In this opinion article, Lucas Kengmana, a senior investment strategist with the NZ Super Fund, discusses the importance of prioritising environmental, social, and governance (ESG) factors in investment decisions. Kengmana challenges the arguments against socially responsible investment practices, emphasising that companies with strong ESG performance tend to outperform. He cites evidence from various studies and the fund’s own back-tests, showing that ESG-enhanced indices provide greater returns and lower volatility. Kengmana highlights the pressing environmental and social challenges the world is facing, such as climate change and biodiversity loss, and argues that investors can benefit from contributing to a sustainable world. The NZ Super Fund, bound by law to manage the fund responsibly, has already taken steps to reduce the emissions intensity of its portfolio. Kengmana concludes by advocating for action now, rather than waiting for complete confidence in the link between ESG performance and financial performance, considering the economic costs of ESG risks and evolving stakeholder expectations.
Read the full article on the NBR website:
https://www.nbr.co.nz/guest-opinion/esg-investment-a-long-term-view/