15 Aug 2017

Climate change risk prompts Super Fund to sell shares in oil, gas firms

1:05 pm on 15 August 2017

The New Zealand Superannuation Fund has sold shares in some of the world's biggest companies to reduce exposure to firms emitting greenhouse gases.

Offshore natural gas, oil

The fund is selling the shares to reduce exposure to climate change risk, its chief investment officer says. Photo: 123RF

The fund is quitting or reducing holdings in 300 firms as part of its "carbon transition". They include Exxon Mobil, Shell, BP and Statoil and local firms New Zealand Oil & Gas and Genesis Energy.

The firms are part of the Super Fund's huge passive investment portfolio - making up two thirds of the fund's total investments - and similar principles will be applied now to active investments.

Chief investment officer Matt Whineray said 40 percent of all super fund investments would be low carbon as a result of the changes.

The aim was to reduce risk by cutting exposure to the companies expected to be most affected by climate change.

"We think that climate change represents a material risk, one that is not being properly priced by the markets," he said.

"So we have done something about that by reducing exposure to companies that are most exposed to this.

Mr Whineray said the change was being made for commercial reasons, not as a result of political pressure.

"This is clearly not an ethical decision at this stage, it is an investment decision.

"We have reviewed the risk that we think is posed by climate change to our portfolio and we have reduced that risk."

He conceded the policy might lose money in the short term, but long term, the worst that could happen was that some high value shares were changed for other high value shares.

"In the worst case, we have sold some fairly valued assets and bought some fairly valued assets; best case, we have removed a significant risk from our portfolio."

Other companies being completely or partly divested from include: US oil exploration company Anadarko, which is active off the New Zealand coast; US utilities firm Alliant Energy; Berkshire Hathaway; Chevron; Rio Tinto; ConocoPhillips; Mitsubishi; and Occidental Petroleum.

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