From the Mercer KiwiSaver schemePDS (pg 6):

“Responsible investment, including environmental, social,and governance considerations, is taken into account in the investment policiesand procedures of the scheme as at the date of this product disclosurestatement. You can obtain an explanation of the extent to which responsibleinvestment is taken into account in those policies and procedures at theissuer’s Internet site at https://www.mercerfinancialservices.co.nz/sustainable-investment.html . Mercer’s SustainableInvestment Policy which documents the approach to environmental, social andgovernance considerations can also be found in the document headed “Mercer NZ -Sustainable Investment Policy” available at www.disclose-register.companiesoffice.govt.nz  (search under “Offers” for Mercer KiwiSaverscheme).  The funds labelled assustainable which are available in this scheme may be suitable for investorswho want to invest according to the ethical criteria as set out in the Policyand have a higher proportion of sustainability-themed assets.

From the Policy (pg 4):

“Mercer believes a sustainable investment approach ismore likely to create and preserve long-term investment capital and, morespecifically, that:

1. ESG factors can have a material impact on long-term risk and returnoutcomes and these should be integrated into the investment process.

2. Taking a broader and longer-term perspective on risk, includingidentifying sustainability themes and trends, is likely to lead to improvedrisk management and new investment opportunities.

3. Climate change poses a systemic risk, and investors should considerthe potential financial impacts of both the associated transition to alow-carbon economy and the physical impacts of different climate outcomes.

4. Stewardship (or active ownership) supports the realisation oflong-term shareholder value by providing investors with an opportunity toenhance the value of companies and markets.

Consequently, Mercer believes that a sustainableinvestment approach that considers these risks and opportunities is in the bestinterests of our investors.”

The Mercer KiwiSaver scheme products employ ESG integration, active ownership, sustainability themes and screeningstrategies in its sustainable investment approach  
 
1. ESG integration, which is the inclusion of ESG factors into the investmentprocess for risk/return reasons. Mercer scores managers abilities to integrateESG factors into their strategies using their ESG Ratings criteria between anESG1 (best) and ESG4 (worst). The portfolios aim to employ managers ESG3 andabove where practical, with the aim of improving the portfolios overall ESGscore over time. Socially Responsible labelled single-sector strategieshave a minimum ESG score of ESG2 required.
2. Active ownership, Mercer's Sustainable Investment Manager runs a dedicateddirect company engagement program with the top twenty Australian holdings, overand above the engagement managers are doing with companies, and the engagementwe undertake with our managers and through collaborative initiatives. 
3. Sustainability-themed exposures: The 60% of the equity allocations withinthe Mercer KiwiSaver scheme with have a allocation to the SR Overseas Sharesfund which has managers that incorporate the Sustainable Development Goals as adirect input to their portfolio construction process. The KS products withexposure to Unlisted Infrastructure and Unlisted Property which endeavour toinvest in assets with sustainable attributes 
4. Excluded investments include the following: 
• Tobacco - Companies involved in the manufacture and/or production of tobaccoproducts (regardless of revenue), including subsidiaries and joint ventures, aswell as any other company that derives 50% or more of revenue from othertobacco-related business activities such as packaging, distribution and retailof tobacco products. 
• Controversial weapons: Companies that manufacture whole weapons systems, ordelivery platforms, or components that were developed or are significantlymodified for exclusive use in cluster munitions, anti-personnel landmines,biological or chemical weapons, as well as companies involved in the productionand retailing of automatic and semi-automatic civilian firearms. 

• Russian securities*, which include:

• Shares – By country of incorporation. For publicly heldcompanies within the country of incorporation where the security also has aprimary listing in Russia plus subsidiary mapping.
• Fixed income – Issuers captured in shares screening (asabove) plus Russian sovereign bonds and bonds issued by Russiangovernment-related entities (Rouble or foreign currency denominated). 
• Cash holdings in Russian currency.
• Russian FX exposure.
• Sanctioned Russian entities and related entities ofsanctioned entities.
• Private markets assets domiciled in Russia.
• All secondary issues of excluded securities.
• Derivatives having Russian asset as primary exposure.

*We have instructed our appointed investment managers todivest any existing exposure to Russian securities as market conditions allowand to prohibit any new investments in Russian securities.