KiwiSaver boss calls for ethics review

Sam Stubbs launched a low-fees KiwiSaver fund called Simplicity. Photo / Doug Sherring

The founder of new low cost KiwiSaver provider Simplicity has called on the industry to work together to jointly adopt the ethical investment policies of the NZ Superannuation Fund, in the wake of revelations that some major funds are invested in weapons and tobacco companies.

Sam Stubbs, Managing Director of Simplicity KiwiSaver said the policies of the NZ Superannuation Fund, which have been successfully developed over many years, are global best practice. It made sense to work together to follow that model, he said.

"All New Zealand Kiwisaver funds should be adopting these policies, which have been developed by a government entity, to give New Zealanders the assurance that the nation's superannuation investment is morally appropriate," he said.

The NZ Super Fund has a blacklist of companies making cluster munitions, manufacturing and testing nuclear weapons, tobacco, anti-personnel mines and whaling.

It was publicly available and the research was taxpayer funded, Stubbs said.

"If these policies were adopted by every KiwiSaver fund, ordinary kiwis could be assured that their individual contributions were being invested ethically. It's a world class, elegant and very Kiwi solution."

Stubbs said Simplicity had asked it's own offshore manager, Vanguard (used by many KiwiSaver funds), to consider applying this standard to its funds offered in New Zealand. This would make it easier for all Kiwisaver funds to take advantage of well-defined ethical standards, and apply them across their entire portfolios.

The Herald's analysis of KiwiSaver disclosures to the Financial Markets Authority found many providers listed only investments in index funds, and did not declaring what the indices were composed of.

For instance four providers -- Westpac, ASB, Grosvenor and Lifestages -- have between them invested $734m into the Vanguard International Share Index Fund.

The wide spread use of this index means that these providers indirectly have holdings totalling $20.4m in companies blacklisted by the NZ Super Fund, including $1m in potentially-illegal stakes in cluster bomb manufacturers.

Westpac and ASB have since announced their investment policies are under review, and RNZ has reported Grosvenor has decided to divest from the VISIF and seek alternate index investments which do not include blacklisted assets.