Sustainable Investment Philosophy


AMP Wealth Management New Zealand


Scope of Philosophy

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)

Our Philosophy


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.

Our principles

Together we create a good tomorrow

Overall adoption of Sustainable Investment approach

Sustainable Investment and competitive returns go together

Sustainable Investment approach without trade-off of long-term returns.

We are committed to shared value and transparency

Regular reporting of application of exclusions and Sustainable Investment decisions which we will make publicly available on our website.

We will make your money speak for you

Increased engagement and voting on key principles through proxy voting and engagement with companies, where relevant.

We will avoid the bad and support the good

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.

We will work with others to increase your influence

Join wider initiatives and focused groups to increase positive engagement outcomes (NZ Super Fund, Sustainable Business Council, and the Responsible Investment Association Australasia (RIAA))

Exclusions

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:

Controversial weapons

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

Civilian firearms

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.

Military weapons

All companies deriving 5% or more revenue from the production of conventional weapons, weapons systems, components and support systems and services.

Fossil fuel

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

Nuclear power

All companies generating (or that have installed capacity to generate) more than 5% of their electricity from nuclear sources.

Tobacco

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.

Palm oil

All producers and any companies that earn revenue from the distribution and supply of palm oil.

Whale products

Companies that derive revenue from whale meat production.

UN Global Compact violators

Any companies that are assessed to be non-compliant with the UN Global Compact principles.

Primary industry exclusions

Any companies with Primary Industry Exclusions as defined by GICS codes:
• Coal
• Integrated Oil & Gas
• Oil & Gas Drilling
• Oil & Gas Equipment
• Oil & Gas Exploration and Production
• Tobacco

NZ Super Fund exclusions

Any companies on the NZ Super Fund exclusion list.

Find out more about our exclusion thresholds here.

 

Ownership look-through

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.

ESG Integration

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.

Reporting on Sustainable Investment Principles

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.

Engagement and Voting

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:

Board Quality

Quality leadership is essential to performance. Hence, board composition, effectiveness, diversity, and accountability remain a top priority.

Environmental Risks and Opportunities

Disclosure provides enhanced understanding of board and management oversight of policies, risk factors and opportunities that drive sustainable long-term financial performance.

Capital Strategy & Capital Allocation

A clear articulation of corporate strategy and capital allocation provide a clear sense of the direction a company intends to take.

Compensation that promotes long termism

Executive pay policies and outcomes should link closely to long-term strategy, goals, and performance.

Human capital management

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.