Our approach to responsible investment

The purpose of the scheme is to help members provide for their long-term financial security. Therefore, we have a fundamental responsibility under the Trusts Act 2019 to act in the best financial interests of members. When it comes to our investment policy, any consideration of responsible investment must be viewed through the lens of this fiduciary responsibility. Increasingly, that means assessing the financial risks and opportunities associated with climate change and other environmental, social and governance factors.

Our beliefs

The trustee’s investment beliefs constitute the investment philosophy of the scheme and guide the investment of UniSaver’s assets. One of these beliefs is that responsible investment can reduce risk and impact returns positively. We also recognise the increasing impact of climate change as an investment risk. You can read more about our investment beliefs in our  [external link]statement of investment policy and objectives [PDF, 131 KB].

Our policy

We have adopted a policy on responsible investment in line with our investment beliefs and to avoid reputational risk for the scheme’s sponsors. Our policy is that we will:

  • seek to avoid investment in companies whose activities are materially contrary to the intent of New Zealand legislation – these activities currently include the manufacture of cluster munitions, anti-personnel mines, nuclear explosive devices and tobacco products
  • require our investment manager (currently Russell Investment Group Limited) to be a signatory to the United Nations-supported Principles for Responsible Investment (PRI)
  • require the investment manager to incorporate environmental, social and governance considerations (ESG) into its investment process, with the trustee receiving regular reporting on these considerations. The investment manager's investment process is informed by a series of beliefs, which we have determined aligns with our own beliefs and are detailed in Russell Investments' 2024 investment stewardship report [PDF, 9.5 MB]
  • require the investment manager to address climate change risk specifically as a component of ESG considerations, and to provide the trustee with regular reporting on how climate risk is factored into investment decisions and the carbon intensity of the scheme’s portfolios.

As a responsible asset owner, we also expect our investment manager to seek to improve the ESG practices of the companies that we invest in through share voting and engagement. Exclusion is usually a last resort, but a company may be excluded from the portfolio if it is determined that engagement and voting is unlikely to lead to positive change.

Principles for responsible investment

Russell Investments manages the portfolio, selects the managers within each asset class and monitors investment performance. Russell Investments is a signatory to the United Nations-supported PRI. These are the six principles:

  • We will incorporate environmental, social and governance (ESG) issues into investment analysis and decision-making processes.
  • We will be active owners and incorporate ESG issues into our ownership policies and practices.
  • We will seek appropriate disclosure on ESG issues by the entities in which we invest.
  • We will promote acceptance and implementation of the principles within the investment industry.
  • We will work together to enhance our effectiveness in implementing the principles.
  • We will each report on our activities and progress towards implementing the principles.

Read more about the PRI [external link].

Growth (Lower Carbon) investment option

In addition to the above general approach to responsible investment, the Growth (Lower Carbon) investment option targets a lower exposure to carbon emissions and fossil fuels (relative to Growth and to the market index) through underlying investments in the Russell Investments Sustainable Global Shares ex Fossil Fuels Fund and the Russell Investments Global Bond Fund. This investment option provides an option for members who prioritise both a longer investment horizon and an additional focus on lower carbon emissions and renewable energy.

The Growth (Lower Carbon) option underlying fund composition is as follows:

  • 80% in the Russell Investments Sustainable Global Shares ex Fossil Fuels Fund. This fund aims to reduce exposure to carbon emissions by 60% versus the MSCI ACWI ex-Australia Index and eliminate exposure to fossil fuel reserves.
  • 20% in the Russell Investments Global Bond Fund. This fund does not exclude fossil fuels but does target a carbon footprint that is 20% less than the market index for the corporate debt portion of the fund (acknowledging the difficulty in measuring the carbon footprint of sovereign bonds).

Specifically, the Russell Investments Sustainable Global Shares ex Fossil Fuels Fund seeks to exclude companies that:

  • Have fossil fuel reserves.
  • Have significant involvement in fossil fuel-related activities, being companies that derive more than 10% of revenue from thermal coal extraction or power generation from coal.
  • Have significant involvement in oil and gas-related activities, being companies that derive more than 10% of revenue from oil and gas exploration, production, refining, transportation and/or storage or that are part of these Global Industry Classification Standard subsectors:
    • Integrated oil and gas.
    • Coal and consumable fuels.
    • Oil and gas drilling.
    • Oil and gas exploration and production.

The Russell Investments Sustainable Global Shares ex Fossil Fuels Fund also has exclusions relating to tobacco and armaments similar to the other UniSaver investment options and consistent with the trustee’s general approach to responsible investing.

Russell Investments’ sustainable investing policies

Russell Investments believes that having a sound awareness of environmental, social and governance (ESG) risks and opportunities helps it deliver on clients’ long-term objectives, while enhancing financial security by investing in a sustainable and resilient future.

Its policy is to incorporate sustainable investing into the investment manager evaluation process, portfolio management, advisory services, and through implementing proprietary solutions to meet clients’ needs and preferences. This approach is covered in detail in Russell Investments’ 2024 investment stewardship report [PDF, 9.5 MB].

Active ownership is the use of shareholder rights to advocate for good corporate governance and improve the long-term value of a company. Russell Investments sees active ownership as an important component of its investment responsibilities. Proxy voting, engagement and industry collaborations are a core part of its sustainability offering.

Russell Investments' policy is to research, measure, report and consider climate change risk and opportunities as integral parts of their investing practice, active ownership, and business operations. These factors are integrated into sub-advisor research and selection, portfolio management, advice, proxy voting and shareholder engagement, and day-to-day business.

In April 2021, Russell Investments committed to achieve net zero carbon emissions for all investment portfolios by 2050 and set the goal of reaching net zero in its own business operations by 2030.  Russell Investments collaborates with organisations that establish and drive sustainable investment practices, including the United Nations-supported Principles for Responsible Investment [external link] (PRI), the Institutional Investors Group on Climate Change [external link] (IIGCC), the Carbon Disclosure Project [external link] (CDP) and the Task Force on Climate-Related Financial Disclosures [external link] (TCFD). 

Russell Investments is recognised as a Responsible Investment Leader 2024 by the Responsible Investment Association Australasia [external link] (RIAA) and was a founding signatory to New Zealand’s inaugural stewardship code [external link]. The code establishes a clear framework for investors to engage on environmental, social and corporate governance issues and consideration of a Te Ao Māori worldview.

Our approach and legal obligations

This article explains our approach to responsible investment in the context of our fiduciary responsibility to members.

Measuring our carbon footprint

Weighted Average Carbon Intensity is one measure we use to track the carbon footprint of UniSaver's investment options.

2024 ESG Engagement Survey

Russell Investments' 10th Annual ESG Manager Survey offers a deep dive into the global trends shaping sustainable investing.