Majority of New Zealanders expect more from their KiwiSaver

Embargoed until 15 November 2016

MEDIA RELEASE:

Consumer Polling: The clear majority of New Zealanders expect more than just financial returns from their KiwiSaver investments

Consumer polling released today highlights just how strongly New Zealanders believe their KiwiSaver providers should consider environmental, social and ethical factors as a part of delivering good investment products and financial returns.

A clear majority of respondents (81%) believe that it is important that KiwiSaver funds consider environmental, social and/or ethical factors providing a loud and clear signal to the industry that New Zealanders expect that their retirement savings are invested in a responsible manner.

Launched today at the New Zealand Responsible Investment Conference in Auckland, the polling very clearly highlights that New Zealanders don’t see this as a choice between financial considerations or personal values, but that both should be part of good investment practice.

“These results show just how clearly New Zealanders believe that personal values should not be separated from the way their retirement savings are invested” said CEO of RIAA Simon O’Connor.

“The polling confirms the strength of conviction that New Zealanders don’t want their retirement savings to come at a cost to society or the environment. The good news is that investors should be able to have their cake and eat it too, as a strong body of evidence now shows us that investing in more sustainable companies can deliver stronger investment outcomes.”

Simon O’Grady, Kiwi Wealth chief investment officer, said investors expected their wealth management companies to develop pragmatic solutions that reflected their personal values but also performed financially.

“The message is clear. New Zealanders want to be responsible with their investments but at the same time want to achieve strong financial returns. Well over half of the sample say financial performance is more important to them in their investments than personal values. We think this is important to take into account when developing our investment policies.

“The survey shows how varied peoples’ personal values are when it comes to investment. Kiwis have also demonstrated a strong preference for fund managers to be active shareholders, positively influencing company performance through active engagement rather than just divesting.

“This survey raises many important issues for the New Zealand wealth management industry, and it’s a real challenge to strike the right balance on these issues while still meeting our fiduciary responsibilities. At Kiwi Wealth we’re developing solutions for investors that achieve this balance across our entire investment portfolio. We hope to be in a position to give more information to our investors on this topic in the coming weeks.”

Responding to the recent backlash against KiwiSaver funds that had investments in cluster munitions, landmines, nuclear weapons and tobacco, this polling was commissioned by the Responsible Investment Association Australasia (RIAA), in conjunction with Kiwi Wealth, to better understand the depth of conviction and the issues that matter most to New Zealanders.

Key findings:

The top 5 industries that most respondents want to avoid investing in (in order) were whaling, nuclear power, tobacco, gambling and weapons.

The key issues that Kiwis want their KiwiSaver providers to take into account are issues related to people and animals (slavery, child labour, animal cruelty) above environmental issues such as environmental damage and carbon emissions). Clear in the findings was that all issues named were considered to be important by respondents, with very few respondents (5-11%) deeming any issues ‘not important’.

When asked about the performance of ‘responsible or ethical funds’ compared with standard funds, a large proportion of respondents (43%) indicated they believed there was no difference in performance or that responsible funds would outperform.

When asked about the barriers to investing in responsible and ethical funds, more than half of all respondents agreed that they do not have enough time to look at all the options and compare them, or that there is not enough independent information available.

Significantly, a quarter of respondents indicated they’d be ‘much more likely’ to chose a fund certified as responsible or ethical. In total, more than half (55%) would be more likely (slightly and much more).

“These results unambiguously highlight how today it is essential for KiwiSaver providers to take a responsible approach when offering investment products or advice. The relatively low levels of opting in by consumers to responsible or ethical funds risks being interpreted that people don’t consider these issues to be important. What this research validates is that this is false, with the clear majority simply expecting their fund providers to consider these important issues as a matter of standard investment practice.”

“The recent moves by the bulk of the KiwiSaver industry to put in place exclusions across controversial weapons and tobacco is a strong start, however this industry needs to continue to engage more deeply with clients and develop the types of products that reflect the strongly held values of Kiwis, better manage all investment risks including environmental and social, whilst also delivering strong financial outcomes,” said Simon O’Connor.

Pleasingly, a growing body of local and international evidence highlights responsible investment can deliver all of these elements. Our own research has confirmed this, with Australian responsible investment funds having outperformed their relevant benchmarks over 1, 3, 5 and 10 years.1 1 RIAA (2016), Responsible Investment Benchmark Report 2016. See also: Deutsche Asset and Wealth Management (2015), ESG and Corporate Financial Performance: mapping the global landscape; Oxford University and Arabesque Partners (2015), From the Stockholder to the Stakeholder; Kotsantonis, Sakis, Christopher Pinney, and George Serafeim (Harvard Business School) ESG Integration in Investment Management: Myths and Realities, Journal of Applied Corporate Finance 28, no. 2 (Spring 2016): 10–16.

The full polling report can be found here:

http://responsibleinvestment.org/wp-content/uploads/2016/11/20161107_Mobium_RIAA_KiwiSaver_FINAL.pdf

The national poll was conducted by Mobium Group in late October 2016 via an online survey with a survey sample of 1,001 New Zealanders aged between 18-69 years old.

The Responsible Investment Association Australasia (RIAA) is the peak industry body representing responsible and ethical investors across Australia and New Zealand. RIAA has over 165 members who manage more than $1 trillion in assets, including super funds, fund managers, consultants, researchers, brokers, impact investors, property managers, community banks, community trusts, religious groups, and financial advisers.

RIAA is hosting its annual Responsible Investment Conference in Auckland today at the Hilton Hotel, bringing together 120 delegates from across New Zealand’s investment industry to discuss issues a including consumer trends, exclusions/screening, climate change and impact investment.

ENDS

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