How to earn ‘good’ returns on your KiwiSaver

The National Government admitted last week that it will not be taking any responsibility for KiwiSaver funds that invest in cluster bomb, landmine, and nuclear weapons manufacturers. New Zealanders care deeply about whether or not their money is being used to do harm elsewhere. It’s time the Government did too.

In Government, the Green Party will take a more proactive approach to responsible investment, making it easier for small KiwiSaver funds to invest ethically and legally.

Here’s our plan:

1. The Government would only appoint default KiwiSaver providers with strong responsible investment values and full disclosure of the companies they’re investing in. At a bare minimum, we’d expect default providers to follow the NZ Super Fund’s exclusion list, as Sam Stubbs, Managing Director of Simplicity KiwiSaver, has recently called for.

Good ethical investment practice extends way beyond what you don’t invest in. Equally important is how fund managers engage with companies that are potentially acting unethically and push for positive reform. Yearly disclosure over shareholder engagement and voting records would also be an expectation.

2. The current law around landmines and nuclear weapons lacks clarity when it comes to investment. Recent defensive statements made by ACC that its investments in cluster bomb and nuclear weapons manufacturer Lockheed Martin were not illegal highlight the fact that the law seems to offer fund managers legal wiggle room when there should be none.

In Government, we’d strengthen the law so that it clearly reflects our values when it comes to cluster bombs, land mines, and nuclear weapons.

3. For all other KiwiSaver providers, we’d require full and automatic disclosure of the companies they’re investing in. This would make it easier for KiwiSavers to see for themselves where their money is going.

It’s important for public and private fund managers to develop their own responsible investment policies, as this will help drive innovation and offer diversity in this area for investors. But it’s clear the Government’s current hand’s off approach is not working. KiwiSaver is about to turn ten years old, yet only 2.6 percent of all funds under management here are invested ethically.

The good news is that cleaning up our investment sector is relatively straight forward, involves divesting small amounts, and will have a largely immaterial impact on profits. The Government can also help keep the costs of implementing strong ethical standards for smaller KiwiSaver funds low by setting minimum standards for all funds.

PS. Wondering if your KiwiSaver invests ethically? Write and ask them directly. If you’re in a default fund, you can check yours here.