Eight in 10 KiwiSavers expect no human rights abusers or tax-dodgers in their funds

Tuesday, 29 October 2019

The majority of KiwiSavers now expect their money to be invested responsibly and ethically, a survey by the Responsible Investment Association Australasia (RIAA) and Mindful Money shows.

Gone are the days when KiwiSavers only expected to have their money invested responsibly, if they chose a specially badged ethical fund.

Instead, 83 per cent of investors expected their KiwiSaver or other investments to be invested responsibly and ethically as a matter of course, and for the first time that included avoiding companies that didn't pay their fair share of tax.

This time last year just 72 per cent of investors expected KiwiSaver funds to be invested ethically as a matter of course.

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'Because of the low uptake of ethical funds, it was thought the public didn't care,' said Simon O'Connor, chief executive of RIAA.

'But what we understand now is that people expect ethical and sustainable issues to be embedded by the people they trust with their retirement savings.'

A growing majority expected fund managers to invest responsibly across all the funds they offered to the public, he said.

Many also said they would consider switching KiwiSaver provider, if their current manager invested in companies involved with practices of which they did not approve, with human rights and labour rights violations at the top of their list of things they wanted to steer clear of.

Two in three New Zealanders would consider switching their KiwiSaver or other investments to another provider if their current fund engaged in activities inconsistent with their values, said O'Connor.

Mindful Money founder Barry Coates said it was not only younger investors who were demanding fund managers invested responsibly as a matter of course.

'It is not only Millennials who want to invest ethically. Support is even higher amongst those over 60 years old,' he said.

'Support is also stronger amongst women than men, especially in holding strong expectations of ethical performance in their KiwiSaver accounts and other investment funds.'

Coates believed people lacked time to hunt out ethical funds, though it had become easier since Mindful Money had launched an online tool to help people check just what ethical concerns their funds were exposed to.

While human rights violations topped the list of things the public really did not want to see in the companies they invested in, there were plenty of issues that were not raised in the 2018 survey.

Many investors wanted their KiwiSaver funds not to invest in companies that didn't pay their fair share of tax (89 per cent said it was either 'somewhat important', 'important', or 'very important'), social media companies that breached privacy standards (86 per cent), and companies involved in predatory lending (86 per cent).

Other new issues of concern, which did not make it into the top 10 were companies involved with peddling high-sugar foods and drinks (72 per cent) and companies involved in the fossil fuels industry (75 per cent).

There's been growing concern that KiwiSavers are being bombarded with responsible investment claims by scheme managers that is hard for them to interpret, leading to the fear some managers may be misleading investors.

The Financial Markets Authority has begun a probe of KiwiSaver managers' ethical claims.

'While the FMA supports the development of the market for these products, there are associated risks and issues, largely arising from the lack of common understanding of what makes an investment responsible,' Nick Kynoch, the FMA's general counsel, said in September.

'With the growing popularity of these products we want to ensure investors are protected from 'greenwashing' and have a clear understanding of what is on offer,' he said.