KiwiSaver users' demand for responsible investing increases

Kiwi Wealth’s annual responsible investment survey shows an overwhelming 89% of Kiwis expect their KiwiSaver funds to be invested responsibly.

Online extremism is a notable new issue Kiwis want their KiwiSaver provider to take action on. More than 90% placed some importance on their KiwiSaver providers taking action on online extremism with their investments.

Three-quarters of respondents said they expected KiwiSaver providers to use their influence as shareholders to compel social media companies to remove all objectionable and extremist content from their platforms. More than two-thirds said shareholder votes should be used to influence positive change in social media companies.

RESPONSIBLE INVESTING PRACTICES IN THE SPOTLIGHT

Melissa Vasta, Kiwi Wealth Head of Product, said the latest results indicated Kiwis’ attitudes to responsible investing, and their expectations placed on KiwiSaver scheme providers, was hardening.

“Kiwis increasingly want their personal values reflected in their investments. They want to know where every dollar is invested and that their fund manager is making sound investment decisions that match their personal values.

“The onus is on KiwiSaver providers more than ever to better meet the demands of their members. In part, that means providers should be adopting and implementing responsible investing practices across all investments, not just a few funds marketed as ‘ethical’.

“We think Kiwis also see through the lip service being paid to responsible investing by some providers, and it’s only right they demand their providers be more transparent with where their money is invested. For example, any member of the Kiwi Wealth KiwiSaver Scheme can find out on our website exactly which sectors or companies are excluded and how we have exercised our shareholder voting influence to effect positive change in the companies we invest in.”

SOPHISTICATED ATTITUDES ON BEST WAYS TO INFLUENCE COMPANIES

The survey also showed varying attitudes on how KiwiSaver providers could best exercise shareholder influence to change company behaviour.

Almost a third of respondents preferred shareholders divest entirely from companies, while 29% said exercising voting rights to force a change within organisations was most effective. Another 21% believed “naming and shaming” would motivate companies to be more responsible.

“This survey also showed that Kiwis do have a sophisticated and nuanced view on the best approaches to effect positive change,” said Vasta.

“They know a one-size-fits all approach has limited impact, they want fund managers actively and consistently demanding that the companies they invest in behave more responsibly.

“That type of activity can only ever be achieved by fund managers who actively manage their investment portfolios and are prepared to work for responsible investing, as well as financial, goals.”

Along with the Accident Compensation Corporation and the New Zealand Super Fund, Kiwi Wealth is a founding member of the Social Media Engagement Initiative. It seeks to use collective shareholder holder influence to encourage social media companies to strengthen controls on the distribution of objectionable content.

AT A GLANCE: KIWIS’ VIEWS ON RESPONSIBLE INVESTING AND KIWISAVER

• 89% expect their KiwiSaver funds to be invested responsibly
• 78% would consider changing providers if their KiwiSaver scheme was investing in companies not consistent with their personal values.
• 92% believe online extremism should be taken into account by KiwiSaver providers in their decisions on where to invest.
• Human rights abuses (74%), animal cruelty (68%) and Labour rights abuses (64%) the most important environment and social issues providers should positively influence through shareholder votes.
• 31% prefer total divestment from companies not considered responsible
• 29% believe using voting rights to force positive change by businesses is most effective
• 21% believe naming and shaming best motivates corporate responsibility

Kiwi Wealth’s 2017 white paper on responsible investment, endorsed by the Responsible Investment Association Australasia (RIAA), found that responsible investing was best achieved when Environmental Social and Governance (ESG) factors were considered across all investments in a portfolio in combination with actively engaging with companies and exercising proxy voting rights to influence company performance.

The Investing in an imperfect world: our take on true responsible investment white paper can be viewed online at https://www.kiwiwealth.co.nz/ri-whitepaper.

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