Kiwisaver providers are trying to find a balance between recommending ethical companies and making sure investors have positive gain.
In a drastic change of events in the investment landscape, Kiwisaver providers have recently established changes to their investment portfolios. As a consequence, providers have made the call to adjust who they recommend to consumers. These adjustments are based on the report of the ethical rating on the Mindful Money website.
However, despite providers moving towards recommending more ethical companies, surveys have revealed that Kiwisaver investors are still marketing that they are committed to ethical investing even when their actions show otherwise.
Data from the National Capital Kiwisaver HealthCheck submissions suggest that very few people are willing to sacrifice potential returns or higher returns for environmental, social, and governance (ESG) well-being. This highlights that there is an inconsistency in what investors say they will do, or want to do, versus what they actually do.
Key Insights from the HealthCheck Statistics:
Trade-off consideration: While only 8.3% of survey respondents said they wished to prioritise ethical companies over potential financial gains, they also highlighted that their main focus is still financial gain.
Ethical Investment Awareness: While there is a growth in ethical consideration in the investment world, the statistics provide clear evidence that Kiwisaver providers must make sure their recommendations also align with the unique preferences of their Kiwisaver members.
Navigating the Ethical-Financial Balance
The investment industry faces the challenge of having to balance consumers' financial benefit and being ethically responsible. The data from the statistics clearly shows that people still prioritise financial gain over environmental, social, and governance factors when it comes to their investment decisions.
Kiwisaver providers must tackle this challenge by helping Kiwis find ethical investments that also ensure they enjoy low fees and positive gain. While providers have made a positive step by reducing who they recommend consumers to, the industry can also make steps to ensure Kiwis will benefit from their investments.
What should Kiwi Investors Do?
Kiwis should be able to see positive gain from their investments and choose to invest in ethical companies. The National Capital six-pillar investment selection framework is designed to help Kiwis find investments that will benefit them financially and ensure they are choosing ethical companies.
This six-pillar framework includes:
- Performance
- Organisational Capabilities
- Fees
- Organisational Stability
- Processes and Portfolio Composition
- Ethical Investing Considerations
To make sure your Kiwisaver matches your financial goals and ethical standards, we recommend chatting to our partners at National Capital and getting a National Capital Kiwisaver HealthCheck. This is vital for achieving financial well-being and making ethical responsible investment decisions.