New Zealand’s responsible investment managers are too focused on exclusions, a new white paper says

 

Good Returns invited me (Janet Natta) to comment about “responsible investing missing the mark” – here’s the beginning of the article so you’ve got some context:

Most fund managers had made changes to the way they invest members’ funds, over the past year.

In 2016, the total responsible investment market in New Zealand reached $131.3 billion assets under management, up 67% from the previous year.

Kiwi Wealth had released a new white paper that says most New Zealand managers are doing that through exclusions or negative screens. But it said that was inflexible and limited in its ability to add investor value and achieve the public, social and environmental goals sought through responsible investing.

“That falls short of international best-practice and certainly not what we consider to be true responsible investment,” said Simon O’Grady, Kiwi Wealth chief investment officer.

“Sector exclusions are a blunt instrument. It’s an approach that can actually work against investors, and means managers may be neglecting their fiduciary duty to act in investors’ best interests in the extreme.

“Not only are sector exclusions inflexible and limited in building investor value, it’s an approach that doesn’t necessarily effect any real or positive change in the behaviour of companies within excluded sectors.”

You can read my response here.

If you have any questions about anything in the article or my response please don’t hesitate to get in touch.