Is your KiwiSaver ethical? Sure your provider tells you it is. But exactly how ethical is the question.
Sometimes the razzle dazzle advertising makes certain funds look more ethical than they are in real life. Only 10 per cent or fewer get the tick of approval from two organisations that provide responsible investing certification or searches.
For many, they've only done the bare minimum by removing harmful investments from their line-up. It's called negative screening and it's now the norm in New Zealand and, as one industry person described it this week, "ethical lite".
If you really truly want a deeply ethical KiwiSaver then you're going to need to dig, or turn to search engines that can do it for you. There are two in New Zealand - Mindful Money (mindfulmoney.nz) and Responsible Returns (reponsiblereturns.co.nz).
You'll need to know what types of unethical practices you want to avoid, such as weapons, gambling, pornography and animal testing. You might like to think as well of investments you'd choose if you could, such as renewable energy or sustainable water.
Mindful Money was launched earlier this year by former Green MP Barry Coates. The site has given its tick of approval to 26 of 260 KiwiSaver funds and once you've inputted your concerns, it spits out a list of funds that suit your risk profile, probable length of return and a few other factors.
Responsible Returns from the Responsible Investment Association Australasia (RIAA) has fewer funds (16) that meet its level of ethical certification.
The Mindful Money search allows you to rank on a number of factors including fees and past performance as well as an ethical score, whereas Responsible Returns focuses solely on the ethical side of the investments.
Other issues to consider include your time horizon and risk profile in order to determine if you need a conservative, balanced or growth ethical fund.
Kiwis who want to put ethics before other concerns when investing often think it's hard or they will forfeit some profit. It's not, says Coates. Switching funds takes five minutes online once you've made the decision to move.
Both Coates and RIAA chief executive Simon O'Connor point out that there is growing evidence that responsible KiwiSaver funds do as well as those that don't have an ethical bent.
Investments such as fossil fuels, for example, are becoming less profitable.
My journalistic radar went up at the launch of Mindful Money when Amanah KiwiSaver managing director Brian Henry raised the question of whether fees should be an option in any ethical KiwiSaver search.
It's a good question. If you want to do good then fees rank well down the list in importance. Only if you have two very similar ethical funds should fees come into the decision-making process.
Henry's argument is that before fees there are more vital questions to ask such as what the KiwiSaver provider's mandate covers, how that is audited and what happens if the provider finds that one of its investments has done something to breach the ethical mandate.
There are a wide range of other questions to consider. It might sound odd, for example, but some KiwiSaver managers such as KiwiWealth, Booster and AMP (through AMP Capital) sometimes use their shareholding in certain companies to force change around ethical issues.
If ethical investing is important to you then it's a good idea to learn more. Read as much as you can.