The debate over responsible investing has been boosted by attacks on a high profile public investor.
At the end of 2012 the New Zealand Superannuation Fund sold what were relatively tiny stakes in three Israeli companies because of their involvement with the construction of settlements in the Occupied Palestinian Territories and the separation barrier - activities the United Nations says are illegal under international law.
It earlier divested shares in Freeport-McMoRan Copper & Gold because of bribery and thuggery around its Grasberg mine in West Papua, KBR (formerly Kellog Brown & Root) for persistent breaches of bribery and corruption standards, Fukushima nuclear plant operator Tokyo Electric Power Company and the Zijin Mining Group for environmental damage in China.
The Green Party has a further list of companies they want the fund to quit because of bribery and corruption, severe environmental damage, human rights and the reported manufacture of cluster munitions.
The fund guardians say they do respond to actual or reported breaches of their environmental, social and governance (ESG) standards, which are closely monitored.
Their focus is on addressing and changing behaviour, which can be through engagement with the companies either directly or in collaboration with other investors. Divestment is the last resort.
The fund owned the shares, which amounted to less than $2 million of the $19 billion fund, because they were on passive indexes. Such companies move in and out of the fund based on market capitalisation rather than through active stock picking.
The New Zealand Superannuation Fund is a target for those who want to make a point about responsible investment, but how can ordinary savers know their money is being invested in ways that match their ethics and aspirations?
In their investment statements, every Kiwisaver fund provider discloses their approach to responsible investing, including environmental and social considerations. ?Those who do go down this path have a growing body of research to work from, which is used by other organisations - many of who use the same fund managers.
Trust Waikato chief executive Bev Gatenby says the trust signed up to the Principles of Responsible Investment in 2007. "It's a worldwide movement established by the United Nations. Through that we get access to frameworks and a huge amount of work on the issue, and it provides a community to operate in," she says.
"The trustees took the view that if the purpose of the trust is to make donations that do good for the community, then the way we invest should also do good.
"A number of trustees also talked about the business case for responsible investment and sustainability. There is increasing evidence that funds based on ESG issues perform better than the standard benchmarks," Gatenby says.
THE BUSINESS CASE
Sovereign Insurance chief executive Charles Anderson says he wants to get his company's $2 billion investment fund more in line with its liabilities.
He's reviewing the way its index is constructed, to for example lower its exposure to carbon. He wants it managed passively, to reduce brokerage and trading costs, and to reflect the sort of values an insurance firm should model.
Anderson, who was one of the few New Zealand executives to attend last year's Rio+20 climate summit, says it's clear the world's resources are being used at a rate that is totally unsustainable.
"If you have family and are interested in a forward view of the world, you have to recognise something has to change," he says. "There is no sense for us to feel good about investing in things we know have negative medium or long-term consequence. It's particularly crass to do it simply on the basis you could make a better financial return if you do that."
He believes it will make for better long term returns.
"It's a fundamental ability of business to read the signals from the environment they are operating in and transform their models.
"If you look through an investment lens, companies that are actively factoring in to their business models these sorts of environmental, social and governance issues are positioning themselves to perform better in future than people who aren't.
"Sydney-based Hunter Hall is the largest fund in Australasia dedicated to responsible investment, with $1.2 billion under management. Its head of responsible investment research, Michael Walsh, says when Peter Hall launched the company in 1994 there were few ethical funds around.?It is now an industry, with benchmarks, research, guidelines, international standards that funds can sign up to.
"I think there are two core objectives in this space. The first is to align investments with the way people align their values in life - they may not like gambling, drink alcohol in moderation, care about the environment, they don't want people to be treated cruelly," Walsh says.
"Investment can also influence capital markets for good. There is debate in accounting and capital markets about companies not picking up the bill for the environmental consequences or their activities. "Sustainable investment recognises companies are being asked to pay the bill more often and that influences their price."