Ethical investing has moved from being fringe a decade ago to mainstream today. Yet with different approaches and different terms used, many investors don’t know where to turn.
In this column we want to demystify things by answering reader’s queries. This week’s questions come from Angela.
Question: How can I have an impact with my savings?
Our world has many challenges, from environmental damage to social turmoil. This can be overwhelming, and it’s hard to see what difference any one of us can make.
But we can each have an impact.
Firstly, how we spend our time is critically important. We can choose to mentor young people or volunteer for a charity, which are genuinely positive for our communities.
Secondly, we know how we spend our dollar as a consumer matters. Ethical consumption by the average shopper helps buy the world we want to see.
Companies change their products and how they run their business to focus on sustainability. Often, it’s driven by their leadership or team members, but often it’s because they know that’s what consumers want.
Less plastic, lower carbon or no animal testing, you choose what is important to you.
And thirdly we can make a big impact with how we save our money. You might start thinking about your banking relationship – KiwiBank and Co-operative Bank don’t lend to oil or coal companies. Forest & Bird very publicly moved their banking relationship for this reason in 2018. Banks take note of these trends.
What companies you invest in can make a difference in the world. This applies regardless of whether you invest directly through a broker, with a platform like Sharesies or Hatch, or into managed funds.
When deciding how and where to invest your money, consider the kind of world you want. Collectively as investors, we can have incredible influence, whether we know it or not.
Question: What about my KiwiSaver?
KiwiSaver totals over $82 billion, and you can use yours to avoid harm and invest positively.
You can exclude entire industries, like gambling, weapons or tobacco. There may be cases where you don’t mind the industry, but the company’s activities are controversial or unethical.
For example, you can be fine with mining companies but object to Rio Tinto which blew up aboriginal sites at Juukan Gorge in Australia. Or you might be fine with banks but not fine with scandals for mistreating customers (Wells Fargo) or large funders of coal projects (JP Morgan Chase).
Avoiding companies won’t immediately change the world, but it does mean you start thinking about where you want your money invested.
You might prefer companies whose products provide solutions to global problems, like Vestas Wind Systems in Denmark, or companies that value sustainability and purpose, like American Water.
Shareholders in companies have a right to vote, meaning you can influence corporate decisions. Shareholders in ExxonMobil recently pushed through the appointment of new directors with renewable energy expertise - this was not what the company wanted.
So, investing your money as an ethical investor can have a positive difference, including your KiwiSaver. Start with a visit to MindfulMoney.nz and check out if your KiwiSaver aligns with your values.
If you really don’t care what your money is invested in, that is entirely your choice. But the converse is also true – if you really do care then there are the tools to help you, you just need to spend the time with some mindful research.
And let’s not forget that ‘how we spend our time’ is first on our list of ways to have an impact on the world.
– John Berry is co-founder and chief executive of ethical fund manager and KiwiSaver provider Pathfinder Asset Management, the first B Corp certified fund manager in New Zealand which is part of Alvarium Wealth. Pathfinder KiwiSaver invests in Vestas Wind and American Water, but not Rio Tinto, Wells Fargo, JP Morgan Chase or ExxonMobil. This article is not a recommendation to buy or sell any particular security.
(This article was originally published by Stuff October 7, 2021) (Picture Source -Naja Bertolt Jensen)
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