Investing responsibly: passing the tipping point

NZ’s staggering RI growth

The Responsible Investment Association of Australia recently released its Responsible Investment Benchmarking report for the 2016 year. For those interested in responsible investing, it showed some quite remarkable growth in funds in New Zealand managed using responsible investing guidelines. With year-on-year growth of over 2500% (from NZ$1.6 billion to NZ$42.7 billion), at face value the report indicates quite a remarkable transformation in the NZ managed funds scene. 

Yet the picture isn’t quite as dramatic as it first appears. In August of last year, the New Zealand Herald published a story pointing out many Kiwisaver funds owned shares in companies that are banned by various United Nations Conventions (land mines, cluster munitions, nuclear weapons). In response to this story, most affected Kiwisaver funds took an initial step into the Responsible Investing world by implementing an exclusions based policy, removing where possible the few companies affected by the UN conventions. 

Some providers moved much faster than others – in fact some are only implementing changes now. This illustrates for some how difficult it will be going forward to have a dynamic RI policy when they outsource the stock selection.