Higher Standards of Corporate Conduct Through Better Investments
want their KiwiSaver fund to avoid companies that aren’t consistent
with their values. But there is another approach. Investment managers
can also analyse the performance of companies according to
Environment, Social and Governance (ESG) criteria, and choose companies with higher ESG standards.
Providers can influence positive change on ESG issues in companies that they invest in through identifying opportunities and, where relevant, voting for change as a socially responsible investor. They can also engage with the Boards of Directors of companies and try to raise their standards. If the companies don't respond, the fund will then divest.
Many providers consider this approach to have more impact than simply excluding an overall sector.
Most investment managers undertake some form of ESG analysis, but there is a lot of greenwash. There is only one credible certification scheme available internationally – from the Responsible Investment Association of Australasia (RIAA).
This is one of the main criteria used by Mindful Money. The following companies are certified by RIAA as raising ESG standards in their KiwiSaver portfolios.