KiwiSaver Investors Must Be Aware Of Unethical Greenwashing

What is ethical investing?

Ethical investing is the practice of applying ethical principles to support industries that create positive social and environmental positive impact. This is commonly known as socially responsible investment (SRI). 

Green bonds are a common ethical income asset incorporated by commercial banks and KiwiSaver providers in New Zealand. Their primary purpose is to support investments and projects that provide environmental benefits, such as alternative energy, sustainable water management, green building, and climate adaptation initiatives. By investing in funds that include income assets like green bonds, individuals can align their investments with ethical values while seeking financial returns. 

What is greenwashing, and are KiwiSaver providers overusing ESG to persuade investors?

Greenwashing is the practice of misleading customers with false or exaggerated environmental claims. In the finance industry, this has become increasingly common, with some KiwiSaver providers claiming to incorporate environmental, social, and governance (ESG) principles to attract investors, as these non-financial factors are being used more frequently in investment analysis.

In recent media, Stuff News has mentioned that several KiwiSaver providers are misleading investors with responsible funds. Paul Gregory, FMA director of investment management, has said that increasing popularity of ethical investing funds had led to a huge number of funds promoting themselves as ethical, without significant changes to how they operate. Additionally, the Financial Markets Authority also says KiwiSaver and investment fund that labels itself green, climate-friendly or ethical is falling short on its promises. 

What does this mean for New Zealanders in KiwiSaver?

KiwiSaver providers have incorporated these ethical initiatives to invest in socially responsible investments to positively support society in creating a better future for the country. It is important for New Zealanders who have chosen to invest in responsible KiwiSaver funds, to ensure that their provider follows through with their ethical investment claims.

How can National Capital help?

National Capital can help narrow down the investments that will suit your ethical views. If you feel unsure about your current situation and KiwiSaver Fund, you can complete a KiwiSaver Healthcheck. Completing a Healthcheck will allow you to reach your financial goals and receive KiwiSaver advice tailored to your beliefs.

National Capital provides independent KiwiSaver advice to New Zealanders and is paid for by the KiwiSaver providers so it’s free to you. For more information, visit www.nationalcapital.co.nz. 

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