17th Oct. 2019
Many New Zealanders who want to invest ethically are confused by the lack of clear definitions and put off by unsubstantiated claims of being 'ethical, responsible or green'. The FMA want to tackle these issues. They have released a consultation paper and invite submissions by 5pm on 24th October.
Many New Zealanders who want to invest ethically are confused by the lack of clear definitions and put off by unsubstantiated claims of being 'ethical, responsible or green'. The FMA announced at the Mindful Money campaign launch on 3rd September that they want to tackle these issues. They have released a consultation paper and invite submissions by 5pm on 24th October.
We encourage you to make a submission. Send your views to firstname.lastname@example.org via email (in word or PDF format) with the subject line "Green bonds and other responsible investment products: [Your Name or Organisation]".
The FMA has not previously come out as an advocate for responsible investing, so this is an opportunity to encourage them to do so. Some issues you may want to include are:
- The FMA should encourage the provision of a range of responsible investment products that meet the demands of consumers, including through outlining the benefits to members of the public and providing explanatory information. The case for the FMA to support responsible investment reflects the following factors:
- A large majority of the public expects KiwiSaver funds to be managed responsibly. According to the 2018 survey of the New Zealand public 72% of consumers want their fund provider to be responsible.
- Responsible investment has benefits for society and should be encouraged. Responsible investing not only has benefits for investors, through meeting their wish to have an ethically managed fund, but also channels funds to support public good, such as reduced pollution and exploitation, investment in reducing greenhouse gas emissions and improving well-being.
- Responsible investing earns returns that are, on average at least as high as comparable funds, generally with less risk. A review of the evidence by Mindful Money and KPMG shows that responsible funds perform well across different markets and time periods.
- Requiring quarterly disclosure of portfolio holdings
- Specifying standardised reporting formats for the key features of responsible investment for use in PDS, SIPO and quarterly reports to allow informed decision-making and comparisons across managed funds.
These should allow for different strategies used in fund management.
- The FMA should produce guidelines on standards required for responsible investment and other terms.
- Fund managers should be required to verify claims of responsible investing.
- The FMA should be prepared to take action to ensure that misleading claims are not used, especially with regard to the use of the term "impact investment".