Has the time come to invest responsibly?

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Thursday, June 3rd 2010, 1:50PM 2 Comments

by Philip Macalister

Something unusual happened yesterday. I got excited at a conference! Yes that sounds scary (and strange) but let me explain. I spent the day at the Responsible Investing (RI) conference organised by Matt Mimms at The Investment Store (and ably support by Jen and the AMP Capital team). For years I have been a supporter of RI. I always figured it was a no brainer for Kiwi investors. We are clean green. We are proudly anti-nuclear and anti-whaling. We were the first to give women the vote. The list goes on. To me these values are part of our collective DNA. But do we transport those values to our investments? No. For years we have written articles in ASSET Magazine and www.goodreturns.co.nz about how big RI is around the world, yet it remains a small part of our collective investment universe. There are changes starting though. Our big institutional funds like the NZ Super Fund are leaders in RI. More and more KiwiSaver funds which invest responsibly are in the market. Added to that there are a number of fund managers who have signed up to the UNPRI. The group gathered yesterday was also a change. RI has been a very quiet space in the past couple of years. However there is now renewed interest in it. Yesterday’s conference was well attended. Indeed I understand they had to turn people away. One of the sessions which resonated with me was what I would call a keynote speech from the head of the Responsible Investment Association of Australasia Louise O’Hallaron. The presentation was modelled on Al Gore’s movie An Inconvenient Truth, and the message was (as you’d expect) simple and stark. Everyday we read about things like the oil slick in the US, the global financial crisis, climate change and wars. We are concerned about what is happening with our planet and change needs to come. We can’t rely on oil and fossil fuels forever. We need to ensure there is food and water to sustain the population growth. We need to deal with climate change and global warming. One of the things we can do is change the way we invest. Instead of filling portfolios with “sub prime” assets we need to spend more time understanding what the companies we invest in actually do and we need to invest in the other areas like alternative energy. The price of carbon will have to be accounted for at some stage. Maybe New Zealand is sensible to adopt and ETS as it may make our companies more attractive in the long term. On top of this throw in the changes to the financial adviser world. Under a regulated advisor world talking to clients about RI may become a requisite of a good financial plan. Here at Good Returns we are keen to help advisers understand more about RI and how (and why) they should consider it as part of their business. One idea is to build up a network of advisers and get some discussion going. Included in here would be the ability to ask others advisers about how they use RI. If you would like to become part of this group then drop me an email (philip@goodreturns.co.nz).

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