ALMATY (Reuters) - New Zealand’s sovereign wealth fund has reduced its exposure to carbon emissions and carbon reserves by a fifth, its chief executive said, after launching a review of climate change risks last year.
The move is part of a broader trend by some sovereign investors to reduce their exposure to fossil fuels or seek clean alternatives to protect their portfolios from rising environmental risk.
Adrian Orr, of the New Zealand Superannuation Fund (NZSF), told Reuters that exposure in its passive physical global equity portfolio to carbon emissions had been reduced by 50 percent and to reserves by 70 percent.
That had reduced the NZ$35 billion ($25 billion) fund’s overall exposure to emissions and reserves by around 20 percent each.
“The risks of holding carbon in your portfolio are not adequately rewarded,” Orr said in a telephone interview ahead of a meeting in Kazakhstan of the International Forum of Sovereign Wealth Funds, which he chairs.
“We will invest in fossil fuel but we want to be rewarded appropriately.”
Orr said his fund was also looking for more investment options in the context of climate change.
“At the moment it’s patchy - there are some good initiatives like the green bonds - but investment options in governance and social issues were also patchy five years ago,” he said.
Reporting by Olzhas Auyezov; editing by John Stonestreet