“For stewards of long-term capital, like sovereign wealth and government pension funds, the question is not can they afford to invest responsibly but rather, can they afford not to? NZSF is proud to be a member of the BWII Leaders List: The 25 Most Responsible Asset Allocators. The initiative focuses attention on the critical issue of sustainability and helps sovereign wealth and government pension funds consider more than just financial metrics in the investment process. Doing so is essential to create value over the long-term.”
- Adrian Orr, CEO, New Zealand Superannuation Fund; Chairman, IFSWF.
Most asset allocators still operate under a false choice: that they must choose between optimizing returns for their stakeholders, and environmental, social and governance concerns. Over the last decade, however, what has become clear in academic study after academic study is that companies and projects with higher scores on environmental, social, and governance metrics generate higher financial and economic returns over time.
Combining analysis of long-term sustainable risks and traditional financial metrics is an important way to optimize return, reduce risk and identify opportunities for future growth, all while aligning portfolios with broader goals of society. Regulators are coming to support this idea, opening a path for allocators to include non-traditional financial risks such as ESG factors in the portfolio selection process. Pressure also is mounting from stakeholders and the public, who would like to see sustainability risks incorporated into their pensions and long-term savings funds.