KiwiSaver Providers Must Earn Trust To Be Believed On Responsible Investing Claims
A quarter of New Zealanders are having a hard time trusting claims of ‘responsible investing’ from fund managers, and it’s up to KiwiSaver providers to earn the trust of their members.
Joe Bishop, Kiwi Wealth Chief Customer Officer, said Kiwis clearly wanted to have their funds invested responsibly but a lack of trust in their provider, and independent information, was preventing them from doing more.
“Kiwis increasingly want their personal values reflected in their investments. They want to know where every dollar is invested and that their fund manager is making sound investment decisions that match their personal values.
“The onus is on KiwiSaver providers more than ever to better meet the demands of their members. In part, that means providers should be adopting and implementing responsible investing practices across all investments, not just a few funds marketed as ‘ethical’.
“It also means working closer with KiwiSaver members to understand what personal values matter most and how they would like them reflected in their investments. We listened to our members and the wider community, taking the time to understand what’s important to them and the products and policies that meets those needs.
“Because all our funds are actively managed, we have the flexibility to change our responsible investment criteria to exclude those companies we deem ‘unethical’ and reward those who are performing well on environment, social and governance issues.”
Last year’s survey of 1,000 New Zealanders from the Responsible Investing Association Australia (RIAA) found that 49% cited a lack of independent information as a barrier to responsible investment. 26% didn’t believe the responsible, sustainable or ethical claims of their fund managers.
“Trust is earned, not given, and providers can and should do more to show their members they’re not ‘green washing’. They can be more transparent on the information they’re reporting to members and open up their responsible investing practices to independent scrutiny.
“For example, any member of the Kiwi Wealth KiwiSaver Scheme can find out on our website exactly which sectors or companies are excluded and how we have exercised our shareholder voting influence to effect positive change in the companies we invest in.”
“Almost 90% of our KiwiSaver members have said independent certification is important in their decision-making. That’s why we were the first default provider to have all funds independently verified by the Responsible Investment Association of Australia. As a recent signatory of the United Nations-backed Principles for Responsible Investment framework, our performance on responsible investment is being independently graded.
“Kiwis deserve to know just how responsibly invested their KiwiSaver fund is and have confidence in the information being supplied to them. At a bare minimum, providers should be equipping them with information on sector, company exclusions, shareholder proxy voting records, and having their responsible investment processes independently certified.
Kiwi Wealth’s 2017 white paper on responsible investment, endorsed by RIAA, found that responsible investing was best achieved when Environmental Social and Governance (ESG) factors were considered across all investments in a portfolio in combination with actively engaging with companies and exercising proxy voting rights to influence company performance.
The Investing in an imperfect world: our take on true responsible investment white paper can be viewed online at https://www.kiwiwealth.co.nz/ri-whitepaper