Ethics and Government Investment
The recent statement by Simon Tyler on behalf of the
National Provident Fund and the Government Superannuation
Fund, that environmental and social goals must be balanced
with financial risk and reward, displays conceptual
confusion about the role of ethical factors in decision
making in investment. To claim that financial returns should
take precedence over ethical matters, is contrary to common
sense and current practice. All funds exclude some
unethical behaviour from their portfolios regardless of
financial returns, such as money laundering, tobacco, land
mines, or some human rights abuses. These exclusions are
made regardless of any potential financial profit or loss,
because there are certain forms of moral behaviour that any
society sets for the safety and well-being of its citizens.
The debate should be about the ethical principles that
should guide investment choices, and the NPF, the Government
Superannuation Fund, ACC and the New Zealand Superannuation
Fund all illustrate wide variations with no consistency. It
is now time for the Government to reform these to provide
consistency, including consistency with its stance on
climate warming.
Just as disturbing was Finance Minister
Grant Robertson’s reply that ministers had to maintain an
arms-length relationship with crown entities. ACC and the
NZ Superfund have an ethical charter determined by the
Government – it is just that this charter is so weak that
it is in effect useless. So there is a need for Government
to review and change the charter but leave its
implementation to the Funds. That is the responsible role
that Government should
play.