Almost half of KiwiSaver members are unfazed about whether their investment makes any positive environmental or social contribution, a new Westpac survey suggests.
But the bank says KiwiSavers’ attitudes are shifting when it comes to what they are investing in.
In October, Westpac commissioned Nexus Planning & Research to survey 1007 KiwiSaver members about their attitudes towards their investments.
According to the survey, 45% say they are not concerned about whether their investment makes an environmental or social contribution, a further 14% say they disagree with this investment approach, and 41% prefer to have their savings in an investment that does make a positive contribution.
Interestingly, almost half of the KiwiSaver members say they want to know more about where their money is being invested. On the other hand, 40% did not care about where their money is invested and 16% did not want to know more.
Despite the mixed attitudes, Simon Power, Westpac NZ general manager of consumer banking and wealth, says investment attitudes are changing.
“Investors are increasingly looking at the social effects of their investment and weighing that against the expected financial return on their investment,” Mr Power says.
The release of the survey results coincides with Westpac launching its “responsible investment approach”, to integrate “environmental, social and governance (ESG) factors into the decision-making process [of investments] and removes investments in nuclear explosive devices, anti-personnel mines, cluster munitions, and tobacco from its KiwiSaver funds.
This approach also means Westpac will exclude investments with ties to whaling.
ESG risks can present long-term financial risks that Westpac needs to consider on behalf of its customers, he says.
“As part of this process, we have reduced investment in companies with a poor track record of managing these risks and, through our partnerships with institutional fund managers, engaged with the boards and management of some of the companies we invest in to bring about positive change. We will continue to take that approach in the future.”
Previously, KiwiSaver providers have come under fire for their involvement in investing in weapons and tobacco companies.
Splitting investments across multiple companies, or diversifying, is a common strategy to minimise investment risk. However, as Sorted explains, it can be tricky for the KiwiSaver member to find out what they are invested in.
“It’s not always easy to determine the names of the companies, the industries they operate in or whether they would be regarded as ethical investments.
“Details are outlined in the provider’s annual disclosure statement, typically available online,” according to the Sorted website.
Sorted advises KiwiSaver members to contact their provider if they have moral objections to investing in certain companies.
“…let your voice be heard and make the provider know your preference for ethical investment choices.
The Sorted website has compiled a list of KiwiSaver providers with funds that have filters in place to avoid “undesirable” investments, such as weapons or tobacco.
However, ethical investment is only one piece of the puzzle when it comes to choosing a KiwiSaver fund. The fund also needs to have an appropriate risk level to suit your needs, the level of services you want and also reasonable fees.
Canstar compares KiwiSaver funds, looking at fees as well as returns, to help investors narrow down their options.
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