30 Sep 2022

ACC adopting low-carbon benchmarks in nearly all listed equities

6:40 am on 30 September 2022
ACC Building in Wellington

ACC says it has changed to lower carbon benchmarks for New Zealand equities in May this year and will also adopt low carbon reserves benchmarks for Australian equities. File photo. Photo: RNZ / Angus Dreaver

The Accident Compensation Corporation (ACC) is shifting almost its entire holding of listed equities to low-carbon benchmarks, which cover about $15 billion of Australian and New Zealand investments.

ACC said it was adopting the low-carbon benchmarks in line with the government's zero carbon emission targets, which included its commitment to the Paris Agreement and the Crown Responsible Investment Framework.

The corporation said it would adopt the Morgan Stanley Capital International (MSCI) All Country World Index (ACWI) Low Carbon Target Index (LCTI) as a global equities benchmark.

It would also adopt low carbon reserves benchmarks for Australian equities, adding it had changed to lower carbon benchmarks for New Zealand equities in May, this year.

"ACC is committed to supporting the government in achieving carbon reduction objectives and showing leadership on climate change," ACC chief investment officer Paul Dyer said.

"Asset owners have a responsibility to support the transition to a low carbon economy through investment decisions and interactions with investee companies."

The new benchmarks would help ACC meet its interim targets for a 60 percent reduction in its fund's carbon intensity by 2025 and 65 percent by 2030.

Dyer said most of ACC's listed equities were outside of New Zealand and made up the largest part of its measured emissions.

"We aim to continue to earn strong investment returns for levy payers in the future while also meeting our responsibilities under the Climate Change Response (Zero Carbon) Amendment Act 2019," he said.

Divestment and exclusion of high emitting investments was only part of the answer, Dyer said.

"Engagement is becoming increasingly important because companies are more likely to raise their climate ambitions if held to account by responsible investors such as ACC, rather than being owned and controlled by less climate conscious shareholders," he said.

"Ultimately, net zero will only be achieved if all of us - governments, companies, investors, and the public - participate in the transition to a low-carbon world."

Get the RNZ app

for ad-free news and current affairs