Guardians of NZ Superannuation are focused on investing in climate change mitigation globally. Photo / Levente Gyori
Guardians of NZ Superannuation are focused on investing in climate change mitigation globally. Photo / Levente Gyori
The Guardians of New Zealand Superannuation will remain “disciplined” in their pursuit of returns on investments, while pledging to put money where their morals are.
Super Fund head of external investments and partnerships Del Hart said the fund was constantly looking for opportunities in the climate research space, and youngercompanies were most attractive.
“The investment thesis is around growth characteristics, rather than mature businesses. That’s where we believe we will achieve the best risk-adjusted returns.”
The NZ Super Fund shortly before Christmas announced it had committed US$100 million to a US$1 billion fund investing in early stage companies mitigating climate change in North America and Europe.
The fund, managed by Wellington Management in Boston, Massachusetts, was seeking to generate non-concessionary growth returns, meaning it would not sacrifice financial returns while achieving positive sustainability goals.
“Often people jump to the assumption that if we are trying to get positive environmental outcomes or social outcomes, we have to be giving up returns for that, and that’s certainly not the case here,” Hart told the Herald.
Super Fund head of external investments Del Hart says returns will not be sacrificed in its fight against climate change. Photo / Supplied
The Super Fund had the chance to double its investment in the fund to US$200m (NZ$319m) by co-investing in other opportunities at its discretion.
“If they [Wellington Management] see really attractive investment opportunities, we’ve got the ability to say we can commit to more through co-investment.”
The fund had already invested in five companies, including an alternative protein food manufacturer, an artificial intelligence sorting solution provider and a software-enabled panel manufacturer.
Half the fund would be used to reinvest in such companies’ growth plans.
Whether or not the Super Fund stumps up extra cash for its most recent fund of choice, Hart saidfuture external investments could continue in the venture capital space, and opportunity existed in international growth equities.
“Where I think about opportunity, where we would be looking there, is more in the international growth equity, which could be more sustainable investments if we meet those criteria.”
However, balancing risk was what drove its decisions and it wasn’t willing to give up returns.
“We still need to be very selective. There will definitely be pockets of opportunity, but for us it’s really being a disciplined investor.”
Mind the manager
In 2021, the Super Fund put another US$100m into a California-based real estate technology venture capital fund and invested €125m (NZ$212m) in a Copenhagen energy transition fund.
The managers of those investments had to meet strict criteria, Hart said.
“It’s really thinking about, is the team sufficiently aligned with our direction, are they a manager that we can trust to deploy capital on our behalf, on behalf of all New Zealanders, and what level of transparency can we get.”
Hart said the beginning of 2023 would be spent managing the assets it had under its belt and no other financial commitments were on the immediate horizon.
