If the world is to avoid a climate catastrophe, there needs to be more walk than talk, a leading investment funds manager has warned.
Jeff Ruscoe, Managing Director of AMP Wealth Management, says while it is easy to be glib about the issue, a strong stand needs to be taken for the future of the planet.
“Fast early progress is crucial; we need to be thinking well into the future. For young people especially, their retirement years are up to 60 years away and we need to ensure there is a future not just in terms of their retirement savings, but for the world they live in.”
Ruscoe says to this end AMP is increasingly taking a “green” approach to its portfolio. AMP is already certified carbon neutral as a business, and is now focusing on achieving net zero in its investment funds, including KiwiSaver, by 2050 or sooner.
It is already 65 per cent of the way towards this goal and this year alone its exposure to emissions has decreased by 24 per cent.
“In 2021 we changed our investment selection criteria to avoid what we call the bad, those companies causing harm (to the environment) such as the fossil fuel industry.
“That industry is a significant carbon emitter,” he says. “But we also won’t invest in many other areas such as nuclear weapons, firearms, whale products, tobacco and palm oil.
“We are 13 months into this journey and we have had to make a number of divestments. This doesn’t come easy, but it is super important. The last 10 per cent is going to be as hard as the first 90 per cent, so our fast start is critical in achieving our committed goals.”
Ruscoe says AMP has up to $8.5 billion in sustainable investments under its management, $6 billion of which is in KiwiSaver. It has around 145,000 KiwiSaver members and close to 200,000 investors overall.
He says while reaching carbon zero is important, so are the investment returns for AMP customers - and the new approach is proving there doesn’t appear to be a “green penalty” for investment.
“Clean investing is often conflated with weaker returns, but this is not AMP’s view,” he says. “Since September 2021 our returns have improved relative to other providers and we are now sitting mid-market which shows us there is no green penalty.
“Our investment modelling demonstrates that the transition to a lower-carbon economy, while challenging, will deliver better investment outcomes over the long-term. Our customers have told us they expect us to take a strong stand on the future of the planet, but they don’t want to see their own financial future suffering as a result.
“We also reduced our KiwiSaver fees last year which has a positive impact on long-term results.”
Ruscoe says AMP is the first KiwiSaver provider to formally sign up to the Science Based Targets initiative (SBTi), a partnership between the United Nations Global Compact, World Resources Institute and the World Wide Fund for Nature that helps large organisations meet their climate change targets with genuine scientific principles, rather than “window-dressing” changes.
Some of the measures AMP has adopted to reduce its own emissions include sourcing 100 per cent renewable electricity for its four New Zealand offices, staff travel reductions and the conversion of its vehicle fleet to hybrid or fully electric.
Ruscoe says one of the reasons for AMP’s fast action towards carbon zero is how closely it measures progress.
“We have a daily progress update of our investments’ carbon emissions and track our own carbon emissions on a monthly basis,” he says. “We also summarise our investment portfiolio progress every quarter with a report to our board - then make it publicly available.”
AMP was a finalist in the Toitū Brighter Future Awards 2022 in the Top Reducer (closest to zero) category which is awarded for making the most progress towards carbon zero while being certified by Toitū Envirocare. It has also been recognised by the Responsible Investment Association of Australasia (RIAA) as a responsible investment leader for 2022.
For more information go to: www.amp.co.nz/nz/about/sustainability