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Can KiwiSaver investments influence how companies behave? Two fund managers say they can

Investing / news
Can KiwiSaver investments influence how companies behave? Two fund managers say they can
Responsible investing
Source: Copyright: artemisdian

KiwiSaver fund managers say they can influence “harmful” companies through investing, but one is cautioning that influence only extends as far as New Zealand’s borders.

Charity Mindful Money has released new analysis which it says shows KiwiSaver funds invested into companies causing harm had hit a record, with $8.6 billion invested into firms that harm the climate, the environment and society.

Mindful Money’s Founder and Chief Executive Officer (CEO) Barry Coates said only a few KiwiSaver funds were “comprehensively” avoiding harmful companies, including fossil fuel firms and those that commit human rights violations.

Coates said ethical investing had been shown to provide similar returns to funds that invest in fossil fuels, and as an investment fossil fuel companies face higher risks such as being stuck with so-called stranded assets as countries transition to net zero decarbonised economies.

He pointed to New Zealand’s Super Fund and its shift to a “fossil fuel light” portfolio.

In 2022 the Fund shifted its benchmark Reference Portfolio to market indices that aligned with the 2016 Paris Agreement.

"[NZ Super Fund's CEO] said it not only did this for the climate, it also made $800 million in terms of higher value, and Simplicity has done the same thing … It doesn't necessarily cost you more and in fact, it may be a better financial option, particularly stuff like fossil fuels. You can understand that the risks of your portfolio are considerably lower. And if you're looking at a risk-return ratio, it's not a bad decision.”

Can KiwiSaver make a difference?

Milford KiwiSaver manager Murray Harris said while the Mindful Money research showed so-called harmful investments reaching new levels, it was the overall value of those investments that had increased  — not that there were new investments.

He said while the fund manager doesn’t have blanket exclusions in investing in fossil fuel companies, it could influence how those firms operate and encourage them to adopt new technologies.

For the year to June 2023, Milford had undertaken 174 engagements with companies, and Harris said the firm could also vote for or against company proposals through proxy votes. Milford had proxy voted 2400 times in the year.

Harris said, for example, after mining giant Rio Tinto destroyed ancient caves in Australia Milford had “provided some very strong feedback” to Rio Tinto, along with other investors.

This feedback meant the miner apologised, tried to put it right “and obviously will take a much much more careful approach going forward around what they do with indigenous art, artefacts and land where they've got projects operating nearby”.

Harris said closer to home, Milford had invested in Contact Energy. Because Milford was invested it was able to promote and encourage green energy projects for the benefit of New Zealand, whereas an international investor may not take that view.

“We don't want to exclude investment in that company, we want to help that company in two ways. One, by providing them the capital that they can invest in new tech, but also by being a major shareholder in the company we — along with other institutional investors — can be working with the boards, the management teams and other shareholders to engender that change, or to encourage the change and to keep them honest, and to keep them on track to doing the things that they say they're going to do.”

Harris said there were other examples where Milford had weighed in on how a business was operating, including to improve diversity or confront unacceptable behaviour.

For example, chemical company DGL’s Founder Simon Henry stoked anger when he publicly criticised My Food Bag Co-Founder Nadia Lim.

Harris said Milford had immediately engaged with DGL as an investor when Henry’s comments came to light, and had told the company the behaviour was not OK. Ultimately, Harris said, Milford divested its investment in DGL.

“Through the process, actually, we were able to provide quite a bit of education to the business around what is kind of acceptable behaviour, and that institutional investors expect their companies to be acting in a way which is from a human rights point of view and discrimination, acceptable in this day and age.” 

Paul Brownsey, Chief Investment Officer at ethical KiwiSaver fund manager Pathfinder, said KiwiSaver funds could encourage businesses to be better but that influence was limited when it came to global firms such as Meta, which Mindful Money has on its harmful list.

“It's pretty hard to argue that minority investors have managed to change the thinking of large companies easily. We're all for engagement, don’t get me wrong, and we spend a lot of time engaging with companies particularly in New Zealand where we can have more of an impact. But if we rocked up to knock on the door of Exxon Mobil or something, what impact can we have on them? You just can't, and it's kind of facile to suggest that a small New Zealand investor engaging with a close to a trillion-dollar company is going to have any sort of impact.”

However, like Milford, Brownsey said Pathfinder had been able to talk to New Zealand firms about diversity on their boards for example, and promote change.

It could also influence what businesses invested in themselves. Browsey said for example a company it invested in was looking to buy into the wine sector. That would have been a dealbreaker for Pathfinder, so the firm didn't go ahead.

"The good thing about New Zealand is that every time we have engaged with senior management or board members the companies reciprocate. They don't just have a narrow view on 'let's just make as much money as we can'. They also know they operate with a social licence, and they do have to reflect the thinking of society."

What a KiwiSaver member wants

Both Milford and Pathfinder said they have engaged clients who give them regular feedback about investments, encouraging or discouraging which firms they may want to support.

Browsey said Pathfinder "often gets challenged, and we don't see that as a threat".

He said the KiwiSaver manager had been introduced to potential new investments by some members, and they were adding to the work its analysts do.

Harris and Brownsey said their KiwiSavers embedded environmental, social, and governance (EGS) aims throughout their investing teams.

"As part of the research process with any company we're either looking to invest in or are invested in our analysts have a series of ESG and sustainable investing questions that they'll put to the business, and we expect a response to those," Harris said.

Milford didn't have a standalone ESG fund.

"What we're doing and our philosophy and sustainable investing strategy, spans all of our funds."

KiwiSaver members can check out how Mindful Money rates their fund's exposure to harmful companies here.

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.


So ethical investing is as fruitful as non ethical investing, yet the proportion of non ethical investments has grown due to asset value increases?


I'm a big ol' greenie, but there is a massive logic gap there.


Keep looking, there are others. 


I dont plan to put my money in an "ethical " kiwisaver fund.

I think a person makes more of a difference if they reduce their own , so called, harmful consumption.

Less travelling by car

Less jet plane travel.

more buying local goods

Simply consuming less.... reducing ones standard of living.

AND if that person also buys Oil /mining shares.... I would consider that individual to be morally/ethically integrous   ( in regards to harming the planet ) .... more so than someone who invests "ethically" but still lives the same way

The harsh reality is that our modern standard of living would collapse without non renewable natural resources.
We cant live without these things.... Thats a  BIG truth as far as I know ..??
Throw in the truth that we are profoundly damaging the world....and we have a really difficult dilemma.

80000 people are flying to Dubai this yr for the climate change junket.....It seems kinda bizarre to me.
( It would be interesting to know  what the total energy consumption of that gathering will be jet travel/airconditioned hotels/ food...etc ).....   and , ironically, Dubai is an "Oil" country ..

I dont have a problem with owning oil shares and I dont find that incongruent with living a simpler lifestyle, as my way to help reduce the impact humanity has on this planet.

Maybe mindful money would make more of a difference by focusing on individual consumption, and promoting less materialism ...less consumption   rather than focusing on the investment/production side of things ??

If the price of oil shares drop because of "ethical investing " ...I would buy more, being mindful that whatever company it was...was doing things as well as possible, in regards to communities/environments etc,  wherever they are.

If we consumers stop buying/using oil...then oil companies will stop producing it .  ( Not buying their shares will make zero difference )


Good post. I would argue that the consumerist lifestyles are actually making us unhappier as a people. Urban lifestyles are all about hoarding stuff and spending on food, travel, etc. to make up for limited access to nature as well as loss of sense of community and family values.


Amen to that. Seems the social engineering to shift people from buying physical items, to buying "experiences", is just mindless consumption redefined.…

And what choices do we get at the coming election? Promises to accelerate the BS of decades past. 


I wonder how many kiwisaver funds invested in the company that has Budweiser beer as one of its brands? A few others that have taken their eye off the ball in what the majority of people want rather than listening to a few loud mouthed very small minority groups. Fund managers in NZ should minimise ESG criteria in their investment decisions. SVB bank was heavily into ESG, not that this was the main reason for its downfall but certainly is likely to have contributed.

Boycotting FF companies for the feel good factor is a waste of time.


If these companies are so bad, their activities should be illegal. Fiddling around with your Kiwisaver to make some kind of moral point while your own lifestyle remains unchanged is a bit of a wank really.


Who decides what is “ethical”? So far the answer has been it is ethical if it aligns with the ideology of political leftism. Bombs are ethical if they are blowing up the bad guys. 


Seeing as capitalism itself is basically eating the life support systems of planet Earth, there is no such thing as ethical investing, only investment in greenwash and investment in those still figuring how to greenwash.


The question was raised in the article as to whether the increase in investment is real or whether it just results from increases in fossil fuel prices. It is correct to say that there has been an increase in fossil fuel share values (indicated by the US Oil and Gas index) after a decade of declines of over 4% on average over the past decade (compared to an increase of over 10% pa in the S&P500). The data in Mindful Money's analysis shows that the increase in NZ investment has been higher than a combined increase in average share prices and total Kiwisaver investment. So it is a real increase.

Most of that investment is in the fossil fuel companies expanding their exploration and field development, rather than transitioning to renewables. Leading investors, including the Norwegian sovereign fund and the Anglican Church have given up after a decade of trying to influence the major oil companies in the face of consistent greenwashing and a lack of action. We agree that stewardship and engagement have an important role but only if companies are prepared to take action to end their harmful practices.


ESG, what absolute rubbish! 99% woke virtue signaling. In any nation committed to the rule of law and democratically elected Legislatures (yeah, not so many of these animals) all citizens, including corporations should obey the law or be held to account for not. It is the job of our elected representatives to establish the law through statutes largely intended to proscribe bad behaviour.

If a company breaks the law including the more vague stuff like abuse of monopoly power, anti-competitive behaviour, etc., it should be sanctioned through the courts. Of course there have been some notable examples of government majority-owned companies acting badly, so I admit good behaviour, ie within the law, is a complicated beast, but far rather we do things through the proper channels than the current ESG nonsense designed by an advertising agency.