Rātā intends to be a highly responsible and ethical investor and aims to ensure our portfolio reflects our purpose and what we value as investors.
Our strategy to achieve this includes selecting aligned funds to invest into, actively communicating with fund managers our aspirations and excluding investments that fall short of our expectations.
Engagement
Rātā values engagement with its fund managers and the investment industry. Consistent with our engagement approach with our communities, our investment engagements will be purposeful to achieve one or more of the following outcomes[1]:
- Informing decisions – to provide investment advisors, fund managers, and experts opportunities to contribute to decision-making processes.
- Share knowledge – to share understanding with the investment community on a specific theme or issue to increase knowledge and change behaviours.
- Strengthening relationships – to build new relationships and/or improve relationships with the investment community.
Rātā encourages dialogue and discussion on any issues raised through engagement. Rātā may engage directly on its own or collaboratively with other institutional investors such as Community Trusts, other signatories to the Principles of Responsible Investing (PRI), members of the Responsible Investment Association of Australasia (RIAA), or similarly minded collectives of investors.
Rātā uses engagement to stay abreast of developing practices in responsible investment and monitors relevant literature and research with the goal of continuous improvement.
Exclusions
Rātā intends to be a highly responsible and ethical investor and aims to ensure our portfolio reflects our purpose and what we value as investors. Our strategy to achieve this includes selecting aligned funds to invest into, actively communicating with fund managers our aspirations and excluding investments that fall short of our expectations.
We acknowledge the practical challenges in fully realising our exclusions and, where pragmatically possible, endeavour to decrease investments into areas on our exclusions list.
Rātā trustees have determined that the following products, industries and practices should be excluded:
- Companies manufacturing cluster munitions[2],
- nuclear explosive devices[3],
- tobacco[4],
- civilian automatic and semi-automatic firearms, magazines, and parts that can be used to assemble prohibited firearms[5].
- Human Rights Abuses
- Modern Slavery and Labour Rights Abuses
- Animal Cruelty
- Recreational Marijuana
- Gambling (apart from Lotteries)
- Adult Entertainment/Pornography
- Fossil Fuels (High Carbon)
- Alcohol[6]
- Whaling
- Testing on Animals for non-medical purposes
- Rights of Indigenous Peoples breaches under The United Nations Declaration (UNDRIP)
In determining these exclusions and whether to exclude any other investments, Rātā will consider the following:
- Whether excluding the investment supports our purpose of striving for an equitable and sustainable society under the korowai of Te Tiriti o Waitangi.
- If the investment causes substantial and irreparable harm to society or the environment,
- Whether New Zealand legislation, regulation, or government commitments prohibit certain products or activities or if they aim to significantly reduce or render obsolete such products or activities in the foreseeable future.
- The materiality of the issue.
- The impact of the exclusion on the portfolio's expected investment risk and return.
- Our stakeholders' perspectives.
- The impact of investment on the reputation of Rātā and our stakeholders.
The efficacy of other responsible investment approaches (e.g. engagement, either individually or collaboratively) in addressing the issue of concern. Exclusion will only be considered as a last resort.
Rātā may consider and update as necessary additional reasons for exclusion or products or services to be excluded.
Implementation
While Rātā strives to align our portfolio with our exclusion aspirations, we recognise that the complexity and practical realities of the investment landscape may sometimes require us to make pragmatic decisions that may not fully meet our aspirations.
When investing in listed markets, Rātā does not manage securities directly but selects specialist fund managers for each investment class.
Rātā invests in Collective Investment Vehicles (CIVs), where the investments are pooled with those of other investors. The use of CIVs enables cost-effective access to a diversified portfolio of assets. Rātā does not control or set the guidelines for these investments. As such, Rātā may sometimes have indirect exposure to an excluded company. However, Rātā will pragmatically apply this exclusions framework to its choice of CIVs.
Rātā will actively enforce the Rātā exclusion policy for investments as much as practicable.
Rātā Foundation relies on third-party providers of ESG research in determining excluded companies.
[1] Taken from the Community Investment engagement models based on the Capire Engagement Triangle Capire | Giving every person a voice | Capire Engagement Triangle 2022.
[2] Cluster Munitions Convention signed by New Zealand in 2008
[3] New Zealand Nuclear Free Zone, Disarmament, and Arms Control Act 1987
[4] World Health Organisation (WHO) Framework Convention on Tobacco Control (FCTC) signed and ratified by New Zealand as one of 168 signatory countries. The objective of the FCTC is to reduce continually and substantially the prevalence of tobacco use and exposure to tobacco smoke, which successive NZ Governments have introduced legislation to achieve, including Smoke-free Environments Act, fiscal controls i.e. taxation, and Ministry of Health programmes, in particular “Clearing the Smoke”.
[5] Arms (Prohibited Firearms, Magazines, and Parts) Amendment Act 2019
[6] Organisations that are primarily set up to manufacture and distribute alcohol for consumption.