New Zealand Professional Investment Services Firm

Forsyth Barr

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

<h2>ESG with a Capital "E" Part of the Problem or Part of the Solution?</h2>

The global wall of ESG money is starting to get serious about climate change
The ~US$30tr ESG community is at an early stage of a necessary shift from negative screening (e.g. coal) to a more scientific approach to combating climate change where alignment with Paris commitments is taking centre stage. Australasian investors are no exception to this global trend. More than four out of five Australasian asset managers state they either already are, or are considering, setting a net zero emissions target for 2050. The shift in focus is being made possible due in part to a combination of increased disclosure on total scope emissions and detailed climate modelling. We believe we are at an early stage of this shift.
Being an early adopter can pay off; but picking the ESG winners and avoiding ESG losers is becoming more complicated
Over the last five years energy has declined from 6% to 2% of the S&amp;P 500 index. In NZ, the valuation of MCY and MEL has decoupled from that of CEN and GNE to now be valued at a 60%+ premium, vs no premium five years ago. With an increased focus on level and trajectory of total emissions, both by lawmakers and investors, we believe the ESG winners of the next decade will be harder to pick and may be different from the ones of the last decade.
NZ Inc is embracing the fight against climate change
In NZ there is broad political and private sector support for action on climate change. 119 out of 120 MPs signed the Zero Carbon bill, the Prime Minister has declared a "climate emergency" and 101 executive directors, including the CEOs of 16 NZX listed companies, have pledged that their respective organisations will take voluntary action on climate change.
Greenhouse gases (GHG) matters for investment returns
Our focus in this report is on carbon emissions, or more broadly on greenhouse gases (GHG). We focus on this because we believe it will matter for investment returns over the next 5–10 years, primarily through three vectors; (1) ESG winners of the past and ESG winners of the future, (2) direct costs of high emissions, (3) obsolescence risks and impact investing. With this report we update and expand upon our inaugural report, Counting Carbon Costs: Climate Change and NZX companies, published 5 December 2019.
Aaron Ibbotson CFA aaron.ibbotson@forsythbarr.co.nz +64 9 368 0024
Andy Bowley andy.bowley@forsythbarr.co.nz +64 4 495 8246
Liam Donnelly liam.donnelly@forsythbarr.co.nz +64 4 495 8194
Chelsea Leadbetter CFA chelsea.leadbetter@forsythbarr.co.nz +64 4 495 5262
Andrew Harvey-Green andrew.harvey-green@forsythbarr.co.nz +64 4 495 8185
Rohan Koreman-Smit CFA rohan.koreman-smit@forsythbarr.co.nz +64 9 368 0085

ESG with a Capital "E" Part of the Problem or Part of the Solution?

The global wall of ESG money is starting to get serious about climate change
The ~US$30tr ESG community is at an early stage of a necessary shift from negative screening (e.g. coal) to a more scientific approach to combating climate change where alignment with Paris commitments is taking centre stage. Australasian investors are no exception to this global trend. More than four out of five Australasian asset managers state they either already are, or are considering, setting a net zero emissions target for 2050. The shift in focus is being made possible due in part to a combination of increased disclosure on total scope emissions and detailed climate modelling. We believe we are at an early stage of this shift.
Being an early adopter can pay off; but picking the ESG winners and avoiding ESG losers is becoming more complicated
Over the last five years energy has declined from 6% to 2% of the S&amp;P 500 index. In NZ, the valuation of MCY and MEL has decoupled from that of CEN and GNE to now be valued at a 60%+ premium, vs no premium five years ago. With an increased focus on level and trajectory of total emissions, both by lawmakers and investors, we believe the ESG winners of the next decade will be harder to pick and may be different from the ones of the last decade.
NZ Inc is embracing the fight against climate change
In NZ there is broad political and private sector support for action on climate change. 119 out of 120 MPs signed the Zero Carbon bill, the Prime Minister has declared a "climate emergency" and 101 executive directors, including the CEOs of 16 NZX listed companies, have pledged that their respective organisations will take voluntary action on climate change.
Greenhouse gases (GHG) matters for investment returns
Our focus in this report is on carbon emissions, or more broadly on greenhouse gases (GHG). We focus on this because we believe it will matter for investment returns over the next 5–10 years, primarily through three vectors; (1) ESG winners of the past and ESG winners of the future, (2) direct costs of high emissions, (3) obsolescence risks and impact investing. With this report we update and expand upon our inaugural report, Counting Carbon Costs: Climate Change and NZX companies, published 5 December 2019.
Aaron Ibbotson CFA aaron.ibbotson@forsythbarr.co.nz +64 9 368 0024
Andy Bowley andy.bowley@forsythbarr.co.nz +64 4 495 8246
Liam Donnelly liam.donnelly@forsythbarr.co.nz +64 4 495 8194
Chelsea Leadbetter CFA chelsea.leadbetter@forsythbarr.co.nz +64 4 495 5262
Andrew Harvey-Green andrew.harvey-green@forsythbarr.co.nz +64 4 495 8185
Rohan Koreman-Smit CFA rohan.koreman-smit@forsythbarr.co.nz +64 9 368 0085

ESG with a Capital "E": Part of the Problem or Part of the Solution?

Mercury NZ Ltd

ESG with a Capital "E": Part of the Problem or Part of the Solution?