Amazon off the cards for responsible investor

Tobacco company investment is off the agenda for a new responsible investment fund as is global retail giant Amazon. Photo/123RF.

Tobacco, coal and gambling are out and so is Amazon when it comes to a new responsible investment fund.

Auckland based boutique fund manager Pathfinder has launched a Global Responsibility Fund and is taking a tough stance on where it invests.

John Berry, chief executive of Pathfinder Asset Management, said as well as excluding the typical nasties the fund uses a controversy rating system and only picks those with high environmental, social and governance (ESG) scores.

That has knocked out the likes of Volkswagen over its emissions scandal and Johnson & Johnson for its talcum powder cancer scare.

Global online retail giant Amazon is also off the list because it doesn't have a high enough ESG rating.

"It is not excluded by virtue of revenue sources and while it has some controversy around labour practices and tax policy, it is not cut out on the controversy basis.

"But its ESG score is not high enough to make the portfolio. By comparison Alphabet (Google) has a higher ESG rating and is selected in the portfolio," Berry said.

The company launched a wholesale version of the fund earlier this year after getting a mandate of just under $50 million from Ngai Tahu.

Now it has made a retail version available and is promoting it via online investment platform Sharesies in a bid to tap into a younger market.

Berry said the platform was opening up investing for a whole new generation and it had seen demand from consumers for more socially responsible investment products.

Younger people appeared to be taking a different view on investing, he said.

"They are much more connected with what is going on in the world and are much more connected with environmental issues. Their motivation is not just to make money off investments."

New Zealand has seen a big rise in socially responsible investing in the wake of revelations by the Herald and Radio New Zealand that KiwiSaver funds invested in tobacco and controversial munitions companies.

KiwiSaver providers have since pulled out of those investments, with most taking on an exclusion approach.

Berry said its fund went a step further than that using its extra screening tools and would also change over time to reflect changing beliefs.

"You can't set and forget." If there was a groundswell against something like using palm oil then it would look to exclude companies involved in that.

Berry said it was often asked what cost investing responsibly came with when it came to investment performance.

He said overseas research showed it tended to do at least as well as the market and could do better.