"There will always be pushback from some quarters. There will always be different views. What I do know for sure is that the need for action on climate change and systemic risk more broadly is urgent and pressing. And the momentum for a more sustainable financial system is growing … but we need much more," he said, according to a transcript of his speech published on the fund's website.
While voluntary moves to decarbonize portfolios and move to net-zero investments are "a great start … decarbonizing our portfolio through changing the makeup of the global equities portion, while it reduces our exposure to this risk, won't do much to change the real-world outcome: We need new capital to flow to funding the transition, and we need governments and regulators to act as well."
Mr. Whineray said investors "need to change the rules of the game. … In other words, as long as capitalism denies externalities, our voluntary activities can't get us out of the bind we're in."
Mr. Whineray said there is a need to "step up our engagement with policymakers and regulators to set the vision, build the structures and demand the disclosures that will help the rest of us to compete within a system that is not working against our long-term objectives. We need to change the way we behave, and we need to change the way we think," he said.
Those changes must be made "at a deep level — so this means not just changing the rules of the system — how it operates, and what is counted and what isn't, but also the goals of the system," he said.
However, changing the "mindset from which the system arises is a "deeper" level that needs changing, Mr. Whineray added.
He also said the NZ$65 billion ($41.4 billion) sovereign wealth fund's move to implement its climate change investment strategy in 2016 "has not cost us anything to do this in terms of returns in the six years we have been operating the strategy." The sovereign wealth fund is now working to incorporate ESG and net-zero considerations into its multifactor equity portfolios.
The CEO, who will leave the wealth fund in December, also highlighted the evidence showing the need for urgent action with regard to climate change has come at a time of debate over the concept.
He said a rise of 1.5 degrees Celsius is "likely locked in this decade," with the highest temperatures on record in parts of the world over recent weeks, heatwaves in Europe and North America and historic rains in India and China. "We already knew it, but the weather extremes the world has experienced in 2023 demonstrate the need for action," he said.
However, Mr. Whineray added, "sadly, at the same time these weather extremes are happening, we're seeing political polarization extend to the world of sustainable finance, with ESG being weaponized against investors and managers in countries such as the U.S. These investors are looking to do the only sensible thing and incorporate these considerations into investment decisions, for the long-term benefit of their members and customers," he said.
Mr. Whineray did note that he's optimistic, however, that "we already have most of the solutions we need. We have the tools. The answers are in our hands. We just need to turn our commitments into action," he added.