Taking the long view: A global investor's perspective on sustainable investment - RIAA 2026 Keynote Address, Jo Townsend

Tēnā koutou katoa. 

It’s a privilege to be here with you all today and to have this opportunity to speak. 

I want to begin by acknowledging what RIAA has built over the past twenty-five years. Not just a membership organisation, but an industry with standards, evidence, education, credibility and shared practice, drawn from people with very different mandates and starting points.  

What holds it together is a shared goal: better investment outcomes through the integration of sustainability, and higher standards of practice, knowledge and transparency. 

Ultimately, all of that work is in service of beneficiaries.  

For us at the New Zealand Super Fund, this is the New Zealand public, whose retirement will be lived in the economy, environment and society our investments help shape. 

That obligation sometimes feels an unusual one.  

Faster news cycles, shorter attention spans, global conflict, polarisation – there are so many drivers pushing toward compressing the horizon. Our mandates require us to resist that pressure. 

That responsibility is captured in our name. While we are known as the New Zealand Super Fund, our formal name is Guardians of New Zealand Superannuation.  

This represents an important distinction. We are not simply a fund with a benchmark. We are Guardians of a fund created to benefit generations of New Zealanders who will live with the consequences of our decisions long after we have left the building. 

That horizon changes how we think about the source of investment returns. 

Most of the Fund is invested outside New Zealand, across global markets. A fund of our size and breadth therefore holds a slice of the global economy. Over decades, our returns will largely reflect that economy's performance, plus the value we add through investment skill. The economy's health does not sit alongside our returns. It produces them. 

And that economy sits inside physical systems indifferent to our opinions. 

Carbon accumulates in the atmosphere according to physics and chemistry, not news cycles.  

Biodiversity loss is, in most cases, irreversible and does not wait for markets to price it accurately. 

Our first obligation is to anticipate how these changes will affect markets and assets -  where value is created, and where it is destroyed. And where we are taking risks we are not being compensated for. 

The second obligation is less comfortable. We are not only exposed to these outcomes. We may help determine them. Market standards, disclosure quality, the incentives we set for our managers, policy settings, behaviours - these are inputs into the health of the economy from within it sit the markets we invest in. A diversified, long-horizon investor cannot diversify away from the state of the world. 

Which brings me to why we do this. Our mandate requires us to invest the Fund on a prudent and commercial basis, consistent with three objectives: best-practice portfolio management; maximising return without undue risk; and avoiding prejudice to New Zealand's reputation as a responsible member of the world community. 

That was not accidental. When the Fund was established in 2001, Parliament gave those three objectives equal weight. I am told this reflected a deliberate choice by Sir Michael Cullen, who established the Fund. The message was clear: prudent investment, strong risk-adjusted returns and New Zealand’s reputation all needed to be considered together. This meant that, sustainable investment is not an interpretation imposed on the mandate. It is part of the discipline required to fulfil it. 

It’s no surprise then that sustainable investment has been an important consideration since the Fund’s early days when thinking about environmental, social and governance issues in investment decisions was still an emerging discipline, largely associated with ethical choices and exclusions.  

For example, in 2006, the Fund became a founding signatory to the United Nations-backed Principles for Responsible Investment. 

Ten years later in 2016 our Climate Change Investment Strategy was introduced. 

Since then, the Fund has reduced its exposure to assets most at risk in that transition and increased exposure to those positioned to benefit from it.  

We exceeded the carbon-reduction targets we set for 2025 and have since established new targets for 2030. As at June this year, the Fund’s emissions intensity was estimated to be 76 percent lower than the target benchmark, while its exposure to potential emissions from fossil fuel reserves was estimated to be 99.8 percent lower. 

It is worth pausing on what those figures represent. They reflect a decade of investment decisions - changing benchmarks, reallocating exposure, searching for opportunities, due diligence and using our influence.  

We have learned a great deal along the way, and we have shared that experience in the hope that others can build on it. The wider transition remains uncertain and uneven, but our direction is clear. We must sustain the progress already made and keep adapting our approach as we work towards net zero. 

We are not alone in that commitment. Next month, I will attend the One Planet Sovereign Wealth Funds Network, where global investors representing more than US$48 trillion in assets under management will consider tangible actions they can take, individually and collectively, to manage climate-related risks and strengthen resilience.  

The institutions involved have different mandates, portfolios and starting points. The value of the network is not that everyone will take the same approach. It is that long-term investors can share evidence, learn from implementation and collaborate where doing so supports their mandates and the interests of their beneficiaries.  

The Fund has also recently been recognised as the world’s best-performing sovereign wealth fund over the past twenty years.  

That performance has many drivers, not least our allocation to growth assets, and I would not attribute it to any single strategy. But it does demonstrate that integrating sustainability considerations into investment decisions does not need to come at the expense of returns. It is not a choice between returns and responsibility. It is the work of identifying risks that markets may be mispricing, recognising opportunities they may be underestimated, and positioning the portfolio accordingly. 

Agriculture provides a practical example. Working with T&G and our external investment manager, FarmRight, we have invested in converting dairy land in Canterbury to apple production. 

Previously, the economics did not work for either side. For farmers, transporting apples to a processing facility in Nelson made conversion uneconomic. For T&G, there was not enough local production to justify establishing a facility in Canterbury. By sharing the investment, economics and risk, we have helped create a commercially attractive proposition that works for both parties. 

The investment is expected to deliver strong financial returns while reducing methane emissions per hectare by 80 percent and nitrogen emissions per hectare by 90 percent. It may also help make apple production a viable option for other farmers in the region. 

This is the opportunity side of sustainable investment: using long-term capital to overcome a coordination problem, develop a commercially compelling investment and create benefits that may extend beyond the asset itself. 

Staying focused on the long term also means looking beyond our own portfolio. 

As a large institutional investor, we have an interest in the quality of the wider systems in which we invest. Strong markets depend on clear information, durable settings and a shared understanding of the standards expected of companies and investors. 

That is why we contribute to public policy in areas relevant to sustainable finance, while remaining politically neutral and firmly grounded in our mandate. 

Modern slavery is one example. First and foremost, it is a serious human rights issue. It can also create long-term financial, regulatory and reputational risks for companies and their investors.  

The Fund’s work in this area has included contributing to the UN-supported Liechtenstein Initiative on modern slavery and human trafficking, and engaging with companies through our stewardship activities. 

We also made a recent submission in support of New Zealand’s first Modern Slavery Bill, which seeks to strengthen transparency and accountability around modern slavery risks. 

For investors, that transparency matters. We need credible information to understand where risks may exist, how companies are responding and whether progress is being made. 

Of course, no one sector or investor can solve a systemic global issue alone. But we can use our influence, networks and stewardship activities to support better practice. 

Our Sustainable Investment Team has been involved in the development of a Sustainable Finance Taxonomy for New Zealand, led by the Centre for Sustainable Finance. 

The purpose of taxonomies is to grow the market by making it more efficient for investors with sustainable investment goals to allocate capital. They don’t set policy or restrict financing. They provide clarity and consistency. 

This will be an important tool for the sector – and a high calibre one at that – with the project recently being awarded the global Climate Bonds Award for Most Innovative Taxonomy. The Taxonomy will be submitted to the Government in December.  

I want to turn now to an issue that has attracted considerable attention – and that’s the recent High Court judicial review proceeding concerning aspects of our sustainable investment policy documents and holdings in four entities.  

We have always taken our obligations as an investor on behalf of New Zealanders extremely seriously. 

Decisions about how we respond to concerns involving companies in the portfolio are rarely simple. They require careful research, structured evaluation, expert judgement and consideration of our statutory mandate as a whole. 

Given the significance of our role for New Zealand, we expect our approach to be examined and, at times, challenged. That scrutiny is an important feature of a strong democracy. 

In response to the High Court’s findings, we have created a standalone Sustainable Investment Policy and detailed Sustainable Investment Procedures.  

Together, they set out how decisions are made, the standards and evidence considered, where expert judgement is required, and how responsibility, authority and oversight are allocated. 

Our updated Sustainable Investment Procedures set out detailed processes for integrating sustainability considerations into investment decisions, conducting due diligence, monitoring investments, engaging with companies, exercising our voting rights and, where applicable, considering exclusion. Exclusion remains one possible response within our broader sustainable investment activities. 

Our fundamental approach to Sustainable Investment has not changed. We also know that sustainable investment is a fast-evolving area and we continue to look for ways to strengthen our approach. 

This is important because the environment we operate in is only going to keep getting more complex, with areas like geopolitics, AI, human rights and climate change continuing to dominate headlines and impact markets.    

Ignoring these issues does not make them disappear. It simply leaves an investor less prepared for them. 

For the Guardians, this means continuing to deliver on our Climate Change Investment Strategy and the targets we have set. 

It means pursuing opportunities such as offshore wind where the commercial proposition is compelling. 

It means using our stewardship rights to help build a more sustainable finance system.  

And it means bringing our scale, global perspective and intergenerational horizon to the opportunities New Zealand has in front of it. 

There will be uncertainty and periods when the direction of travel is contested. 

We can’t remove that complexity – but we can be disciplined about how we respond to it. 

We can keep testing our assumptions and improving our approach.  

Because taking the long view is not about claiming to know exactly what the future will look like. It’s about being prepared for change and ready to invest in the opportunities it creates. 

Thank you.