1
From:
I Lees-Galloway (MIN)
To:
Paula Rebstock
Cc:
Vicky Holmes
Subject:
Enduring Letter of Expectations for Statutory Crown Entities
Date:
Tuesday, 15 October 2019 9:18:29 AM
Attachments:
image001.jpg
ELOE 2019.pdf
Dear Dame Paula
Collectively we need to consider how you can contribute to the Government’s objectives, both
through what you deliver and how you deliver it.
To help achieve this we attach an enduring letter of expectations (ELOE), which replaces the
previous enduring letter of expectations from 2012.
Our ELOE focusses on our expectations for seamless Government, board role and integrity,
workforce matters, Maori Crown relationships, and entities applying a wellbeing approach to
their work, including the need to address climate change.
Yours sincerely
Hon Grant Robertson Hon Chris Hipkins
Minister of Finance Minister of State Service
Yours sincerely,
Office Hon Iain Lees-Galloway
Minister for Workplace Relations and Safety
Minister of Immigration
Minister for ACC
Deputy Leader of the House | MP for Palmerston North
P: 64 (4) 817 8713 | E: [Iain Lees-Galloway request email]
Authorised by Hon Iain Lees-Galloway, Wellington
2
3
From:
Vicky Holmes
To:
9(2)(a)
; Sarah Simpson; Deborah Roche
Subject:
FW: Enduring Letter of Expectations for Statutory Crown Entities
Attachments:
ELOE 2019.pdf
Good morning
Please find attached an updated Enduring Letter of Expectations for Statutory Crown Entities,
that was sent to Dame Paula by Hon Grant Robertson and Hon Chris Hipkins, via our office.
Please distribute this as appropriate and action accordingly.
Kind regards
Vicky
Vicky Holmes - Private Secretary (ACC)
Office of Hon Iain Lees-Galloway
Minister for Workplace Relations and Safety, ACC, and of Immigration
Deputy Leader of the House
4.5R, Executive Wing | Private Bag 18041 | Parliament Buildings | Wellington 6160 | New Zealand |
From: I Lees-Galloway (MIN)
Sent: Tuesday, 15 October 2019 9:18 AM
To: 9(2)(a)
Cc: Vicky Holmes
Subject: Enduring Letter of Expectations for Statutory Crown Entities
Dear Dame Paula
Collectively we need to consider how you can contribute to the Government’s objectives, both
through what you deliver and how you deliver it.
To help achieve this we attach an enduring letter of expectations (ELOE), which replaces the
previous enduring letter of expectations from 2012.
Our ELOE focusses on our expectations for seamless Government, board role and integrity,
workforce matters, Maori Crown relationships, and entities applying a wellbeing approach to
their work, including the need to address climate change.
Yours sincerely
Hon Grant Robertson Hon Chris Hipkins
Minister of Finance Minister of State Service
Yours sincerely,
Office Hon Iain Lees-Galloway
Minister for Workplace Relations and Safety
Minister of Immigration
Minister for ACC
Deputy Leader of the House | MP for Palmerston North
P: 64 (4) 817 8713 | E: [Iain Lees-Galloway request email]
Authorised by Hon Iain Lees-Galloway, Wellington
4
(ELOE), which replaces the previous enduring letter of expectations
from 2012.
Our ELOE focusses on our expectations for seamless Government,
board role and integrity, workforce matters, Maori Crown
relationships, and entities applying a wellbeing approach to their
work, including the need to address climate change.
Yours sincerely
Hon Grant Robertson Hon Chris Hipkins
Minister of Finance Minister of State Service
Yours sincerely,
Office Hon Iain Lees-Galloway
Minister for Workplace Relations and Safety
Minister of Immigration
Minister for ACC
Deputy Leader of the House | MP for Palmerston North
P: 64 (4) 817 8713 | E: [Iain Lees-Galloway request email]
Authorised by Hon Iain Lees-Galloway, Wellington
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<1910.16 Acknowledgement of new Enduring LoE_.docx>
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5
Hon Grant Robertson
Minister of Finance, and
Hon Chris Hipkins
Minister of State Services
Private Bag 18041
Parliament Buildings
Wellington 6160
16 October 2019
Dear Ministers
Enduring Letter of Expectations
On behalf of the Board of ACC, I acknowledge receipt of the new, 15 October 2019,
Enduring Letter of Expectations. I assure you of our total commitment to acting in a spirit of
service, and with care and integrity, to ACC’s customers and to the broader community.
ACC focuses particular attention on the health, safety and wellbeing of its employees. This
extends to having policies on diversity and inclusion, working to reduce pay gaps, and
encouraging worker representation.
Our Whāia Te Tika Māori Strategy aligns well with the Government’s good-faith and
collaborative approach with Māori. ACC is committed to partnering with Māori and their
whānau, ensuring that together we minimise the incidence and impact of injury for Māori.
As is reflected in ACC’s 2019 Annual Report, ACC is already including our contribution to the
Government’s wellbeing vision in our external reporting.
ACC is an active participant in several multi-agency family violence reduction initiatives,
including Whāngaia Ngā Pā Harakeke in Tairāwhiti and Counties Manukau, and the
Integrated Safety Response in Christchurch.
ACC also takes a broad, cross-sector approach through its injury prevention investments
across a range of sectors in New Zealand. These include injury prevention measures across
the wider health sector to reduce treatment injuries, investments Ghandi Nivas in Auckland
and our secondary schools initiative Mates & Dates, to reduce the incidence of family and
sexual violence, and partnering with the Ministry of Transport and with other agencies, to
improve road safety.
In terms of taking steps to reduce our greenhouse gas emissions, as reported in the
2019 Annual Report, ACC is actively incorporating environmental aspirations with our
corporate activities, to reduce waste and improve energy efficiency.
I am available to discuss any of these matters with you, should you find this helpful.
Yours sincerely
Dame Paula Rebstock DNZM
ACC Board Chair
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Out of scope
Question 110: What actions, if any, have been taken to lower greenhouse gas
emissions; and how does the level of greenhouse gas emissions in 2018/19 compare
to previous years? What is the total cost of this work?
ACC takes our responsibilities regarding climate change and sustainability extremely
seriously. As a state sector agency, we recognise the leadership role we must play by taking
active steps to reduce greenhouse gas emissions, improve energy efficiency and reduce
waste.
ACC’s Annual Report 2019 (page 59) includes details on measurement of ACC’s
environmental impacts and where we are working to reduce those impacts.
Vehicles
We have almost halved our carbon emissions from fleet vehicles compared with last year.
Our carbon emissions were 431t in 2017/18 and are now 254t. We have a programme of
work to reduce our environmental impacts through:
• replacing our fleet vehicles with smaller and more efficient vehicles
• reducing the number of vehicles, from 219 to 184
• replacing older vehicles with electric or hybrids vehicles.
We have completed a pilot trial of different electric vehicles to ensure that these will meet our
business needs. We have an accelerated plan to shift to these vehicles in the next few
years.
Travel
We have significantly reduced our business travel emissions through the implementation of
alternative options to travel and improved processes and commercial arrangements. Less air
travel means our volume of car rentals has also reduced. We are also utilising more
technology solutions where appropriate. We have recently rolled out Skype for Business to
make it easier for our people to communicate and collaborate.
Waste
During 2019/20 we will be retendering for our cleaning services. Through this procurement
process we plan to improve our recycling where appropriate at all 32 of our sites and
improve health and safety within these services.
Page
123 of
310
Environmental performance
The Climate Change Response (Zero Carbon) Amendment Act 2019 (‘Zero Carbon Act’) wil
have implications for ACC over the coming decades. As such, work is underway developing
a climate change policy and framework for ACC that includes our role as a significant
investor in New Zealand. This is expected to be presented to the ACC Board in the first half
of 2020. Following approval, this will be made public. Our approach will be open and
transparent.
We are confident of our ability to continue to earn strong investment returns for levy payers
in the future, reducing the cost New Zealanders pay for accident cover, will also meet our
responsibilities under legislation.
In 2019/20 we will also develop an environmental, social and governance corporate policy to
further define our approach to our environmental performance and development of our
environmental targets. We are taking a deliberate and coordinated approach in all
environmental aspects that ensure ACC is an active contributor. We plan to increase the
energy efficiency of all our leased buildings. We will develop appropriate targets and
introduce these targets in guidelines for our leased buildings.
Return to contents
Out of scope
Page
124 of
310
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"This message and any attachments may contain confidential and privileged information.
If you believe you have received this email in error, please advise us immediately by return
email or telephone and then delete this email together with all attachments. If you are not
the intended recipient, you are not authorised to use or copy this message or any
attachments or disclose the contents to any other person."
9
27 Climate Change Response (Zero Carbon) Amendment Act 2019
Investments: Paul Dyer / Governance: Deborah Roche
Note: This topic is still being worked on and will be updated closer to the Committee hearing.
Back to contents
Page
67 of
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• Delivery of a policy that excludes from the investment portfolio, businesses that generate more
than 30 percent of their revenue from thermal coal; and
• Delivery of further advice to the Board, outlining the steps ACC will need to take as an
organisation and a significant investor.
9 Regarding investments, while our carbon and climate change policy is being developed, it is likely
more portfolio reweighting will form part of ACC’s response. Since late last year ACC has already
divested and excluded companies involved in thermal coal production.
10 ACC has excluded firms that earn more than 30 percent of their revenue from thermal coal
production. Norges Bank, the world’s largest sovereign wealth fund and manager of the Government
Pension Fund of Norway, applies the same criteria.
11 As a result, ACC has added 54 thermal coal stocks to our exclusion list. The updated exclusion list
has been communicated to all portfolio managers (internal & external, equity and bonds) and, as at 1
February 2020, no securities holdings in these stocks remain in the portfolio.
12 In developing ACC’s climate change and Environmental, Social and Governance (ESG) policies, we
are utilising specialist skills from New Zealand and overseas alongside our internal capability.
13 Dr Paul Winton, the Principal of Temple Capital Investment Specialists, is assisting ACC with its
overall strategy and policy work on climate change. Dr Winton is a leading authority on climate
change and how New Zealand can deliver on its international obligations. He has previously worked
with Government Ministers, New Zealand corporates, and government agencies – including the New
Zealand Superannuation Fund on developing climate change policies.
14 Alongside Dr Winton, Russell Investments will provide advice to ACC’s Investments Team and Board
Investment Committee on future carbon options and how large funds are looking at the issue.
15 Regarding our wider work on developing ACC’s ESG policy and framework, ACC has engaged Dr
Matt Bell – Asia-Pacific leader of ESG from Ernst and Young.
16 ACC plans to increase the energy efficiency of all its leased buildings. ACC is developing appropriate
targets and introducing these targets in guidelines for its leased buildings. As announced on 13
February 2020, ACC is partnering with Tainui Group Holdings (TGH) to build a new complex to
house 650 staff in central Hamilton. The precinct will meet a yearly minimum four-star standard under
NABERSNZ – the system for rating the energy efficiency of office buildings. The building will also
have multiple charging stations for electric vehicles – including cars, bikes and scooters.
17 ACC’s 2019 Annual Report notes that in 2019 it nearly halved carbon emissions from fleet vehicles
compared with 2018. Carbon emissions were 431t in 2017/18 and 254t in 2018/19.
18 ACC has a programme of work to reduce our environmental impacts through:
• replacing our fleet vehicles with smaller and more efficient vehicles;
• reducing the number of vehicles, from 219 to 184; and
• replacing older vehicles with electric or hybrids vehicles.
19 A pilot trial has been completed of different electric vehicles to ensure that these will meet our
business needs. We have an accelerated plan to shift to these vehicles in the next few years.
20 ACC has significantly reduced its business travel emissions through the implementation of alternative
options to travel and improved processes and commercial arrangements. Less air travel means
ACC’s volume of car rentals has also reduced. Technology solutions are also being better utilised
where appropriate, and ACC has recently rolled out Skype for Business to make it easier for our
people to communicate and collaborate.
21 ACC will retender for its cleaning services in 2019/20 to improve recycling where appropriate at all 32
of our sites and improve health and safety within these services.
2
11
www.acc.co.nz
ACC cares
about the
environment –
please don’t
print this email
unless it is
really
necessary.
Thank you.
Disclaimer:
"This message and any attachments may contain confidential and privileged information.
If you believe you have received this email in error, please advise us immediately by return
email or telephone and then delete this email together with all attachments. If you are not
the intended recipient, you are not authorised to use or copy this message or any
attachments or disclose the contents to any other person."
Disclaimer:
"This message and any attachments may contain confidential and privileged information.
If you believe you have received this email in error, please advise us immediately by return
email or telephone and then delete this email together with all attachments. If you are not
the intended recipient, you are not authorised to use or copy this message or any
attachments or disclose the contents to any other person."
12
• Delivery of a policy that excludes from the investment portfolio, businesses that generate more
than 30 percent of their revenue from thermal coal; and
• Delivery of further advice to the Board, outlining the steps ACC will need to take as an
organisation and a significant investor.
9 Regarding investments, while our carbon and climate change policy is being developed, it is likely
more portfolio reweighting will form part of ACC’s response. Since late last year ACC has already
divested and excluded companies involved in thermal coal production.
10 ACC has excluded firms that earn more than 30 percent of their revenue from thermal coal
production. Norges Bank, the world’s largest sovereign wealth fund and manager of the Government
Pension Fund of Norway, applies the same criteria.
11 As a result, ACC has added 54 thermal coal stocks to our exclusion list. The updated exclusion list
has been communicated to all portfolio managers (internal & external, equity and bonds) and, as at 1
February 2020, no securities holdings in these stocks remain in the portfolio.
12 In developing ACC’s climate change and Environmental, Social and Governance (ESG) policies, we
are utilising specialist skills from New Zealand and overseas alongside our internal capability.
13 Dr Paul Winton, the Principal of Temple Capital Investment Specialists, is assisting ACC with its
overall strategy and policy work on climate change. Dr Winton is a leading authority on climate
change and how New Zealand can deliver on its international obligations. He has previously worked
with Government Ministers, New Zealand corporates, and government agencies – including the New
Zealand Superannuation Fund on developing climate change policies.
14 Alongside Dr Winton, Russell Investments will provide advice to ACC’s Investments Team and Board
Investment Committee on future carbon options and how large funds are looking at the issue.
15 Regarding our wider work on developing ACC’s ESG policy and framework, ACC has engaged Dr
Matt Bell – Asia-Pacific leader of ESG from Ernst and Young.
16 ACC plans to increase the energy efficiency of all its leased buildings. ACC is developing appropriate
targets and introducing these targets in guidelines for its leased buildings. As announced on 13
February 2020, ACC is partnering with Tainui Group Holdings (TGH) to build a new complex to
house 650 staff in central Hamilton. The precinct will meet a yearly minimum four-star standard under
NABERSNZ – the system for rating the energy efficiency of office buildings. The building will also
have multiple charging stations for electric vehicles – including cars, bikes and scooters.
17 ACC’s 2019 Annual Report notes that in 2019 it nearly halved carbon emissions from fleet vehicles
compared with 2018. Carbon emissions were 431t in 2017/18 and 254t in 2018/19.
18 ACC has a programme of work to reduce our environmental impacts through:
• replacing our fleet vehicles with smaller and more efficient vehicles;
• reducing the number of vehicles, from 219 to 184; and
• replacing older vehicles with electric or hybrids vehicles.
19 A pilot trial has been completed of different electric vehicles to ensure that these will meet our
business needs. We have an accelerated plan to shift to these vehicles in the next few years.
20 ACC has significantly reduced its business travel emissions through the implementation of alternative
options to travel and improved processes and commercial arrangements. Less air travel means
ACC’s volume of car rentals has also reduced. Technology solutions are also being better utilised
where appropriate, and ACC has recently rolled out Skype for Business to make it easier for our
people to communicate and collaborate.
21 ACC will retender for its cleaning services in 2019/20 to improve recycling where appropriate at all 32
of our sites and improve health and safety within these services.
2
13
• Delivery of a policy that excludes from the investment portfolio, businesses that generate more
than 30 percent of their revenue from thermal coal; and
• Delivery of further advice to the Board, outlining the steps ACC will need to take as an
organisation and a significant investor.
9 Regarding investments, while our carbon and climate change policy is being developed, it is likely
more portfolio reweighting will form part of ACC’s response. Since late last year ACC has already
divested and excluded companies involved in thermal coal production.
10 ACC has excluded firms that earn more than 30 percent of their revenue from thermal coal
production. Norges Bank, the world’s largest sovereign wealth fund and manager of the Government
Pension Fund of Norway, applies the same criteria.
11 As a result, ACC has added 54 thermal coal stocks to our exclusion list. The updated exclusion list
has been communicated to all portfolio managers (internal & external, equity and bonds) and, as at 1
February 2020, no securities holdings in these stocks remain in the portfolio.
12 In developing ACC’s climate change and Environmental, Social and Governance (ESG) policies, we
are utilising specialist skills from New Zealand and overseas alongside our internal capability.
13 Dr Paul Winton, the Principal of Temple Capital Investment Specialists, is assisting ACC with its
overall strategy and policy work on climate change. Dr Winton is a leading authority on climate
change and how New Zealand can deliver on its international obligations. He has previously worked
with Government Ministers, New Zealand corporates, and government agencies – including the New
Zealand Superannuation Fund on developing climate change policies.
14 Alongside Dr Winton, Russell Investments will provide advice to ACC’s Investments Team and Board
Investment Committee on future carbon options and how large funds are looking at the issue.
15 Regarding our wider work on developing ACC’s ESG policy and framework, ACC has engaged Dr
Matt Bell – Asia-Pacific leader of ESG from Ernst and Young.
16 ACC plans to increase the energy efficiency of all its leased buildings. ACC is developing appropriate
targets and introducing these targets in guidelines for its leased buildings. As announced on 13
February 2020, ACC is partnering with Tainui Group Holdings (TGH) to build a new complex to
house 650 staff in central Hamilton. The precinct will meet a yearly minimum four-star standard under
NABERSNZ – the system for rating the energy efficiency of office buildings. The building will also
have multiple charging stations for electric vehicles – including cars, bikes and scooters.
17 ACC’s 2019 Annual Report notes that in 2019 it nearly halved carbon emissions from fleet vehicles
compared with 2018. Carbon emissions were 431t in 2017/18 and 254t in 2018/19.
18 ACC has a programme of work to reduce our environmental impacts through:
• replacing our fleet vehicles with smaller and more efficient vehicles;
• reducing the number of vehicles, from 219 to 184; and
• replacing older vehicles with electric or hybrids vehicles.
19 A pilot trial has been completed of different electric vehicles to ensure that these will meet our
business needs. We have an accelerated plan to shift to these vehicles in the next few years.
20 ACC has significantly reduced its business travel emissions through the implementation of alternative
options to travel and improved processes and commercial arrangements. Less air travel means
ACC’s volume of car rentals has also reduced. Technology solutions are also being better utilised
where appropriate, and ACC has recently rolled out Skype for Business to make it easier for our
people to communicate and collaborate.
21 ACC will retender for its cleaning services in 2019/20 to improve recycling where appropriate at all 32
of our sites and improve health and safety within these services.
2
14
From:
Vicky Holmes
To:
Ministerial Servicing
Cc:
Emma Coats; Deborah Roche; Kate Hellstrom; Sarah Simpson; Hanna Davies
Subject:
Actions from meeting with Dame Paula and Scott - due 10 June
Good morning
Earlier this morning the Minister met with Dame Paula and Scott for their monthly catch up.
There were a couple of actions that came out of this meeting:
FYI - ACC’s Climate Change Strategy
Dame Paula indicated that if ACC’s climate change strategy is finalised in the next week, then she
will provide the Minister and Minister of Finance with a two page note detailing this. She had
hoped to be able to talk publicly about it at the Estimates Hearing on 17 June.
Out of scope
Out of scope
I understand from the conversation that these topics were possibly Board papers, and so it
shouldn’t be too difficult to repurpose them..?
Happy to chat further as needed.
Kind regards
Vicky
Vicky Holmes - Private Secretary (ACC)
Office of Hon Iain Lees-Galloway
Minister for Workplace Relations and Safety, ACC, and of Immigration
Deputy Leader of the House
4.5R, Executive Wing | Private Bag 18041 | Parliament Buildings | Wellington 6160 | New Zealand |
15
ACC’s climate change ambition statement
11. The ACC Board has indicated it wishes to take a leadership role to support the Government’s
commitment to limit global temperature increases and reduce emissions. In order to achieve this, the
following aim statement has been adopted:
ACC wil 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 degrees above pre-
industrial levels.
12. To achieve this aim, ACC will adopt a dual pathway approach:
• Corporate - ACC will take a strong leadership role by reducing corporate emissions faster
than required under the Zero Carbon Amendment Act. This will involve aiming for a 60
percent reduction in Scope 1, 2 and 3 emissions1 by 2025 from 2019 levels. Offsetting
residual corporate emissions from 2021 will be explored, subject to Board endorsement.
• Investments - ACC will be aligned with the Climate Change Response (Zero Carbon)
Amendment Act. This means reducing the carbon intensity of the investment’s global equity
portfolio by at least 50 percent by 2030 compared to 2019 levels. This position will remain
under active review as ACC moves towards net zero, and it may choose to alter the ambition
of the approach as it gathers more evidence about the opportunities and costs. In particular,
the position may be adjusted to at least be consistent with the five-year emissions budgets
that will be set by the Climate Change Commission. ACC does not rule out taking a more
ambitious path should progress exceed the targeted reductions.
13. The two most significant levers for ACC to achieve its aim is via its corporate functions and the
investment portfolio, which is its largest lever.
14. On the Corporate side, given the majority of corporate emissions are from staff travel, it is anticipated
that a 60 percent reduction in Scope 1, 2 and 3 emissions by 2025 could require ACC to reduce staff
travel by at least 60 percent by 2025 in comparison to 2019 levels.
15. On the Investments side, ACC has fewer controls to impact emissions related to its equity
investments. This is the main reason for ACC’s dual pathway approach in its climate change
framework. Equity investments are largely determined by the behaviour of investee companies, most
of whom are located overseas, and over whom ACC has no direct control. The carbon intensity of
the portfolio has been falling steadily over the past decade, and continuation of this trend is critical to
reducing emissions to net zero. However, it will probably not be sufficient on its own. Stronger
action will be needed, in the form of consciously looking at the mix of investments to achieve this end
goal.
16. ACC will continue to use its influence as a shareholder through proactive engagement on climate
change and adopt a range of measures to reduce carbon exposure in its portfolio. Further detail on
this is provided in the ‘Investment fund considerations’ section.
17. Assuming the 2030 objective for investments is achieved, the carbon intensity of the equity portfolio
will have declined by around two-thirds over the 20 years between 2010 to 2030.
18. Figure 1 shows an illustration of the dual pathway for reducing emissions on the corporate and
investment side. Both pathways will ensure that ACC plays its part in supporting efforts to limit
average temperature rise to less than 1.5°C above pre-industrial levels.
1 Scopes have yet to be formally defined
2
25. In developing a climate change framework, ACC intends to take account of two specific risks. These
are the impacts of climate change itself, and the policy risk of being exposed to businesses whose
operating models need to change to adapt to climate change – whether on the investment or
corporate side of its business.
26. Addressing these trade-offs between ethical considerations and financial risk is not new to ACC.
ACC is permitted to factor non-financial factors into decision-making where it does not risk significant
financial detriment to the reserve portfolios. The ACC Board has historically included non-financial
factors in investment decisions through its Ethical Investment Policy, for example, the 2006 decision
to not invest in tobacco companies, accepting this may lead to lower returns over time.
Good progress is already being made
27. As part of ACC’s broader ESG obligations, and central to what ACC stands for as an organisation,
the investment team takes the health and safety of the companies that are invested in and partnered
with extremely seriously. In 2020 ACC has set up a specific impact fund of around $50 million within
its direct investment team that will invest in organisations that are implementing solutions that will
improve health and safety in the New Zealand workforce. It is an innovative step and one in which
ACC expects to earn a commercial return.
28. ACC has already begun decarbonising and reweighting the investment portfolio. Carbon intensity in
ACC’s global equities portfolio has fallen 19 percent over the past 10 years. This primarily reflects
developments within companies in whom ACC has invested. Most of the growth in corporate activity
is now in low-carbon activities (such as technology and other services). There is comparatively little
growth in “smokestack” industries. The trend appears to be that overall carbon intensity is trending
down by about two percent per year. Continuation of this trend is pivotal to ACC meeting its emission
objectives.
29. ACC has also added companies who generated at least 30 percent of their revenue from thermal
coal production to the list of excluded investments. A total of 54 companies were added to the
exclusion list as a result.
30. The role of Responsible Investment Manager has been created within the Investment Team and the
position has recently been filled. This is a senior position. Their role will be to advise on carbon
strategy and progress, as well as other aspects of ESG. Our view is that this will be an ongoing
requirement within the investment operation and warranted permanent resource.
31. On the Corporate side, during 2019 ACC nearly halved its carbon emissions from fleet vehicles
compared with 2018 and has significantly reduced its business travel emissions through reducing
activity, improved processes and commercial arrangements, and implementing technology solutions
such as Skype for Business and Microsoft Teams. Since March 2020, ACC has been providing
subsidised e-bikes for ACC staff.
Investment fund considerations
32. In managing its investments ACC must meet the dual objectives of maximising returns while
investing in a way that is ethically acceptable to New Zealanders. The passing of the Climate Change
Response (Zero Carbon) Amendment Act last year, with bi-partisan support, is a clear signal about
how the ethical concerns of New Zealanders are evolving. ACC’s ethical policy and investment
portfolio will naturally evolve with this.
33. ACC has a legal requirement as a Crown Financial Institution to invest as a trustee, giving it a
fiduciary responsibility to maximise return without undue risk on its investment funds. ACC has a
responsibility to do so in an ethical and lawful way and meet the expectations of stakeholders. ACC’s
aim is to achieve these twin objectives. This is common across all Crown Financial Institutions
(CFIs). ACC works closely with the Guardians of New Zealand Superannuation and the Government
Superannuation Fund Authority on all aspects of ethical investment and is a signatory to the United
Nations Principles for Responsible Investment.
4
43. Consideration will also need to be given to how carbon equivalents, such as methane, are treated
within the portfolio. At present these are relatively small. They might need to be included should the
future investment mix change.
44. There are limits to how far ACC can unilaterally reduce its footprint while still retaining a diversified
portfolio. To a large extent, emissions will depend on the behaviour of investee companies. This will
become increasingly apparent over time, as the early benefits of reducing holdings in high-emissions
stocks become harder to repeat.
Corporate considerations
45. ACC’s ambition is to fully integrate climate considerations across the business. There are significant
opportunities to reduce corporate emissions. These include:
a. Transitioning the vehicle fleet to electric vehicles. This is an area where ACC can make
progress quickly to reduce carbon emissions and also take a leadership role in New Zealand
by moving towards renewable sources of energy for its fleet. Our aim is to make our entire
fleet electric in the next couple of years, meeting the Prime Minister’s target for government
agencies.
b. Reducing business travel emissions by implementing alternative options to travel. Air travel is
ACC’s greatest source of corporate emissions (2,662 tonnes of CO2 compared to 254 tonnes
of CO2 for the vehicle fleet). ACC will benchmark its performance with respect to air travel
emissions against comparator companies and businesses and explore ways to accelerate the
reduction of travel for its staff and clients and will then report back.
c. Supporting the procurement of low-emissions goods and services. Given ACC’s role in the
health system, there may be significant opportunities to lead on climate change through
ACC’s procurement processes. Further information on this is provided below.
46. These three steps will take some time to implement. Therefore, another proposed step is to explore
offsetting residual corporate emissions from 2021. ACC would be reducing emissions at the same
time. Initial calculations suggest this could cost several hundred thousand dollars. The cost will
depend on how ACC offsets. ACC plans to carefully consider financial implications of its decisions to
ensure value for levy and tax-payer money.
47. Carbon offset schemes allow individuals and companies to invest in environmental projects which
are designed to reduce future emissions to balance out their own carbon footprints. Some also offer
additional social benefits. Offsets can be used to offset an entire carbon footprint, such as the
approach used by The Warehouse, through to neutralising the impact of a specific activity, such as
Air New Zealand’s offer to customers to pay to offset their flight(s) thus making their flight(s) “carbon
neutral”.
48. If offsetting is to be used, it is critical that the scheme(s) funded by ACC achieve the promised carbon
savings. This relates to the effectiveness of the project at absorbing carbon dioxide and/or avoiding
future emissions, as well as ensuring these carbon savings are additional to the status quo. There
are a range of options that can be explored, from offsetting ACC’s current emissions through to
offering providers and/or customers the ability to offset the carbon impact - or more - of their ACC
funded service.
Health Sector Procurement
49. There will be opportunities for ACC to address climate change through its procurement processes.
For health services in particular, this would also reflect ACC’s commitment to responding to the
potential health impacts of climate change.
7
Targets and financial implications
50. ACC’s leadership ambition requires ambitious targets for reducing carbon emissions. Some of these
targets were outlined earlier. That said, ACC also needs to consider in detail the path to achieving
these targets, the potential consequences for staff and the business, and the potential costs and
impact on ACC’s financial sustainability.
51. Targets and costs wil be included in individual policies as they are developed. ACC’s main approach
for achieving targets will involve a reduction in emissions, for example by electrifying the vehicle fleet
or further decarbonising the investment portfolio. There will potentially be a significant opportunity
cost in addition to the direct cost of implementing each policy. The policies and the overall pathways
will be costed as part of Phase 2 of ACC’s climate change programme.
52. ACC intends to explore offsetting residual corporate emissions from 2021. This may be relatively
easy to implement for Corporate, whilst recognising the enduring cost and carbon price risk. Initial
calculations suggest this will likely cost several hundred thousand dollars.
53. Targets may need to be adapted over time and close consideration will need to be made to how
changes compare against other companies and government departments, as well as the All-of-
Government response and targets set through the five-year emissions budgets currently being
drafted by the Climate Change Commission, as well as responding to any new related policies,
regulations, TCFD reporting requirements, and legislation.
8
17 June 2020
ACC announces new climate change policy framework
The Accident Compensation Corporation today announced targets in a new climate change policy
framework that sets out ACC’s position on climate change and how this is going to be materialised.
Under the framework, approved by the ACC Board last week, ACC will implement policies that cut
corporate emissions and decarbonise the investment equities portfolio in line with the intent of the
Climate Change Response (Zero Carbon) Amendment Act passed last year.
“As stewards of the ACC scheme, and by placing a focus on environmental sustainability and reducing
carbon emissions, ACC is demonstrating its 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 that is used to pay for the cost of injuries that have already occurred.
“It wil 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 ACC’s long-standing ethical
investment policy.
“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, ACC will adopt a dual pathway approach:
•
Corporate: ACC is aiming for a 60 percent reduction in Scope 1, 2 and 3 emissions by 2025 from
2019 levels. Offsetting residual corporate emissions from 2021 will be explored, subject to Board
endorsement.
•
Investments: ACC will be aligned 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 percent by 2030 compared to 2019 levels.
This position will remain under active review as ACC moves towards net zero, and it may choose to
alter the ambition of the approach as it gathers more evidence about the costs and opportunities. In
particular, the position may be adjusted to at least be consistent with the five-year emissions budgets
that will be set by the Climate Change Commission. ACC does not rule out taking a more ambitious
path should progress exceed the targeted reductions.
“Achieving these targets wil require hard work and some significant changes over the next decade,”
Dame Paula says.
“ACC wil be engaging with key stakeholders before we provide further information on the framework.
This will be made public in coming weeks.
“In managing its investments, ACC 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.”
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.
9
“ACC is not starting from scratch. We have already been decarbonising and reweighting the investment
portfolio and made steady progress in reducing corporate emissions,” Mr Pickering says.
Carbon intensity in ACC’s global equities portfolio has fallen 19 percent over the past 10 years. This
reflects developments within companies ACC has 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 two percent per year.
Continuation of this trend is pivotal to ACC meeting its emission objectives. ACC will use its influence as
a shareholder through proactive engagement on climate change.
In December 2019, ACC added companies who generate at least 30 percent of their revenue from
thermal coal production to the list of excluded investments. A total of 54 companies were added to the
exclusion list as a result.
On the Corporate side, in 2019 ACC nearly halved its carbon emissions from fleet vehicles compared
with 2018 and significantly reduced its business travel emissions through reducing activity, improved
processes and commercial arrangements.
Dame Paula says specific climate change policies that ACC will develop that fit under the framework will
need 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.”
ENDS
For ACC media inquiries: 021 998165 or [email address]
10
16
From:
Vicky Holmes
To:
Simon Beattie; Ministerial Servicing
Cc:
Emma Coats; Deborah Roche
Subject:
RE: REQUEST: Information on Climate Change Policy
Hi
Just confirming that close of business is fine.
Cheers
Vicky
From: Vicky Holmes <9(2)(a)
>
Date: Wednesday, 17 Jun 2020, 11:17 AM
To: Simon Beattie <9(2)(a)
>, Ministerial Servicing
<[email address]>
Cc: Emma Coats <9(2)(a)
>, Deborah Roche <9(2)(a)
>
Subject: REQUEST: Information on Climate Change Policy
Hi team
The Office has received a request from the Minister for Climate Change for what was announced
by Dame Paula at the Committee hearing today.
My office understands that ACC is working on an aide memoire for Minister Lees-Galloway, and
the Minister of Finance on this. However, the thinking is that it would be prudent to provide the
Minister for Climate Change with the information that is now in the public arena. They were
specifically interested in the plan to reduce emissions by 60%.
I’ve been asked to get this information today. I understand the Climate Change Minister has a
question on a related topic – so I’m just confirming whether they are expecting the information
prior to that.
Kind regards
Vicky
Vicky Holmes - Private Secretary (ACC)
Office of Hon Iain Lees-Galloway
Minister for Workplace Relations and Safety, ACC, and of Immigration
Deputy Leader of the House
4.5R, Executive Wing | Private Bag 18041 | Parliament Buildings | Wellington 6160 | New Zealand |
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