Last updated: 28/02/2025
At Mercer New Zealand, we take our Sustainable Investment Policy into account when managing our investments, believing that sustainable investment approaches are consistent with an objective to create and preserve long-term investment capital, where relevant and aligned with achieving investment objectives.
Our Sustainable Investment Policy is informed by our global philosophy and principles, updated in 2024 here , and our local experience implementing and evolving our sustainable investment approach for over a decade.
We have principles to guide our implementation approach, summarised into four techniques:
Refer to the Sustainable Investment Policy for more information about these principles and implementation techniques..
Mercer New Zealand also publishes a Sustainable Investment Report which provides a summary of sustainable investment activity.
Exclusions involve seeking to avoid investing in, as well as removing or reducing exposure as much as practicable to, certain companies with involvement in defined products or business activities.
Exclusions can be used to respond to evolving societal norms and expectations, including New Zealand Government policy positions, especially where integration and stewardship are considered to be insufficient or not applicable.
Exclusions may be implemented either as rules-based, pre-defined criteria (such as the Exclusions Criteria defined below) or an escalation response for specific holdings related to an engagement process (as described below under the “Stewardship” section). The below documents our approach to rules-based exclusions.
As described below, our application of exclusions is generally determined by the asset class and nature of the holdings, and are subject to the operational limitations and exceptions.
Exclusions only apply to Directed Investments. If a Directed Investment meets an Exclusions Criteria, our investment managers will generally be expected to divest the Directed Investment in a reasonable period of time and as market conditions allow.
Appointed investment managers are required to apply the following exclusions to the Directed Investments of the Funds (‘Exclusions Criteria’), unless an operational limitation as noted below, or other factors beyond our reasonable control, mean they are not possible to apply.
Exclusion |
Exclusions Criteria |
Controversial weapons |
Companies that manufacture whole weapons systems, or delivery platforms, or key components that were developed or are significantly modified for use in cluster munitions, anti-personnel landmines, biological or chemical weapons or nuclear weapons (regardless of revenue). Companies with involvement* in the production or retailing of automatic or semi-automatic civilian firearms or ammunition (regardless of revenue). |
Tobacco |
Companies with involvement* in the production of tobacco, manufacture of nicotine alternatives or tobacco-based products (regardless of revenue), including subsidiaries and joint ventures. Nicotine alternatives and tobacco-based products include, for example, nicotine vaping products such as ‘vaping’ devices and e-cigarettes. Any other company that derives greater than 50% of revenue^ from tobacco-related distribution, wholesale or retail, and services such as marketing or supplying products necessary for production. |
Russian assets# |
Defined as:
|
* Involvement is determined by a third party ESG research provider, currently ISS ESG, typically assessed based on revenue derived from defined activities (no revenue thresholds) or in the case of expansion metrics assessed based on capital expenditure.
^ Revenue is gross revenue in the last full financial year or, where not available, net revenues based on available company filings.
# Mercer New Zealand has instructed its investment managers to divest any existing exposure to Russian securities as market conditions allow and to prohibit any new investments in Russian securities. This may mean that some Funds still retain exposures to Directed Investments in Russian securities, as Mercer New Zealand seeks to divest in a manner that promotes the best interests of investors.
Further to the exclusions listed in the Exclusions Criteria section above, the additional exclusions listed below apply to the Directed Investments of some asset classes – equities, global bonds and global credit - for the Mercer KiwiSaver scheme funds labelled as Responsible or Sustainable (‘Additional Exclusions’) within certain revenue thresholds, unless exceptions (as noted below) or other factors beyond Mercer New Zealand’s control mean they are not possible to apply Other Fixed Income, Overseas Sovereign Bonds and New Zealand Sovereign Bonds asset classes do not have the below Additional Exclusions.
Applying Additional Exclusions Criteria may affect investment risks and returns where, for example, there are exclusions to investments in companies that are not typically excluded in other funds. If those excluded companies perform well or poorly in certain time periods, there may be differences in return outcomes compared to a benchmark or comparable fund where those exclusions are not applied.
These Additional Exclusions for Responsible and Sustainable labelled Equities and Global Bonds are defined as:
Additional Exclusion |
Additional Exclusions Criteria |
Coal, oil, or gas |
Companies with involvement* in the following as defined by Global Industry Classification Standard (GICS) sub-industry:
Companies that own proved or probable reserves in coal, oil, or gas; and derive in excess of 15% of their revenue^ from exploration and extraction of thermal coal, oil or gas. Where referred to above, ‘coal, oil or gas’ includes these fuels where derived from unconventional sources such as tar sands or shale. |
Adult entertainment |
Companies with greater than 10% of revenue^ from adult entertainment-related business activity (adult entertainment-related activities mean production, distribution and not accessible to minors as defined by third-party data provider). |
Alcohol |
Companies with greater than 10% of revenue^ from alcohol-related business activities (alcohol-related activities mean production, distribution and services to the production of alcoholic beverages alcohol as defined by third-party data provider). |
Gambling |
Companies with greater than 10% of revenue^ from gambling-related business activities (gambling-related activities mean production, services and distribution of gambling products as defined by third-party data provider). |
Depleted uranium |
Companies with involvement* in the development or production of depleted uranium ammunition/armour. |
^ Revenue is gross revenue in the last full financial year or, where not available, net revenues based on available company filings.
The following Additional Exclusions apply where a fund (currently the Sustainable Moderate, Sustainable Balanced, Sustainable Growth and Sustainable High Growth) invests in responsible or sustainable labelled Global Credit and are defined as:
Additional Exclusion |
Additional Exclusions Criteria |
Nuclear weapons |
Companies with involvement* in the development or production of nuclear weapons. |
Depleted uranium |
Companies with involvement* in the development or production of depleted uranium ammunition/armour. |
Tobacco |
Companies that derive greater than 10% of revenue^ from tobacco-related distribution, wholesale or retail, and services such as marketing or supplying products necessary for production. |
Cannabis |
Companies that derive greater than 10% of revenue^ from cannabis (medicinal or recreational) production, distribution or services. |
Saudi Arabia |
Saudi Arabian securities, defined by country of incorporation or where the security has a primary listing in Saudi Arabia, including subsidiaries. |
Adult entertainment |
Companies with a material exposure to adult entertainment, alcohol or gambling, where materiality is defined as greater than 10% of revenue^ from production and/or distribution, wholesale or retail, and services such as marketing or supplying products necessary for production. |
Live animal exports |
Companies that derive greater than 10% of revenue^ from live animal export for the purpose of selling live animals for slaughter, husbandry and breeding subjects, including specialised transportation services specifically designed to facilitate live exports. |
Animal fur production |
Companies that derive greater than 5% of revenue^ from fur production. |
Thermal coal mining |
Companies that derive greater than 5% of revenue^ from thermal coal mining. |
Oil sands production |
Companies that derive greater than 5% of revenue^ from oil sands production. |
Fossil fuels |
Companies that own proved or probable reserves in coal, oil or gas and derive greater than 15% of revenue^ from exploration and/or extraction of coal, oil, or gas; or companies with a primary business activity in any of the excluded sub-sectors below:
Where referred to above, ‘coal, oil or gas' includes fuels derived from conventional and unconventional sources such as tar sands or shale. |
*Involvement is determined by a third party ESG research provider, currently ISS ESG, typically assessed based on revenue derived from defined activities (no revenue thresholds) or in the case of expansion metrics assessed based on capital expenditure.
^ Revenue is gross revenue in the last full financial year or, where not available, net revenues based on available company filings.
The Exclusions Criteria and Additional Exclusions listed above are current as at 28 February 2025 and changes may occur from time to time. Any changes will be shown here.
Stewardship
As a shareholder of publicly listed companies, Mercer New Zealand has the right to vote at shareholder meetings and regards voting our shares as important.
Mercer New Zealand engages the services of a third-party proxy advisor to provide proxy voting research and facilitate the collation and reporting of proxy voting data which Mercer New Zealand uses to monitor manager voting. Our ability to directly monitor and report on proxy voting only applies to Directed Investments. Mercer New Zealand’s proxy voting records (to the extent that these are available e.g. for Directed Investments) can be found here and are updated on a six-monthly basis, within three calendar months of the end of the reporting period and show the prior twelve months. Please select New Zealand from the regions drop down menu.
Additional information about Active Ownership is noted in the Sustainable Investment Policy.
RIAA Certification
We are proud that all of our Mercer KiwiSaver scheme funds have been externally certified by Responsible Investment Association Australasia (RIAA)1, an organisation that operates the world’s first certification programme for responsible investment products.
Other Information
Contact Us
For more details, you can contact us on 0508 637 237, or alternatively for Mercer KiwiSaver scheme information email kiwisaver@mercer.com.
Monday - Friday (NZST/NZDT)
Mercer NZ, PO Box 1849
Wellington, New Zealand 6140
PWC Tower, 15 Customs Street West,
Auckland, New Zealand 1010
0508 637 237
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