When responsible investing gets ‘too hard'

8 August 2019

Fund managers shirk duty when responsible investing gets ‘too hard’

Kiwis are unwittingly backing shady companies because some New Zealand investment funds are outsourcing management responsibilities to overseas fund managers.

Joe Bishop, Kiwi Wealth’s General Manager Customer, Product and Innovation, said fund managers that relied on low-cost passive index funds such as Vanguard were leaving investors exposed to companies with highly questionable, and even unlawful, records on environment, human rights and governance issues.

“As BusinessDesk reported last week, KiwiSaver funds are being exposed to Barrick Gold via Vanguard’s ironically-named Ethically Conscious International Shares Index. Barrick is a company that for years has been implicated in the abuse, rape and murder of workers and locals at a mine they operate in Tanzania. Similar allegations have been made about their operations in Papua New Guinea.

“The only tool the Vanguard funds have available to them is to exclude entire sectors from investment portfolios. But what about individual companies that operate in sectors that aren’t excluded, but which have highly questionable, even unlawful, records?

“We dumped Barrick years ago, as did the New Zealand Super Fund. That Barrick is a dodgy operator comes as no surprise to us, nor should it to any other responsible New Zealand fund manager. In our view, those who continue to invest in Barrick are either lazy, don’t care or both.

“That’s the benefit of managing members’ investments from here in New Zealand, based on what Kiwis want, rather than outsourcing decision-making. We make the decisions on what we invest in and we can adjust our investments to suit the views of New Zealanders.

“The tools are there. All it takes is a bit of extra work to research and to implement – precisely the skills investors want from their fund manager.

“Our view is that responsible investing is sadly becoming a bit of a box-ticking exercise or a marketing play. Statements that profess responsible investment values may get a cheap headline, but the talk hasn’t necessarily been followed up with action – at the expense of doing good for both investors and the planet.

“For fund managers to absolve themselves of their responsible investing duties because it’s ‘too hard’ is, we think, frankly shameful. Kiwis deserve more.”

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