaki coast.
In March 2022, the fund announced a partnership with Copenhagen Infrastructure Partners, a Denmark-based infrastructure fund manager, to explore the potential for the wind farm to generate energy for 650,000 homes.
The partnership followed the fund’s commitment in October 2021 of €125 million (NZ$215 million) to Copenhagen Infrastructure Partners’ Energy Transition Fund. The NZ Super Fund has since met with New Zealand’s minister of finance to discuss the project.
According to its latest annual report, around 44% of the NZ Super Fund’s 190 employees are women. The company's six-strong board has two female members and its seven-person leadership team includes three women. The median gender pay gap at NZ Super is 27%, down from 34% in 2021; in 2018, the gap was 29%.
ALSO READ: CPP Investments' updated diversity guidelines to impact Asia boards
NZ Super Fund chief investment officer Stephen Gilmore said the fund’s DE&I efforts were included in its wider aims to strengthen the framework for evaluating the impact of social factors on its portfolio, including oversight of managers it employs.
“We are asking the question: Does this investment create a positive impact? These considerations are being incorporated into the way we invest,” he told AsianInvestor.
Gilmore noted that although there were ESG performance discrepancies among fund managers, standards in general were improving across the sector.
"When it comes to ESG, the bar keeps rising," he said. "There is greater awareness on the part of managers of the importance of having ESG – including social policies – in place.”
The NZ Super Fund's DE&I move comes as super funds in Australia and New Zealand boost their efforts to improve diversity, equity and inclusion internally and among the companies in which they hold stakes.
DIVERSITY DRIVE
Ada Chan, a consultant at asset consultancy JANA in Melbourne, said asset owners were increasingly asking questions about DE&I of managers they employed and related to the securities and assets they invested in.
“The most widely available metric is females on boards, followed by females across different levels of the organisation,” she said.
Six of the 12-member board at Australian Super, the country’s largest superannuation fund, are women. The fund’s annual report notes that 96 of its 211-person management team (45.5%) are women. A spokesperson at Australian Super declined to comment for this story.
ALSO READ: Better representation for women in Asian private markets, but glass ceiling persists
At HESTA, another Australian super fund, which manages almost $70bn of assets, 80% of its 970,000 members are women, as are eight of its 15 board members (53%). HESTA’s annual report does not disclose the number of women in senior positions.
Since 2020, HESTA has led a programme named "40:40 Vision", which aims for 40% identifying as female, 40% identifying as male and 20% identifying as any gender within the executive teams of ASX300-listed companies by 2030. Last year, the number of companies signing up to the initiative doubled to 35.
According to data published on HESTA’s website, 28 companies in the ASX300 had 50% or more female executive team members in 2021.
However, Chan noted that considerable variation existed in the extent of DE&I measurement in super fund portfolios.
“Not all asset owners are moving at the same speed. It is in part resource-reliant, because creating and sending questionnaires is only the start of the process,” she said, noting that the trend was not limited to super funds.