Responsible investment

The purpose of the scheme is to help members provide for their long-term financial security. The trustee’s principal responsibility is to maximise long-term returns while ensuring an appropriate trade-off between return and risk. 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. That means assessing the financial risks and opportunities associated with climate change and other environmental, social and governance (ESG) factors.

Our beliefs

The trustee’s investment beliefs constitute the investment philosophy of the scheme and guide the investment of the scheme’s assets. One of these beliefs is that the integration of ESG factors into investment decision making helps to identify opportunities and risks, resulting in better financial outcomes. You can read more about our investment beliefs in our statement of investment policy and objectives.

Our policy

We have adopted a policy on responsible investment in line with our investment beliefs. Our policy is that we will:

  • require our investment manager to be a signatory to the United Nations-supported Principles for Responsible Investment (PRI)
  • require the investment manager to incorporate climate change and other environmental, social and governance (ESG) considerations into its investment process, with the trustee receiving regular reporting on these considerations.
  • avoid, where practical, investment in companies whose activities are materially contrary to the intent of New Zealand legislation or various international agreements to which New Zealand is a signatory. These activities currently include the:
    • manufacture of cluster munitions, anti-personnel mines, nuclear explosive devices, and tobacco products
    • manufacture and retailing of military style semi-automatic weapons or assault rifles for civilian use.

Mercer’s approach and philosophy

Your savings are invested by fund managers chosen by Mercer. Mercer has its own beliefs and policies on sustainable investment which broadly align with our own. For example, Mercer has committed to achieving net-zero absolute carbon emissions across its investment funds by 2050[1]. It does not necessarily follow that PSS’s portfolio will achieve carbon net-zero status by this date as this would depend on the specific asset allocation of our fund at the time. However, it is expected our carbon exposure will reduce significantly over time.

Mercer requires all its managers to assess and reflect ESG risks and opportunities in security or asset selection. As a responsible asset owner, Mercer also expects its managers to seek to improve the ESG practices of the companies they invest in through share voting and engagement. Exclusion is usually a last resort, but a company may be excluded from a portfolio if it is determined that engagement and voting is unlikely to lead to positive change.

Mercer’s commitment to responsible investment is set out in its Sustainable Investments Policy. Mercer has also published a climate change report which sets out its climate- related commitments in more detail. You can view these documents below.

Read more

[1] Defined as absolute carbon emissions, per $M of funds under management and Scope 1&2 for the Mercer Investment Trusts New Zealand in aggregate.