The Dunedin City Council risks more ''volatile'' returns
from its $76 million Waipori Fund if it opts for an ethical
investment strategy that shuns the likes of the armament and
tobacco industries, the council says.
The warning came as councillors considered how to consult the
community over the need for a new approach to the fund's
investments at yesterday's full council meeting.
Councillors eventually agreed to tweak the wording of a
statement to be included in the council's draft budget for
2014-15 when it was released for public consultation.
The draft statement, in a report by council financial planner
Carolyn Howard, said the fund already avoided the armaments
and tobacco industries, but that decision had never been
formalised by the council.
Councillors needed to decide whether to endorse that by
adopting an ethical approach to guide the Waipori Fund's
investments, and wanted the public's input, the statement
However, after a round of questions and debate at yesterday's
meeting, councillors agreed to add to the statement by noting
the risk of more volatile returns in the short term, while
evidence of a long-term impact was ''inconclusive''.
Council group chief financial officer Grant McKenzie told the
meeting evidence suggested a change in the fund's mix of
investments could result in ''significantly more volatility''
in the short term, meaning annual results would be ''more up
Councillors voted to press ahead despite the note of caution,
with Cr Jinty MacTavish suggesting changes should be enacted
as quickly as possible, while Cr David Benson-Pope warned it
was a complex area.
The council's responsibility to be ethical was already clear,
but it needed public input on how broadly to extend that
ethical approach, he believed. That included whether a ban on
investing in the armaments industry should extend to
companies that made GPS units with military applications, for
''I think we should send out a message with this ... and say
we are going to invest ethically ... [and] we would like your
input about the breadth of that definition,'' he said.
Cr Hilary Calvert warned the council would be ''looking for
trouble'' from consultation, given the complexity of the
issue, and should instead make its own decision.
Cr Richard Thomson said that might be true, but consultation
on a ''reasonably soft'' question would help inform
Councillors voted to press ahead with consultation on the
statement, which was also tweaked to refer only to direct
investment in the armaments and tobacco industries.