by Daniel Smith
Kiwi Invest’s quantitative and responsible investment strategist Steffan Berridge believes that “until recently there has been an abdication of responsibility” in fund managers representing the values of their clients.
The waters have become muddied by high demands for RI leading to a misuse of jargon in the industry. Berridge points to loose terms such as “green bonds” not always amounting to any real change on the ground.
Berridge believes that transparency between investors and fund managers is vital, “Investors deserve to know precisely how a responsible investing strategy is being implemented on their behalf, which companies their money is invested in and how ESG criteria are being applied”.
This position adopted by Kiwi Invest has earned them an A+ rating for Strategy and Governance in its first assessment from the PRI (Principles for Responsible Investment).
PRI is the world’s leading proponent for responsible investment. Partnering with both the UN’s Environment Programme Finance Initiative and the UN Global Compact, PRI aims to set an international benchmark for how investors manage environmental, social, and governance (ESG) issues. Kiwi Invest became a signatory to the global initiative in February 2020.
Berridge told Good Returns that 2016’s ‘KiwiSaver Clusterbomb’ story was “a really strong scene setter for ESG investments”. The story provoked an industry-wide re-evaluation of the kinds of companies investors wanted to be represented in. The idea of exclusion lists was raised, and Kiwi Invest began seriously moving towards ESG commitments.
The ESG issues differ depending on the industry. Facebook has a large social impact, but little carbon footprint. Whilst heavy industry may have environmental issues but little social influence. By targeting and assessing specific ESG issues facing a certain industry, Berridge says that Kiwi Invest has found that “companies who align with ESG values have a long-term, positive vision for the future, an outlook that can help them in outperforming companies that don’t.”
When looking towards the future Kiwi Invest is looking to double down on their position of “active engagement”. In one example of this, BHP, the world’s largest mining company, updated its standards for industry lobbyists in August 2020 as a result from pressure from shareholder voting. Pressure which Kiwi Invest was proud to have a hand in creating.
Kiwi Invest believe that by demanding change from within a company rather than simply divesting delivers better outcomes in the long term, both for their ESG standards and their customers.
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