Craigs Investment Partners shares standout sustainability performers 

Companies will need to adequately resource sustainability initiatives and environmental, social and governance (ESG) reporting if they are to stay ahead of changes in regulation, and investor and consumer expectations. That’s the view of Craigs Investment Partners’ (Craigs) Senior Sustainability Analyst Vanessa Stevens, who leads a team assessing and monitoring the ESG performance of Craigs’ recommended company investments.

The team has assessed 82 companies listed on New Zealand and international exchanges so far, comprising almost 90 percent of its private wealth client direct holdings. Companies’ ESG performance is assessed against Craigs’ proprietary sustainability framework, which Stevens says focuses on the needs of New Zealand investors.

“We developed Craigs’ sustainability framework in response to client demand. We have seen a growing desire in clients to align their investment portfolios to their values. Our goal is to arm clients with useful information that enables them to choose investments in line with their values.”

Stevens says international ratings agencies were unable to leverage reach into the domestic market the way a New Zealand owned and grown firm like Craigs could.

“Through our assessment process we engage with companies to form a clear view of their ESG credentials, which helps influence change. We use a qualitative approach, which acknowledges that many ESG factors cannot be ‘measured’ and that certain issues affecting different companies can be unique.The team and I have reviewed hundreds of sustainability reports amongst other data points. It becomes easy to see where companies have gaps in their ESG reporting, which we can bring to their attention allowing them to gain more information and insight. We think it is a pragmatic approach that goes beyond face value and looks to really understand how companies are working to improve their products, services and operations from an ESG perspective.”

Stevens says companies that stood out when being assessed against the sustainability framework had dedicated sustainability initiatives and were communicating them clearly to investors and consumers.

“For example, Xero (XRO) has a science-based emissions reduction target and leases Green Star and LEED certified office spaces where possible. In 2023, XRO was named in the Bloomberg Gender Equality Index, reflecting its commitment to diversity and inclusion. The company supports initiatives including ‘Code Like a Girl’ and ‘Tech Girls Movement’ aimed at increasing female representation in the tech sector. It is one of only a few listed companies in Australasia that has a female CEO, Sukhinder Singh Cassidy.”

Stevens says one of New Zealand’s largest companies, Fisher & Paykel Healthcare (FPH), is a top performer against Craigs’ sustainability framework. “Through its sustainability programme it has built an onsite water treatment plant which has partially resulted in its water consumption reducing by 28 percent in 2023 alone. It has a dedicated product development team, focused on designing sustainable packaging and biobased plastic technology. FPH has initiatives in place to promote women in STEM roles, including the ‘Women in Engineering’ programme which was a finalist at the 2022 Diversity Works NZ awards.”

Stevens says some New Zealand companies benefit from a sustainability ‘head start’ by typically not operating in negatively perceived sectors, but they should not be complacent as the pace of change in regulation and investor expectations is rapid.  “With the mandatory climate-related disclosures regime now in place in New Zealand for certain organisations, the government has signaled that modern slavery and workplace diversity reporting obligations will also come into effect in due course,” she says. 

“Interestingly, with some New Zealand companies we have seen them quietly getting on with implementing ESG related changes without announcing it to the world. We’ve also heard of some international companies intentionally not announcing ESG targets and initiatives because they fear investors will perceive it as greenwashing. I’m hoping non-financial reporting guidelines will help with this over time, making it easy for companies to understand the metrics and targets investors would like to see.”

Stevens says New Zealand companies could look to Europe for a path to chart. “Europe seems to be ahead of the game with regards to ESG reporting requirements and regulations and certain European companies appear to be seeking out new business opportunities as a result of growing investor and consumer demand for ESG considerations and transparency, and we see companies like L’Oréal, Air Liquide and Schneider Electric performing well against our sustainability framework as a result.”

French company Schneider Electric (SU) pays a living wage and has a comprehensive supplier vigilance programme to ensure modern slavery is not occurring in its supply chain, but it is the company’s environmental initiatives that set it apart.

“As a company that specialises in digital automation and energy management, SU’s technologies promote the transition towards a more electric and decarbonised world. Since 2018, the company has helped its customers save and avoid 440MtCO2e, the equivalent of Australia’s 2022 emissions.” 

Information on Craigs’ sustainability assessments is published in its Sustainable Investment Statement, which details Craigs’ approach to sustainability across its private wealth and corporate divisions, and underpins its own commitment to operating sustainably. 

“One of the biggest ways Craigs can champion sustainability is by educating our private wealth clients with regards to sustainable investing, supporting our clients to select investments that align with their values, and engaging with the companies we monitor in respect of their sustainability practices,” says Craigs’ Head of Strategy Hannah Gillespie, who leads the firm’s sustainability programme.

Of the 82 companies assessed, 70 percent achieved an ‘excellent’ score of four or higher (on a scale of zero to five). Gillespie says the result reflects the high-quality investment options recommended by the firm to its private wealth clients.

Craigs’ Sustainable Investment Statement can be viewed at craigsip.com/about-us/sustainability.

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