Millions of Kiwis signed up to KiwiSaver are growing more conscious of exactly where their money is being invested.
Last month, it was revealed by 1News that some KiwiSaver Funds and New Zealand Super Fund could be considered as “financially propping up the Russian Government” in the invasion of Ukraine with over $100 million in Russian investments.
Pathfinder Asset Management co-founder and chief executive of ethical fund management, John Berry, said that because of Russia's invasion they will sell their Russian securities. The invasion is the trigger for making this issue public, but many investors probably didn’t expect they were invested in Russia in the first place. These fund managers have let people down with a process known as ‘Greenwashing’ where they convey a false impression or provide misleading information about how a company is providing ESG [environmental, social, and governance management.
The good news is that now most of the funds have been divested. Most of the recent investments being index-related funds have now removed the Russian companies linked to the Putin regime.
Morningstar’s global head of sustainability research, Hortense Bioy, voiced before the Ukraine invasion that “some [fund managers] are more credible than others” around their investing being positive for our planet. She referred to the potential for “empty promises” and Morningstar stripped 1,200 funds globally of ‘ESG’ recognition.
Regulators worldwide including New Zealand’s Financial Markets Authority, have been increasing demands for fund manager accountability also - If investors are sold a fund that’s described as sustainable, responsible, or ethical then the fund must match its label.
In wake of the current situation, it is recommended that now is the time for people with KiwiSaver accounts to take the opportunity to discover where their money is being invested and if you support it. Ethical investing looks different for everyone and realising where your money is being invested may not align with your values.
74% of New Zealanders want to exclude fossil fuels from their investments, but New Zealand Investors provide $2.8 billion in investment to companies that provide oil, gas, and coal in KiwiSaver and retail investors funds.
While 85% of Kiwis think it’s important not to invest in cosmetic companies that test their products on animals. Yet a huge $3.4 billion is invested in companies that test their products on animals for non-pharmaceutical use.
Another 81% of Kiwis think it’s important not to invest in weapons manufacturing. However, investments in weapons by New Zealand funds total $391 million with $15 million of that invested in nuclear weapons.
Where you don’t agree with your provider, it is easy to move to another one. National Capital offers free KiwiSaver recommendations to help you choose the right ethical fund for you that practices ESG and is not involved in fossil fuels, animal testing, or weapons manufacturing.
To find the right ethical fund, complete National Capital’s KiwiSaver Healthcheck.