Dirty secrets revealed: ANZ announces review amidst KiwiSaver furore

Most New Zealanders with KiwiSaver accounts are exposed to controversial companies. Photo / File

Today's revelations millions of New Zealanders have unwittingly invested in tobacco and controversial weapons companies through KiwiSaver has seen the country's largest bank announce a review of investment policies.

ANZ, and its OneAnswer funds, are together the largest KiwiSaver providers managing 730,000 accounts worth $8.3 billion. A Herald analysis of KiwiSaver investments found the two companies had invested the largest proportion of client funds in companies blacklisted by the New Zealand Superannuation Fund.

An ANZ spokesperson said this afternoon in response to questions it was "currently conducting a review of the governance and selection criteria of its underlying investments" and customers concerned about their investments were free to change funds.

The spokesperson defending the banks' policies and said its external managers took responsible investing principles into account when allocating client savings and it offered a specific sustainable growth fund with ethical policies at its core.

"We are transparent about where our funds are invested and members can view a list provided annually of the companies their funds are invested in online at any time and we can change members' funds for them if they want," the spokesperson said.

Stories today - covering potential legal ramification of investments in cluster bombs - should spark an "awakening in the community" about what's hiding in their KiwiSaver, the chief executive of the Responsible Investment Association of Australasia said.

RIAA head Simon O'Connor said the Herald's investigation into KiwiSaver providers would spark questions among the public.

"An analysis of this kind often triggers consumers to question their providers and ask if their savings are being invested in companies that do not align with their own morals."

"Our experience is that when people are asked about how they want their savings to be invested very few would say they would want it to be invested in controversial weapons and tobacco," O'Connor said.

A Herald investigation into KiwiSaver funds has found pervasive holdings - totalling more than $100 million - by members of the public in companies considered so controversial the government-owned New Zealand Superannuation Fund has blacklisted them.

The exclusions range from companies involved in tobacco industry, to those breaching international agreements New Zealand has signed banning nuclear and cluster weapons and landmines, and mining companies guilty of gross human rights abuses.

Analysis by the Herald Insight team of annual disclosure filings to the Financial Markets Authority allowed tens of thousands of investments held by more than 70 funds to be analysed.

The analysis shows most New Zealanders with KiwiSaver accounts - more than 2.6 million people have accounts in the retirement savings scheme worth $32.5b - are exposed to controversial companies.

For instance, more than two million New Zealanders are found to have collectively - and likely unwittingly - invested $102m into tobacco companies.

Fund providers are shown to have markedly different approaches to responsible investing, with several having moved in recent years to match NZSF exclusions while some are considerable more exposed than others.

KiwiSaver funds analysed by the Herald have been approached for comment and further findings will be released this afternoon as they respond.

Green Party co-leader James Shaw said he was "horrified" by the nature of the KiwiSaver investments.

"I think the vast majority of New Zealanders would also be horrified that their life savings are invested in companies that are actively involved in the manufacture and distribution of cluster munitions, nuclear weapons, land mines and tobacco."

It was time for the government to start answering questions and for these providers to urgently adopt ethical investment standards, Shaw said.

The Green Party had been questioning the government on this issue for more than six years, Shaw said, adding that he had correspondence from Finance Minister Bill English in 2011 "where he essentially dodged the question about the legality of the investment of some of these funds."

The international socially responsible investment movement had been around since the 1990s and New Zealand was a "real laggard" in comparison to other countries, Shaw said.
"We need to lift our game."

Green Party MP Julie Anne Genter would be raising this issue during question time in the House today, Shaw said.