Some of the $93 billion at last count invested by the KiwiSaver providers goes into a shocking range of companies that sell alcohol, tobacco, and pornography. Or they make their money out of gambling, animal cruelty, and more. And it’s not unheard of for KiwiSaver providers to suggest with one hand in their marketing that they’re ethical, yet still invest in these companies involved in harmful practices.
Research by Mindful Money, a charity dedicated to making investments such as KiwiSaver a force for good, found last year that a number of KiwiSaver providers have dropped a percentage of their harmful investments. For ASB that was 37%, and 22% for AMP, Mindful Money founder Barry Coates said. New numbers are about to be released and providers are still dropping these investments, albeit levelling out.
KiwiSaver providers that say they’re ethical range from those doing everything they can to others doing more or less nothing, Coates said.
“’Everything’ is the ones that are able to not only avoid investing in the things that the New Zealand public don’t want to invest in, but they are pivoting to actually provide positive investing in social housing and renewable energy; the kind of things that can make a tangible difference in New Zealand. That’s really the state of what ‘good’ looks like.
“Those who don’t do much talk about [ethical*] this and [ethical] that and how they’re sustainable. But actually they tend to invest in exactly the same companies that they would always invest in. It’s very difficult to see that they’re behaving any differently than they would have behaved if they hadn’t said they were ethical.”
Some of the investments this second group of KiwiSaver providers hold might raise saver’s eyebrows.
“The first is fossil fuels, and companies like ExxonMobil that has basically doubled down on more and more fossil fuels exploration and field development rather than transitioning to renewables. They’re also spending money on lobbying against climate change regulations in the United States. They’re acting contrary to those issues in a number of cases.
“Another example would be weapons. British Aerospace, BAE Systems, in the Gaza conflict was allegedly involved in delivering white phosphorus weapons. That’s something that burns the skin of people, often for years to come. It leads to really bad suffering [and] can kill them. Many of the tobacco companies push their marketing of cigarettes and vapes to young people.”
Coates said in Australia, the US, and Europe financial regulators had taken legal action against providers for their greenwashing on ethical issues.
“In New Zealand, the regulator [Financial Markets Authority] has kind of grumbled and talked about it, but actually hasn’t taken any action.”
This article started out looking at the most ethical KiwiSaver providers and what they do. There are a small number of providers and funds who do walk the talk.
The winner of the most recent Mindful Money annual awards in 2024 was Pathfinder KiwiSaver, which was a pioneer in ethically managed investments. Highly commended was Simplicity, which has been making its mark with investments in social housing and renewable energy and significant donations to charities. The other two finalists were Generate KiwiSaver and Medical Assurance Society [MAS].
Tracking down other ethical KiwiSaver providers and funds that aren’t being creative with the truth is relatively easy. The Mindfulmoney.nz search has whittled those that meet its ethical standards and tests down to 37 of more than 300 KiwiSaver funds. Other providers that have funds that meet the grade include AE KiwiSaver, Booster, Mercer NZ, QuayStreet Asset Management, and SuperLife. Not all funds from those providers necessarily are among the ethical list.
The old chestnut of whether ethical funds’ returns are poorer than those that invest in nasties is one that hasn’t gone away.
But it has pretty much been disproven by multiple studies, Coates said.
“There’s a lot of evidence [and] thousands of different studies have been compared with each other, and the best evidence is, and this is quite a conservative view, that ethical funds have performed at least as well, if not better, than conventional funds. So there’s not a trade-off between ethical funds and returns.”
*ESG is the acronym used by the industry. It stands for environmental, social, and governance, and is a method used to screen investments.
