Clarity on investment ethics urged

Liz Slooten.
Liz Slooten.
A Dunedin-based group wants a clearer framework in place for New Zealand investment funds to stop investment in companies which it believes harm the environment.

The Wise Response Society, which promotes sustainable approaches to climate change challenges, believed funds were ‘‘talking the talk but not walking the walk’’ on sustainability and social issues.

It has written to Prime Minister Jacinda Ardern identifying what it described as ‘‘major problems’’ and ‘‘worrying trends’’ with New Zealand funds.

The letter, signed by chairwoman Prof Liz Slooten, said investment funds, contrary to their claims, did not seem to be making decisions on ethical grounds.

That would significantly hinder attempts to meet the threats of climate warming and human rights abuses, she said.

Wise Response investigated six investment funds — AMP Capital, AMP Wealth Management, Generate, the New Zealand Superannuation Fund, Pathfinder and Simplicity — and Prof Slooten said none passed the group’s ‘‘ethical test’’.

Speaking to the Otago Daily Times, Prof Slooten said if the sector failed to limit its investment portfolios to companies that cared for people and the planet, it would also become part of the problem.

‘‘It is like going to the supermarket and something is claiming to be sugar-free but really it is full of fat,’’ Prof Slooten said.

Wise Response believed engagement and reporting practices were inadequate and lacked transparency for investors.

The group made some recommendations to the prime minister about how funds could be ethical.

It believed a fund needed to define its values, identify what types of investment would be excluded, engage with companies and investments where differences existed and report on the results of that engagement.

Prof Slooten wanted fund directors to adopt values statements which used ethical language and included social and environmental responsibilities.

When contacted, New Zealand Funds Management chief executive Michael Lang said he believed there had been a ‘‘huge change’’ over the past five years in how investment funds thought about sustainable issues.

He said there was still work that needed to be done, particularly improving the way funds disclosed what they were doing.

‘‘That would not be an onerous obligation for the industry and it would increase knowledge and transparency and it would enable analysis to be done.’’

Mr Lang believed funds could disclose that in their annual statements to members, on their websites or through their quarterly updates.

When contacted, a spokesman for the prime minister’s office referred the ODT to Minister of Commerce and Consumer Affairs Dr David Clark.

Dr Clark said the Government’s commitment to take action on climate change remained ‘‘steadfast’’.

It had been working with New Zealand’s two largest investors, the NZ Super Fund and ACC, to develop an ethical investment framework, he said.

riley.kennedy@odt.co.nz

Comments

"‘‘It is like going to the supermarket and something is claiming to be sugar-free but really it is full of fat,’’ Prof Slooten said."
That is funny !!!
It is usually the other way around. Fat free but full of sugar
Fat is typically associated with animal sourced protein and it has been branded as 'bad' since the early WHO food pyramid
Sugar is plant sourced, pleasant to taste, easy to digest but has been proven to be a primary culprit in making people fat and diabetic
The Wise Response Society remind me of those early WHO pyramids
Projecting concern, high moral standards, righteousness, signalling their virtue but all the while, influenced by yet not fully understanding the consequences of their 'ethical' position.
For decades we have had government meddling in the housing market claiming the same moral 'ethical' position but as with the WHO food pyramid, the result has been the opposite
Why does Slooten et al believe they are any better ?
What they are recommending is a few people in control of the state dictate investing over the ability of the thousands of of people in private sector to decide for themselves
There are countries that do this, Russia, Cuba, China et al

Good work by this organisation - In 1979, an Exxon study said that burning fossil fuels “will cause dramatic environmental effects” in the coming decades. “The potential problem is great and urgent,” it concluded. But instead of heeding the evidence of the research they were funding, major oil firms worked together to bury the findings and manufacture a counter narrative to undermine the growing scientific consensus around climate science. The fossil fuel industry’s campaign to create uncertainty paid off for decades by muddying public understanding of the growing dangers from global heating and stalling political action.
This highlights why it is essential that engagement and reporting practices are full and transparent to investors while ethically dishonest companies are held accountable.

I quite agree that fund managers are presenting 'greenwash' when it comes to ethical standards and the industry branded ESG funds (Environmental and social governance). Attending a talk by managers of a well known fund that prides itself on it's ESG settings, I was subjected to a presentation about the benefits to India's economy that had been put in place by Prime Minister Narendra Modi. That fact that Modi has removed environmental standards and banned NGO's such as Greenpeace was never mentioned. So yes, there is a long way to go.

drivesouth-pow-generic-1.png

Our journalists are your neighbours

We are the South's eyes and ears in crucial council meetings, at court hearings, on the sidelines of sporting events and on the frontline of breaking news.

As our region faces uncharted waters in the wake of a global pandemic, Otago Daily Times continues to bring you local stories that matter.

We employ local journalists and photographers to tell your stories, as other outlets cut local coverage in favour of stories told out of Auckland, Wellington and Christchurch.

You can help us continue to bring you local news you can trust by becoming a supporter.

Become a Supporter