Big news in the KiwiSaver world! Companies managing KiwiSaver funds are making some changes in how they invest. They’re cutting ties with companies that don’t meet ethical standards, according to Mindful Money, an ethical rating site. This shift is the biggest we’ve seen in the last five years.

Even though more KiwiSaver investors say they want to invest ethically, there’s a bit of a gap between what they say and what they do. National Capital KiwiSaver data (2024) shows that only 8.3% of people in the past year were willing to give up some potential money or pay higher fees for Environmental, Social, and Governance (ESG) factors. This gap shows that there’s a need to find a middle ground between talking about ethics and actually doing something about it.

Insights from HealthCheck Stats:

• Trade-off Consideration: Only 8.3% of people said they’d prioritise ESG factors over making more money. Most folks still care more about their wallets.
• Ethical Investment Awareness: While more people are interested in ethical investing, the numbers tell us we need to find a balance that fits what KiwiSaver members really want.

Balancing Ethics and Finances:

Here’s the challenge: how can we balance doing the right thing with making good money choices? People still care a lot about making money when they invest, even if a company says they’re ethical. A report from Calastone shows that funds calling themselves ethical had less money flowing in in 2023. It’s not easy to get the balance right.

KiwiSaver providers need to encourage ethical investments while making sure people get good returns for their money. Cutting down on investments in harmful companies is a good step, but there’s more to be done.

Looking Ahead: Challenges and Opportunities:

Even though we’re making progress, it’s not easy to match what people want with what they actually do, as shown by National Capital’s data. As KiwiSaver moves towards more ethical investments, we need to find a middle ground that respects both the growing interest in ethical choices and what people expect to get out of their investments.

What should KiwiSaver investors do?

You don’t have to choose between doing what’s right and making money. Follow National Capital’s simple guide – it has six pillars to help you pick funds that balance making money with doing good. These include looking at how well the fund performs, the people running it, the fees, how stable the organisation is, the processes they follow, and what companies they invest in.

To make sure your KiwiSaver matches your money goals and ethical standards, give the National Capital KiwiSaver HealthCheck a go. It’s essential for making smart financial choices while being socially responsible.

Revised February 2024