Allure of ethical investments on the rise

The amount of money Kiwis are putting into responsible investments is up 28 per cent to a record $78.7 billion in the past year. Photo / David White

The amount of Kiwi dollars being pumped into responsible investments has grown 28 per cent in the last year to a record $78.7 billion, according to an annual report on the sector.

The New Zealand Responsible Investment Benchmark report has found there is a growing appetite from investors to take account of environmental, social, governance and ethical issues when it comes to choosing where to put their money.

That process can involve excluding certain companies like tobacco and alcohol makers or getting actively involved in the board of a company to change it for the better.

Simon O'Connor, chief executive of the Responsible Investment Association Australasia, said the strong growth in responsible investment showed it was not just a fad.

"In observing the significant and consistent growth in responsible investment we can say without a doubt that this isn't just a passing trend, but an evolution of the entire sector that is now being driven strongly by the acknowledgement that investments perform better when they are investing in more sustainable companies and assets."

Some of the biggest users of the responsible investment process in New Zealand include the New Zealand Superannuation Fund - a pot of money put aside by the Government to help pre-fund New Zealand's future retirement costs - and ACC.

The $30b Super Fund has made decisions including pulling out of investments in companies linked to cluster bombs while investing money into clean energy producer Bloom Energy.

The research also found core responsible investment - the part of the market which it considers to most closely represent an ethical and socially responsible approach - grew by 17 per cent to $1.6b in New Zealand.

O'Connor said the core investment best reflected consumer demand and showed strong flows of money in the last year including money invested into some KiwiSaver funds.