New Stewardship Code will unleash investor power to influence sustainable business, long-term value
Investors now have a clear framework for using their firepower to steer the companies they own on critical issues, including climate and sustainability, with the launch of Aotearoa New Zealand’s first Stewardship Code.
The industry-led Code aims to create and preserve inter-generational value for the people whose money is invested, and New Zealanders more broadly, as well as efficiently directing capital where it’s most needed for a resilient economy.
It does this by bringing transparency and accountability to the practice of stewardship, also called active ownership.
Active owners use various levers to influence a company towards more sustainable outcomes, including voting, engaging directly with the company, filing shareholder resolutions, or advocating for policy changes.
Launched today to more than 350 investors at the Responsible Investment Aotearoa New Zealand 2022 conference, the Stewardship Code will be housed by a secretariat jointly managed by Toitū Tahua: Centre for Sustainable Finance (CSF) and the Responsible Investment Association Australasia (RIAA).
“As investors increasingly recognise, it is now critical they work closely with their investee companies and other issuers – such as countries who issue sovereign bonds - to drive a transition to a sustainable, decarbonised economy that can reckon with the reality of climate change,” said David Woods, CSF Board member and chair of the CSF group that supported the Code’s development.
“We’re simply not going to be able to deliver on a net zero, Paris-aligned economy by 2050 by divesting a few companies. Investors will need to work closely with companies to influence them in a sustainable direction, and this code will help investors do this better by outlining what effective, transparent engagement looks like,” said Woods.
“The launch of this Stewardship Code brings New Zealand in line with leading global markets who already have such codes in place,” said RIAA Chief Executive Simon O’Connor. “More than 40 stewardship codes or initiatives have been issued across 20-plus jurisdictions, including the UK.
“By shedding light on the conversations taking place between investors and investees, these codes work to increase accountability on both sides. It's easy for a fund manager to say that they're doing a lot of engagement and voting, but unless they lay it out in a report that shows what some of the outcomes are and gives case studies, then it can be prone to a form of greenwashing.”
The Code’s nine principles guide investors to incorporate ESG matters in their investments; design and implement engagement policies; vote responsibly at shareholder meetings, and disclose the nature and outcomes of their stewardship; as well as aiming for greater collaboration, including with policy makers.
“Strong stewardship benefits investors as it ensures their capital is deployed efficiently and that they’re accountable to those whose money they invest – their clients and beneficiaries. It also helps investors build trust between companies and other issuers, key stakeholders and their community,” said Erica Miles, Chair of the Stewardship Code Development Committee and ESG Consultant.
“The Code provides a unique and invaluable framework for investors to elevate their stewardship activities beyond a short-term financial value lens, to one focused on activities – and outcomes – that not only create and preserve long-term value for current and future generations, but also contribute towards sustainable outcomes for our planet, our people, and our economy.”
The Code is voluntary, but signatories will be required to comply or explain their non-compliance. It is being launched with a number of founding signatories, who have committed to produce their first Stewardship Report by December 2024 and become stewardship leaders in Aotearoa New Zealand.
The Code was recommended by the Sustainable Finance Forum in its 2030 Roadmap, published late 2020.
The Stewardship Code website www.stewardshipcode.nz has more information.
Contact: info@stewardshipcode.nz
ENDS
Stewardship for Aotearoa New Zealand
Founding Signatories
Devon Funds
Harbour Asset Management
Kiwi Wealth
Milford Asset Management
NZ Super Fund
Trust Management
BT Funds Management NZ / Westpac
Organisations who have supported the development of the Code
The Code was developed by a voluntary industry-led committee chaired by Erica Miles, and included industry, legal and academic representatives, supported by ASB, BNZ, Chapman Tripp, Forsyth Barr, Harbour Asset Management, The Investment Store, NZ Super Fund, Responsible Investment Association Australasia, Toitū Tahua: Centre for Sustainable Finance, BT Funds Management NZ / Westpac, Trustees Executors, and University of Otago Business School.
Supportive quotes
Penny Sheerin, Emma Dale, Nicola Swan, Chapman Tripp:
“It has been a true team effort and very rewarding to be developing such cutting-edge policy that is giving back to the community and the funds management industry. Chapman Tripp is proud to support Toitū Tahua, RIAA and the investment community with the launch of the Code – and is excited to have the opportunity to be able to bring our own legal expertise, as part of this combined effort, in setting clear standards of good industry practice for New Zealand’s future.”
Mark Peterson, NZX Chief Executive:
“NZX is committed to connecting people, businesses and capital everyday. As part of that it is important we deliver sustainable and transparent markets that direct the flow of capital to sustainable outcomes. An industry-wide stewardship code will help New Zealand achieve this.”
Erica Miles, Chair of Stewardship Code Development Committee and ESG Consultant:
“Development of our inaugural Stewardship Code is a significant milestone for the investment policy landscape in Aotearoa New Zealand. The Code provides a unique and invaluable framework for investors to elevate their stewardship activities beyond a short-term financial value lens to a lens focused on activities – and outcomes – that not only create and preserve long-term value for current and future generations, but also a lens focused on contributions towards sustainable outcomes for our planet, our people, and our economy.
“This wider, more holistic view of value, and the Code’s focus on both the long-term and sustainable outcomes has only been possible due to the constructive, dedicated, and enthusiastic involvement by not only the Code Development Committee, but also the wider industry. Having the Committee and industry involvement throughout the development phase perfectly positions the Code to succeed”.
Matt Mimms, Director, The Investment Store:
“Stewardship is a vital component of effective responsible investing, but to date, its application in Aotearoa New Zealand has been somewhat patchy, from good to non-existent – to have a unique Code for investment managers and asset owners sets a great benchmark for our industry and should result in better governed and more sustainably managed investments.”
Philip Houghton-Brown, Head of Investment Solutions for BT Funds Management NZ / Westpac:
“Stewardship is one of the key pillars of our Sustainable Investment Policy, so we whole-heartedly support the development of a Code for the wider industry. By using our influence collaboratively, we will be able to maximise overall long-term value, including environmental, social and economic value.”
Rob Sloan, Chief Risk Officer and General Counsel, Trustees Executors:
“New Zealand is rightly congratulating itself that we were the first country in the world to introduce a law that requires the financial sector to disclose the impacts of climate change on their business and explain how they will manage climate-related risks and opportunities. Despite this ‘world-leading’ approach, in other areas we have been ‘world-lagging’ against our international peers. One of these critical areas has concerned a ‘Stewardship Code’. However, industry has spoken, and the successful implementation of this Stewardship Code will influence investor and investee behaviour to create and preserve long-term value, including the value of environmental, social and economic assets, for current and future generations as part of a responsible investment approach.”
Sebastian Gehricke, Senior Lecturer, Department of Accountancy and Finance, University of Otago Business School:
“Effective stewardship is a key element for all investors to meet client and broader stakeholder needs to create long-term value, while minimising negative and maximising positive impacts on society and the environment. Key elements to effective stewardship are outlined in the principles of this Stewardship Code for Aotearoa New Zealand, along with guidance on how to plan, execute, and report on meaningful stewardship.”
Sue Walker, Senior Manager, Sustainable Finance & Responsible Investment Advisory, BNZ:
“The new Code offers a framework focused on sustainable outcomes. It’s an important step toward the transition we need as we build a resilient, regenerative, and inclusive Aotearoa New Zealand, for the long term”.
Code Development Committee
Erica Miles (Chair of the Stewardship Code Development Committee and ESG consultant)
Anne-Maree O’Connor (Guardians of New Zealand Superannuation (GNZS))
Bruce W Lee (Who’s Good, CFA Institute)
David Kandziora (Russell Investments, CFA Board)
Emma Dale (Chapman Tripp)
Jorge Waayman (Harbour Asset Management)
Katie Beith (Head of ESG, Forsyth Barr)
Matt Mimms (The Investment Store, RIAA Board Member)
Nicola Swan (Chapman Tripp)
Penny Sheerin (Chapman Tripp)
Philip Houghton-Brown (BT Funds Management NZ / Westpac, CFA Board)
Robert Sloan (Trustees Executors, FSC Sustainability Committee)
Sebastian Gehricke (Otago University Business School, INFINZ)
Simon O’Connor (Responsible Investment Association of Australasia (RIAA))
Sue Walker (Bank of New Zealand (BNZ), INFINZ)
Susan Quinn (RIAA)
About RIAA
The Responsible Investment Association Australasia (RIAA) champions responsible investing and a sustainable financial system in Australia and New Zealand. RIAA is dedicated to ensuring capital is aligned with achieving a healthy society, environment and economy. With over 500 members managing more than US$29 trillion in assets globally, RIAA is the largest and most active network of people and organisations engaged in responsible, ethical and impact investing across Australia and New Zealand.
About Toitū Tahua: Centre for Sustainable Finance
Toitū Tahua: Centre for Sustainable Finance was founded to accelerate progress towards a sustainable, inclusive financial system. Its work is anchored in the Sustainable Finance Forum Roadmap, which calls for changing mindsets, transforming finance and financing transformation. The Roadmap had input from more than 200 people across the public, social and private sectors, iwi/Māori and academia. The Centre’s partners include Crown entities, strategic philanthropists, major banks, insurers and professional service firms. It is independently governed, and supported by an implementation network of 80+ market participants.