The New Zealand government is ringfencing billions of dollars from fossil fuel investments, effectively divesting much of the country’s superannuation scheme.
On Sunday, Commerce Minister Kris Faafoi announced the country’s ‘KiwiSaver’ accounts would be going green. From next year, default funds will no longer be able to include ‘fossil fuel production’ companies in their portfolio.
“This reflects the Government’s commitment to addressing the impacts of climate change and transitioning to a low-emissions economy,” Mr Faafoi said. “It also makes sense for the funds themselves given that there is a risk of investing in stranded assets as the world moves to reduce emissions.”
KiwiSaver is New Zealand’s superannuation-style scheme, in which Kiwis are encouraged to put a fraction of their income in a savings deposit, which is then topped by employers and the government.
The decision will impact the 690,000 Kiwis remaining with their default provider, which each invest somewhere between 0.49 per cent and 2.4 per cent of their portfolio in fossil fuels. At the end of 2019, there were 2.9 KiwiSaver accounts in total, with a total value of $NZ59 billion ($A56.5 billion).
New Zealand has already changed the rules on its $NZ47 billion ($A45 billion) Superannuation Fund, which supports the country’s pension system. That decision, in 2017, removed more than $NZ3 billion ($A2.9 billion) from fossil fuel-related stocks “without negatively affecting performance” according to Mr Faafoi. “Moving away from investments in fossil fuels doesn’t have to mean lower returns.”
