What is ethical investing?
Ethical investing is the practice of implementing ethical principles to support industries making a social and environmental positive impact, also known as a socially responsible investment (SRI).
Green bonds are a common ethical income asset incorporated by commercial banks and KiwiSaver providers in New Zealand. The primary purpose of green bonds is to support investments and projects with environmental benefits. This could include alternative energy, sustainable water, green building, and climate adaptation investments. This enables individuals to invest ethically in funds that incorporate income assets such as green bonds to make a positive impact while generating a return on their investment.
What is greenwashing, and are KiwiSaver providers overusing ESG to persuade investors?
Greenwashing is the process of misleading customers with information about environmental claims. In the finance industry, this has become prevalent, with KiwiSaver providers stating that they incorporate environmental, social, and corporate governance (ESG) because investors are more commonly applying these non-financial factors as part of their analysis process.
In recent media, Stuff News has mentioned that several KiwiSaver providers are misleading investors with responsible funds. Paul Gregory, FMA director of investment management, has said, “The increasing popularity of ethical investing funds had led to a huge number of funds promoting themselves as ethical, without significant changes to how they operate”. Additionally, the Financial Markets Authority also says, “Every KiwiSaver and investment fund that labels itself green, climate-friendly or ethical is falling short on its promises”. Furthermore, “Investors need to be alert to spot KiwiSaver 'greenwashing', says Simon O'Connor, CEO of the Responsible Investment Association Australasia.
What does this mean for New Zealanders in KiwiSaver?
KiwiSaver providers have incorporated these ethical initiatives to invest in socially responsible investments to positively support society in creating a better future for the country. It is important for New Zealanders who have chosen to invest in responsible KiwiSaver funds, to ensure that their provider follows through with their ethical investment claims.
How can National Capital help?
National Capital can help inform you on which investments suit your ethical views. If you feel unsure about your current situation and KiwiSaver Fund, you can complete a KiwiSaver Healthcheck. Completing a Healthcheck will allow you to reach your financial goals and receive KiwiSaver advice tailored to your personal morals.
National Capital currently advises New Zealanders on over $70 million of their KiwiSaver savings. For more information, visit www.nationalcapital.co.nz.