New Zealand Superannuation Fund, Auckland, shifted about 40% of its investment portfolio — NZ$25 billion ($15.3 billion) in passive global equities — into low-carbon indexes as part of a sustainability push.
The changes apply to the NZ$57 billion sovereign wealth fund's index-tracking reference portfolio benchmark and the corresponding allocations to passive global equities.
"In addition to alignment with climate goals, we expect these new indices to deliver better environmental, social and governance metrics across the board," CIO Stephen Gilmore said in a news release.
The fund began its changeover to the MSCI World Climate Paris Aligned index and the MSCI Emerging Markets Climate Paris Aligned index in June, with the new benchmarks taking effect July 1. The wealth fund previously tracked a customized version of the MSCI All Country World Investible Market Total Return index.
As well as further reducing the wealth fund's exposure to carbon emissions, the move also reduces the number of publicly listed companies now owned by the fund.
A spokesman said the previous reference portfolio benchmark had more than 8,500 stocks in it, while the new indexes have around 1,100 stocks. Across the actual portfolio, NZ Super now holds those 1,100 passive allocations plus a further around 2,000 actively invested stocks, he said. These companies are held both directly and through derivatives.
At a fundwide level, the number of companies directly owned by NZ Super was 3,200 as of June 30 — about a 30% reduction from the 4,500 held as of Dec. 31. The fund will publish an updated list of holdings effective Dec. 31, 2022. This will give a fuller picture of the reduction, he said.
