Under our new climate change policy, we'll reduce our own corporate emissions, and decarbonise our investments.
Today we announced a new climate change policy framework setting out a range of targets, and how they're going to be achieved.
Under this new framework, we'll implement policies that reduce our own corporate emissions, and decarbonise the investment equities portfolio. This move is in line with the intent of the Climate Change Response (Zero Carbon) Amendment Act passed last year, which has a net zero emissions target for all greenhouse gases other than biogenic methane by 2050.
"As stewards of the ACC scheme, and by placing a focus on environmental sustainability and reducing carbon emissions, we're demonstrating our obligation to the wellbeing of future generations," ACC Board Chair Dame Paula Rebstock says.
"The framework outlines core principles that will guide ACC in the years ahead, including the $46 billion investment fund we're using to pay for the cost of injuries that have already happened.
"It will be part of our wider environmental, social and governance approach that recognises the public good role at the heart of the corporation and its legislation. It also builds on our long-standing ethical investment policy.
We're working towards New Zealand's commitment to net zero emissions by 2050
"ACC's aim is to be proactive in leading New Zealand's commitment to net zero emissions by 2050, including supporting efforts to limit average temperature rise to less than 1.5°C above pre-industrial levels."
To achieve this aim, we'll adopt a dual pathway approach:
- Corporate: ACC is aiming for a 60% reduction in emissions by 2025 from 2019 levels. We'll also explore offsetting residual corporate emissions from 2021, subject to Board endorsement.
- Investments: ACC will align with the Climate Change Response (Zero Carbon) Amendment Act. This means reducing the carbon intensity of the investment team's global equity portfolio by at least 50% by 2030 compared to 2019 levels.
This position will remain under active review as we move towards net zero, and we may alter the ambition of the approach as we gather more evidence about the costs and opportunities. We may adjust the position to at least be consistent with the five-year emissions budgets that will be set by the Climate Change Commission. We're not ruling out taking a more ambitious path should progress exceed the targeted reductions.
"Achieving these targets will require hard work and some significant changes over the next decade," Dame Paula says.
"We'll be engaging with key stakeholders before we provide further information on the framework. This will be made public in coming weeks.
"In managing our investments, we must balance the objectives of maximising returns to pay for the future costs of injuries, while investing in a way that is ethically acceptable to New Zealanders.
"The passing of the Zero Carbon Act last year, with bi-partisan support, reflects the ethical concerns of New Zealanders are evolving. This framework – and the actions associated with it – acknowledge that change."
We've started making changes
ACC Chief Executive Scott Pickering says the adoption of the framework continues the efforts the corporation has been making in addressing the risks associated with climate change.
"ACC is not starting from scratch. We've already been decarbonising and reweighting the investment portfolio and made steady progress in reducing corporate emissions," says Scott.
Carbon intensity in our global equities portfolio has fallen 19% over the past 10 years. This reflects developments within companies we have invested in. Most of the investment growth is now in low-carbon activities, such as technology and other services.
The trend appears to be that overall carbon intensity is trending down by about 2% per year. Continuation of this trend is pivotal to us meeting our emission objectives. We'll use our influence as a shareholder through proactive engagement on climate change.
In December 2019, we added companies who generate at least 30% of their revenue from thermal coal production to our list of excluded investments. We added a total of 54 companies to the exclusion list as a result.
On the Corporate side, in 2019 we nearly halved our carbon emissions from fleet vehicles compared with 2018, and significantly reduced our business travel emissions through reducing activity, improved processes and commercial arrangements.
Dame Paula says specific climate change policies that ACC will develop to fit under the framework will need to be flexible to new and emerging evidence, shifts in expectations, and future changes in government policy settings. These policies will be developed in coming months.
"Our aim is to continue to earn strong investment returns for levy payers in the future and reduce the cost New Zealanders pay for accident cover, while also meeting our responsibilities under the Zero Carbon Act."
You can watch the Facebook live stream of this morning's select committee meeting below. Dame Paula starts her address about climate change at around 13 minutes.