The New Zealand Super Fund has recently dumped Genesis Energy, owners of the Huntly Power Station (New Zealand’s largest thermal power station) in order to cut the fund’s carbon intensity and exposure to carbon reserves. As of August 15, 2017, the $35 billion fund, which was established to help cover future state pension costs, is now declared “low-carbon.”
Dumped More than $950 Million in Investments
As part of the New Zealand Super Fund’s move to reduce its carbon footprint, more than $950 million in investments has ended, including its holding in a state-owned electricity company. Although NZ Super has investments in numerous other carbon intensive industry companies, this latest move has been welcomed by environmental and investment groups. It has brought NZ Super a long way towards hitting its target of cutting its exposure to carbon reserves by 40 percent and carbon intensity by 20 percent.
Fund Now Declared “Low-Carbon”
Last year, the fund’s investment strategy pledged to reduce its investment in fossil fuels and instead, target clean energy to prepare for climate change. The overall fund’s carbon intensity is now just under 20 percent and the exposure to carbon reserves was reduced by 21.5 percent. In total, this latest decision saw the fund exit 279 companies.
Still Invested in Other Carbon Intensive Companies
Of the remaining investments, the fund has investments in at least 29 airlines, 139 companies in the “oil, gas and consumables” sector and almost 200 companies in the “metals and mining” sectors. In addition, it still holds high-carbon stocks periodically due to the discretionary decisions of active managers.
Companies Can Return to Portfolio in Future
According to Matt Whineray, Chief Investment Officer, cutting exposure to companies at risk from climate change was not the same as other categorical exclusions, such as tobacco manufacturers. If companies improve their management of climate risk, they will have the opportunity to become a part of the portfolio again in the future.
Financial Markets Under-Priced Climate Change into the Future
Because the global energy system is transitioning away from fossil fuels, reducing exposure to carbon emissions and reserves is a low-cost insurance policy. In addition, the recent weather shows how crucial is to that New Zealand has a variety of energy sources.
Genesis Energy Not Concerned; Understands its Importance
As the long, dry winter of 2017 has already shown New Zealand, Genesis Energy can help provide NZ businesses and households with energy when needed. In 2017, almost half of the company’s energy generation has been from renewable sources, up from 16 percent during 2016. The company is not concerned by NZ Super’s move, as other investors continue to see and support the advantages of this company’s thermal capacity.
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