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BT Funds Management (NZ) Limited

PRI reporting framework 2020

You are in Strategy and Governance » Objectives and strategies

Objectives and strategies

SG 05. RI goals and objectives

05.1. Indicate if and how frequently your organisation sets and reviews objectives for its responsible investment activities.

05.2. Additional information. [Optional]

  • The BT Investment Committee (BTIC) is responsible for approving the BTNZ Responsible Investment Policy and the BTNZ Proxy Voting Policy. They are then subject to review by the BTNZ Board of Directors. Under the terms of reference for the BTIC, all policies are subject to review at least on an annual basis. 
  • BTNZ's Responsible Investment Policy was last updated in May 2019 whereby the exclusions list was extended to incorporate an exclusion to companies involved in the manufacture of assault weapons for civilian use. This was done in response to the terror attacks on the mosques in Christchurch, New Zealand in March 2019. BTNZ undertook the most recent annual review in November 2019 with no further changes.
  • BTNZ's Proxy Voting Policy was updated in November 2019 to better reflect that voting in undertaken by external investment managers.
  • BTNZ's responsible investment action plan, which outlines further planned work in integrating ESG risk assessments across our investment portfolios, was also reviewed and updated in November 2019, and will be updated periodically.
  • The next full review of the policies and action plan is intended to be undertaken in the fourth quarter of 2020.

SG 06. Main goals/objectives this year

06.1. List the main responsible investment objectives that your organisation set for the reporting year.

Responsible investment processes

Key performance indicator

          Present to the wider BTNZ business on our Responsible Investment strategy, what it means and what we are doing.
        

Progress achieved

  • BTNZ presented to the Investments business on BTNZ's responsible investing policy, including integration, exclusions and engagement, and how this is incorporated into our portfolios..

Key performance indicator

          Responsible Investment strategy workshops with key business stakeholders
        

Progress achieved

  • BTNZ held a workshop to discuss ideas for enhancing BTNZ's Responsible Investment strategy, with a key focus on developing a climate change strategy for BTNZ's funds.
  • BTNZ has engaged with an external consultant and commenced a project to improve the management and communication of ESG issues for BTNZ's funds.
  • BTNZ's new RI strategy is due to be presented to the BTNZ Board in June 2020.

Key performance indicator

          Enhancing the ESG incorporation within the investment decision making process for BTNZ's directly managed fixed interest portfolios.
        

Progress achieved

  • BTNZ's new Fixed Interest Senior Credit Analyst strated in May 2019.
  • A key focus for the analyst has been implementing a framework for including ESG factors within their credit research and investment decision making process.
  • Several investment decisions have been made on the back of incorporating these factors.

Financial performance of investments

ESG characteristics of investments

Key performance indicator

          Improvement of several ESG rating metrics across; ESG risk rating; ESG risk exposure; ESG risk management, against the benchmark and previous year
        

Progress achieved

  • For the Australasian equity portfolio:
    • The prevalence of companies with high exposure to ESG issues in the portfolio is 7% lower than the benchmark
    • The prevalence of companies with weak management of ESG issues in the portfolio is 5% lower than the benchmark
  • For the international equity portfolio:
    • ESG risk rating improved from being 2% better than the benchmark to 3% better than the benchmark
    • The prevalence of companies with high exposure to ESG issues in the portfolio is 27% lower than the benchmark

Key performance indicator

          Improvement of several metrics across; carbon risk rating; carbon intensity; fossil fuel exposure; stranded assets exposure; and carbon solutions involvement, against benchmark and previous year
        

Progress achieved

  • For the Australasian equity portfolio:
    • the carbon risk rating reduced over the year
    • the carbon intensity increased over the year, however is now 16% less intensive than the benchmark versus being 26% more intensive than the benchmark last year
    • carbon solutions involvement increased by a more substantial amount
  • For the International equity portfolio:
    • the carbon risk rating reduced over the year
    • the carbon intensity reduced over the year, and moved from being 9.5% lower than the benchmark to 10% lower than the benchmark
    • fossil fuels exposure reduced over the year, and moved from being 10% higher than the benchmark to 27% lower than the benchmark
    • stranded assets exposure reduced over the year, and moved from being 3.5% higher than the benchmark to 50% lower than the benchmark
    • carbon solutions involvement moved from being lower than the benchmark to higher than the benchmark.

Other activities

Key performance indicator

          Participate in a wide variety of effective and relevant RI initiatives
        

Progress achieved

  • BTNZ attended the annual Responsible Investment Association Australasia (RIAA) conference in New Zealand, and facilitated a panel on ESG insights and trends to watch. Other topics included; an insight into the Sustainable Finance Forum’s vision of a financial system aligned to sustainability challenges; how active ownership can be used to influence corporate behaviour; impact investor insights; a session on fiduciary duties; and big ideas for the next ten years.
  • BTNZ joined the social media company collaborative engagement initiative being led by the NZ Super Fund. The objective of the engagement initiative is to encourage the companies to strengthen controls to prevent the live streaming and distribution of objectionable content, following the Christchurch terror attacks in March 2019.
  • BTNZ representatives sit on the Financial Services Council Board
  • WNZL hosted and BTNZ attended the KangaNews NZ Sustainable Finance Summit.  The agenda included; a panel discussion on corporate sustainability; measuring impact and incorporating it into the investment process; how ESG integration is driving boardroom strategy; and what the EU taxonomy and other international developments mean for New Zealand.

Key performance indicator

          Encourage investment managers to join the collaborative engagement with social media companies (Facebook, Twitter, Alphabet) run by the NZ Super Fund.
        

Progress achieved

  • BTNZ reached out to encourage all 15 of our investment managers to join the collaborative engagement.
  • Five of BTNZ's investment managers joined BTNZ and 93 other organisations in support of the engagement.

Key performance indicator

          Provide examples of ESG incorporation and engagement to Advisers for use with clients
        

Progress achieved

  • BTNZ provide examples of ESG incorporation and engagement undertaken by BTNZ and IMs as part of our investment committee reporting. These examples are shared with Financial Advisers for use with their clients.

06.2. Additional information.


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