This philosophy covers AMP-branded funds offered through the following products:
• AMP KiwiSaver Scheme
• New Zealand Retirement Trust
• AMP Investment Trust
• Superannuation Master Trust
• Personal Superannuation Scheme
• Future Lifestyle Plan
• Savings and Investment Portfolio (incorporating Personal Retirement Plan, Passive NZ Shares and Passive International Equities)
We have adopted a sustainable investment philosophy based on a framework of principles that are expected to produce returns in line with or better than the broader market index and result in a more sustainable impact for the world than if they had not been adopted.
The approach encompasses three key elements:
• Sustainable Investment Exclusions;
• Integration of Environmental, Social and Governance (ESG) considerations into our investment decisions; and
• Stewardship through voting and engagement with companies
This philosophy is intended to be implemented progressively across all asset classes over time as more sustainable investment options become available.
Overall adoption of Sustainable Investment approach
Sustainable Investment approach without trade-off of long-term returns.
Regular reporting of application of exclusions and Sustainable Investment decisions which we will make publicly available on our website.
Increased engagement and voting on key principles through proxy voting and engagement with companies, where relevant.
Bad – Adoption of exclusions (manufacture of cluster munitions, anti-personnel mines, nuclear explosive devices, civilian firearms, conventional weapons, nuclear power, fossil fuels, palm oil and tobacco).
Good – Where possible, apply higher weighting to companies that are doing a better than average job in managing ESG issues.
Join wider initiatives and focused groups to increase positive engagement outcomes (NZ Super Fund, Sustainable Business Council, and the Responsible Investment Association Australasia (RIAA))
We believe that exclusions play a role in delivering part of our Sustainable Investment Philosophy. For our AMP-branded funds (for clarity this excludes AMP Capital branded funds), we use a mandate structure which allows certain sectors and securities to be excluded.
For non-AMP branded funds, which often hold other investors’ moneys too, the relevant managers will have their own exclusion policies.
The current list of exclusions we use in relation to our AMP-branded funds is set out below – note each bullet point represents a standalone hurdle:
All companies that provide components or services used in the manufacturing of controversial weapons, including:
• Anti-Personnel Mines
• Biological and Chemical Weapons
• Cluster Weapons
• Nuclear Weapons
• Depleted Uranium
• White Phosphorus
All producers of civilian firearms and any companies that earn more than 5% of their revenue from the distribution, retail and supply of civilian firearms.
All companies deriving 5% or more revenue from the production of conventional weapons, weapons systems, components and support systems and services.
All companies that earn revenues from the exploration, extraction, production, refinement, transportation and storage of fossil fuels, including:
• Arctic oil & gas
• Oil & gas
• Oil sands
• Shale energy
• Thermal coal
All companies generating (or that have installed capacity to generate) more than 5% of their electricity from nuclear sources.
All producers of tobacco products and all companies that earn more than 5% of their revenue from the distribution, retail and supply of tobacco-related products.
All producers and any companies that earn revenue from the distribution and supply of palm oil.
Companies that derive revenue from whale meat production.
Any companies that are assessed to be non-compliant with the UN Global Compact principles.
Any companies with Primary Industry Exclusions as defined by GICS codes:
• Integrated Oil & Gas
• Oil & Gas Drilling
• Oil & Gas Equipment
• Oil & Gas Exploration and Production
Any companies on the NZ Super Fund exclusion list.
The exclusions criteria in the table above identify companies directly involved with each of the areas noted, or if they are the majority owner (50% ownership or more) of other companies involved in any of the criteria we are looking to exclude.
An additional ‘significant ownership filter’ is used to identify and exclude companies who own between 10% and 50% of any companies with any involvement in one of the exclusions in the table above. In our approach we only apply the significant ownership filter when we have total exclusion of the activity, e.g. Controversial Weapons, Fossil Fuels, Palm Oil, etc.
Where possible, we will implement a weighting to the “good” by overweighting our exposures to companies that have a higher ESG rating where we consider it appropriate to do so based on factors such as expected returns, volatility and liquidity.
We seek to achieve this overweighting by preferring indices (where available and appropriate) that re-weight portfolios to companies that have higher ESG ratings relative to others.
We will publish our voting and engagement outcomes and make this publicly available on our website no less than six-monthly. In addition, we will provide regular updates on our areas of focus as part of regular communications to clients.
AMP believes that stewardship is an important aspect of sustainable investment. The stewardship approach has two key aspects: (1) voting through shares held; and (2) engagement with companies. Stewardship activities will be undertaken via underlying managers exercising these rights on behalf of us (or in consultation with us) with a focus on the following areas:
Quality leadership is essential to performance. Hence, board composition, effectiveness, diversity, and accountability remain a top priority.
Disclosure provides enhanced understanding of board and management oversight of policies, risk factors and opportunities that drive sustainable long-term financial performance.
A clear articulation of corporate strategy and capital allocation provide a clear sense of the direction a company intends to take.
Executive pay policies and outcomes should link closely to long-term strategy, goals, and performance.
In a talent constrained environment, companies should focus on sound business practices that create an engaged and stable workforce.
These areas of focus will continue to evolve and change over time as we and the relevant managers consider feedback from clients and regulatory authorities on the important issues that are relevant to investing in a sustainable way.