Talk sparks action on ethical funds

Jul 23rd, 2017 | By | Category: Hot Topics, Latest News

A few bankers, KiwiSaver providers and investment advisers could expect ‘please explain’ phone calls Monday morning in the wake of today’s ethical investment discussion in Tamahere.

Specialist ethical investment adviser Janet Natta, of Tamahere, surprised many in the audience with the revelation that their savings or investments were unlikely to be in ethical funds.

Ethical investment adviser Janet Natta, left, with Green Party Waikato candidate Philippa Stevenson today

It is a common misconception that investment funds are covered by regulations that rule out “sin stocks” such as tobacco, armaments and gambling, Natta told the event in the St Stephen’s Tamahere hall hosted by Green Party Waikato candidate Philippa Stevenson.

That mistaken belief was amply revealed in a NZ Herald special investigation last year which found more than two million New Zealanders were unwitting investors in big tobacco companies and makers of banned weapons through their Kiwisaver providers.

The investigation found that in total, New Zealanders had $102 million invested in tobacco companies and $2.3 million in a trio of United States companies blacklisted by the NZ Superannuation Fund due to their production of cluster bombs.

Despite the public outcry after the Herald’s revelations KiwiSaver funds were still investing in companies that make cluster bombs, mines and nuclear weapons this year, reported Stuff in March.

Natta said fund managers mistakenly believe that investors’ values ran second to their desire for a return on their investment.

A comprehensive piece of research commissioned by the Responsible Investment Association of Australasia (RIAA), of which Natta is a member, had proved otherwise, she said.

The survey of more than a thousand New Zealanders in October 2016 showed that 95% of respondents wanted KiwiSaver funds to consider environmental, social, governance and/or ethical factors.

Environmental factors were issues like climate change, loss of natural habitat, and pollution, the survey participants were told. Social factors included human rights and labour standards, and governance factors included bribery and corruption.

A third of respondents said that when considering where to invest their retirement savings their decisions were weighted 50/50 between financial factors and personal values.

Respondents generally gave issues with a direct impact on people like slavery or child labour the highest levels of importance along with their concerns over cruelty to animals.

Fifty five per cent said they would be more likely to invest in a KiwiSaver fund that was certified by an independent body as a ‘Responsible or Ethical Investor’.

The research findings were reflected in the audience reaction today. Many said they would be checking with their fund providers or banks to find just what their savings were invested in.

In Government, the Green Party would establish a public, ethical default KiwiSaver fund, Philippa Stevenson said.

In the discussion, Stevenson pointed out that the $35 billion NZ Superannuation Fund had, according to its chief executive Adrian Orr, spent the last five years researching how best to assess climate change risk and incorporate that into its investment decisions.

Orr told the Listener magazine recently that “If I had stood up five years ago and said we are going low carbon I would have been tomatoed out of the building with people saying ‘that’s not your job.’ Now it’s just seen as ‘Yep that’s what we do.’”

The Green Party would do the same in government, she said.

The Greens goal was for New Zealand to be carbon neutral by 2050 and only a week earlier co-leader James Shaw had announced a policy that would establish a $100 million Green Infrastructure Fund. It was designed to bring government and private sector finance together to build projects to transform the economy and create jobs in clean industries like solar and wind energy, waste reduction and recycling, energy efficiency, biofuel, and sustainable agriculture.

A Green government would invest according to its values, just as individual ethical investors could do, Stevenson said.

Natta, an Authorised Financial Adviser who owns the company Smart Money Advice, said it was almost impossible for individuals to evaluate funds and companies for their compliance with good environmental, social and governance values. Ethical investment advisers such as herself relied on the considerable resources of heavyweight research companies.

But individuals could definitely have an impact by demanding that funds be ethical, she said and cited the case of Dr Bronwyn King an Australian oncologist who discovered her superannuation “nest egg” was investing in the tobacco industry.

She fought back and by this year half of Australia’s superannuation funds were tobacco free. She has now launched a crowd-funding campaign to create a “verified tobacco-free” stamp of approval for super funds that steer clear of the industry.

King’s story and Natta’s revelations may just have inspired a few more investors to actively get the lowdown on their own investments and shift them to what many have thought they already were – ethical.

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