Climate change top of mind for Kiwi investors

Joanna Nash, VP Australia equities for Black Rock, says investors want to take climate change into account. Photo/Supplied.

New Zealand investors are taking a growing interest in climate change says an investment expert with global asset manager Black Rock.

Joanna Nash, vice-president Australian equities at Blackrock, is in the country this week to talk to KiwiSaver providers, large investors like iwi and community trusts and financial advisers about investment options.

Nash said it had received a flurry of calls in the wake of last year's KiwiSaver scandal which revealed millions of dollars had been invested in controversial weapons makers and the tobacco industry.

That resulted in providers excluding those investments on the back of a public backlash.

But now there was a growing interest in impact investing, she said.

Rather than excluding certain companies or sectors this type of investing encourages investors to put more money into companies who take environmental, social and governance factors into account.

"I think most people start off with the exclusion side because it is easier to implement. But now we are seeing clients move into ESG integration."

While this can involve considering a lot of factors Nash said climate change was the biggest concern it was seeing.

"We are still seeing a lot of interest in climate change."

She said that was likely to be because people were seeing affects from climate change already.

It had also been a high profile issue this year with US President Donald Trump pulling out of the Paris climate change agreement.

"There is a lot attention and more awareness, that drives investment thinking.

"Ten years ago we wouldn't have thought about electric cars. Now seeing charging stations at the supermarket."

The $35 billion New Zealand Superannuation Fund, which is one of Black Rock's clients, has already taken steps in this direction and earlier this month announced it had reallocated $950 million away from companies with high exposure to carbon emissions.

Nash said while investors wanted to take ESG into account they also wanted to weigh up financial impacts of those decisions.

"People want to be warm and fuzzy...but ultimately people want to be financially better off too."

She said divestment meant there was a possibility that investors would miss out on returns.

"A lot of those sin stocks tend to outperform."

Tobacco companies had done very well in the past 10 years, she said.

But not investing in them was a choice people made because of their values.

Nash said superannuation funds also had much longer timeframes to invest compared to other investors which meant in the longer term some of those industries might not be viable.

Being more selective about investing meant you could tilt investments towards more lower carbon users or invest directly into green technology.

Nash said New Zealand was ahead of Australia when it came to awareness of what people were investing into through KiwiSaver.

Those in the equivalent Australian mysuper funds were not as aware.

She said its sovereign wealth fund was also not as vocal as New Zealand's fund.