The bright future of sustainable investing

Interview with Livvy Mortimer, Sustainable Investment Analyst

Last year we made some big changes to our AMP KiwiSaver Scheme and New Zealand Retirement Trust (NZRT) to deliver even more value for our clients, and through the way we invest, help to address key sustainability issues like the impacts of climate change.

But what is sustainable investing, and how can it help New Zealanders to achieve a great retirement?

We spoke with Sustainable Investment Analyst Livvy Mortimer to understand more about sustainable investing, and why she predicts it will continue to grow in popularity both here and overseas.

Livvy is not only a talented addition to our team, she also brings a strong passion and understanding of how our younger generations are thinking about the future of our planet and society, as a member of Gen Z.

What is sustainable investing?

“It’s an investment approach that takes factors other than just financial performance into consideration.

Things like the organisation’s impact on the environment, its relations with key stakeholders like employees and the community, how it is governed, and manages risk.

So, it’s a more holistic approach which supports identifying long-term value in the market. This is especially important in relation to products like the AMP KiwiSaver Scheme and NZRT, where investors often have a long time before they access their money.”

How does sustainable investing compare to a more traditional approach?

“Many people used to think that there was a trade-off with sustainable investment. In other words, lower returns for ‘doing good’.

However, what is often the case, is organisations who have a proven track record of behaving ethically in relation to the environment, community and the way they govern themselves, tend to perform better than those who lack in one or more of these areas.

Another key difference is that we’re able to address key sustainability issues by being more selective with the organisations and sectors we invest in. Essentially, supporting those that make a positive difference, and excluding those which have a negative impact.”

Can you give an example of an environmental issue sustainable investing helps to address?

“You might have heard about the transition to net-zero. It’s part of a global effort to keep the average temperature rise to less than 1.5 degrees to prevent catastrophic climate change. To achieve this, we need to be in a state of balance between emissions produced and emissions reduction activity by 2050.

Investors have a key role to play in helping the world to realise its net-zero goal, by supporting innovative companies who help to maintain our natural environment and avoiding carbon-intensive industries with no plans to change.

We’re deeply committed to addressing the impacts of climate change, which is why we decided to not invest in companies that earn revenues from the exploration, extraction, production, refinement, distribution and supply of fossil fuels. And on the flipside, we want to support organisations who are helping to create positive change through impact investing."

We often hear that younger generations are more engaged when it comes to addressing climate change – what are your thoughts?

“Gen Z and Millennials have grown up surrounded by the issue of climate change.

I remember in my primary school class learning about the water cycle – that human activity is negatively impacting our freshwater supply, and one day it may run out.

I felt confused, wondering why we were not doing enough to address this potentially catastrophic issue.

As I grew older, the conversations about climate change became more disheartening and imperative. However, global action did not match up.

I believe the combination of being bombarded by information about the perils of climate change, combined with little action from powerful figures, has galvanized younger generations to be the voice of climate action.

The environment is Gen Z’s number one concern and they are more likely to change their habits to be more sustainable.

This gives me hope for the future. As younger generations become more prevalent in the economy, there will be even more opportunity to create positive change through things like sustainable investment.”