How to tell an ethical KiwiSaver from a greenwashed one

7th Feb. 2020

83% of us expect our KiwiSaver to be invested responsibly. But if you've ever tried to find a good ethical fund, you'll know it's not as simple as it sounds. For one thing, everyone has different ethics. For another, companies report on different things in different ways, because there's no legal standard on how to report ethical issues.

Each week the NZ Herald and Newstalk ZB's Cooking the Books podcast tackles a different money problem. Today, it's how to check that your retirement fund is only funding companies you're ok with. Hosted by Frances Cook.

To say that New Zealanders care about ethical investing is a bit of an understatement.  Research from Mindful Money shows the vast majority of us want guilt-free investing, and it's more of us each year. In 2019, 83 per cent of us said we expected our KiwiSaver to be invested responsibly, which is up from 72 per cent of us in 2018. The ultimate test, of course, is whether people will put their money where their mouth is.

Again, most of us say that we would – two thirds of New Zealanders say they would move their KiwiSaver if they disagreed with what it was being invested into. It's not just customers either. The world's biggest money manager, BlackRock, has started pulling out of fossil fuels across the board. And just this year, New Zealand's own Institute of Directors said responding to climate-related issues should be boards' top priority for 2020, to make sure their businesses can last long term.

Now this is very nice, but it's a murky world out there when you're trying to be ethical. There's no set criteria for companies to report on ethical standards, so they're all reporting different things in different ways. This can make it a nightmare when you're trying to compare apples with apples for your investing options.

Besides, everyone's idea of what is ethical is different. Weapons are produced by many engineering companies that also produce important technology that makes our lives better. Social media companies aren't usually on the ethical blacklist, but I personally think they behave in deeply troubling ways. 

So how can you find your way through this, to make sure that your money is supporting the things you want to see in the world?

For the latest Cooking the Books podcast, Frances Cook talked to Mindful Money founder and CEO Barry Coates.

We discussed the increasing push for ethical options from money managers and customers, the difficulty of getting good information, and whether you should consider the "olive" option even if a company isn't fully green.

Cooking the Books:  How to tell an ethical KiwiSaver from a greenwashed one

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