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Guidance Note

Responsible Investment Disclosure by KiwiSaver Scheme Providers

The explanatory document - how a provider should describe "the extent to which responsible investment is taken into account"

4.1

If a KiwiSaver scheme does take responsible investment into account in its investment policies and procedures, then the issuer must prepare a document explaining the extent to which responsible investment is taken into account. This document must be available on the issuer's website (if it has one) and must be given free of charge to anyone who asks for it. This explanatory document is part of the scheme's investment statement for the purposes of securities law, and must not be likely to mislead, deceive, or confuse investors.

4.2

As there is not a precise definition of "responsible investment", it is important that this explanatory document gives an accurate and balanced picture of the role that responsible investment considerations play in the investment policies and procedures of a scheme provider or complying fund. Explaining the extent to which responsible investment is taken into account means saying how far these matters are taken into account in investment policies and procedures. This explanatory document should give investors sufficient information for them to understand the actions that are taken by the people who make the decisions on the scheme's investments.

4.3

An explanation of the extent to which responsible investment is taken into account is likely to have several dimensions, including:

(a)

The role or weight given to responsible investment considerations - how responsible investment decisions fit into the scheme's overall investment process, and what weight is given to these matters;

(b)

Actions taken - what the scheme actually does to take responsible investment into account, including any verification or audit procedures;

(c)

Scope - a scheme may take into account only some environmental, social, and governance considerations. If this is the case, the scope of these considerations should be clearly described. In addition, the scheme should also disclose if an entire portfolio is subject to the responsible investment procedures, or whether only certain portions of the portfolio are .

4.4

Ideally, the following information should be available on the website:

(a)

The scheme's investment policies and procedures.

(b)

The scope of the responsible investment issues which are taken into account in the scheme's investment policies and procedures.

(c)

How these issues are integrated into the scheme's investment policies and procedures. This means giving sufficient information for an investor to understand the activities undertaken by a scheme provider by disclosing:

(i)

the methodology (if there is one) for taking ESG and other relevant issues into account in the investment cycle (if there is no methodology this must be disclosed);

(ii)

the weight allocated to each ESG or other relevant issue, if a weighting system is adopted;

(iii)

any specific criteria or measures by which the scheme assesses ESG issues when choosing or holding investments;

(iv)

monitoring procedures used by the scheme provider relating to the scheme's approach to responsible investing; and

(iii)

any responsible investment rating, accreditation, or verification services used by the scheme.

4.5

The explanation should describe these matters, to the extent possible, in plain English, avoiding jargon. This is important to ensure that the explanatory material is not likely to mislead or confuse investors.

What should a KiwiSaver scheme provider do if it is developing an approach to responsible investment but will not have integrated one into its investment procedures and policies by 1 April 2008?

4.6

If a scheme provider does not take ESG considerations into account in its investment policies and procedures on or before 1 April 2008, then it must disclose that it does not take these matters into account, even if it is developing its responsible investment approach. However, a provider that is developing responsible investment policies or procedures can state that this work is being undertaken, and can provide more detail on this, either in the investment statement or in other materials, such as documents on the provider's website.

4.7

Providers that are developing ESG policies and procedures, but that have not yet implemented these policies should take care that any statements about the development or intended development of such policies do not mislead investors about the current status of the scheme's approach to responsible investment.

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Guidance Note Responsible Investment Disclosure by KiwiSaver Scheme Providers

Guidance Note

Responsible Investment Disclosure by KiwiSaver Scheme Providers