As the saying goes, money makes the world go around. By making good money choices, we can make a better world. Two years ago, when Vladimir Putin brutally invaded Ukraine, Kiwis mobilised as part of a global movement that led to billions of dollars of investment being withdrawn from the companies that finance Russia’s war.
Most Kiwis were appalled by the targeting of civilians and the suffering of the Ukrainian people. But few realised that we were more than innocent bystanders. The charity I founded, Mindful Money, tracks where our money is invested. We revealed that hundreds of KiwiSaver and other investment funds had investments in the Russian government or companies that were funding the invasion. The total was more than $100 million.
The response was amazing. Within days, thousands of Kiwis had visited our website to find out where their money was invested. Funds that were still supporting Putin’s invasion were besieged by concerned investors. Within days, almost all of that $100 million had been divested.
The smart investors were those who, for climate or political reasons, had avoided investments in the Russian government and the big oil, gas and coal companies that supported Putin’s regime, The not-so-smart investors were those who ignored the clear risks posed by the massing of troops on the Ukraine border. Most of the KiwiSaver and investment funds that were slow to divest their Russian stocks lost 70-90% of their value. That has been a painful lesson in the risks of ethical complacency. Those were your savings.
This is one of the many examples that demonstrate investing ethically is smart investing. There is a huge weight of evidence over decades showing that investing in ethical and sustainable companies has lower risks and generally higher returns. Ethical companies don’t fuel conflict, war and climate change. They have brands that consumers love and employees who are highly motivated, and they avoid being sued for environmental damage.
Few Kiwis want their funds invested in these conflicts. But there are other ethical concerns as well. Mindful Money surveys the New Zealand public annually to ask what investments they want to avoid. For the past five years, they have consistently said they don’t want to invest in companies that violate human rights or practise cruelty to animals, and they want to avoid fossil fuels, weapons, social harm (such as tobacco, gambling and alcohol) and environmental damage. Even so, $7.9 billion is still invested in those areas.
The good news is that, over the past six months, we have seen the biggest shift in investments in five years. There was a huge decline in KiwiSaver investment in the areas the public wants to avoid. Transparency has been crucial. New Zealanders are now able to see, for free, what companies are in their KiwiSaver fund.
Our surveys show the public is also worried about greenwashing – everyone is claiming to be ethical. It is encouraging to see consumer power push ethical and sustainable investment into the heart of our KiwiSaver and investment institutions, banks and institutional investors such as trusts and foundations, charities, unions, universities and councils.
The next phase is even more inspiring. Smart investing also means opportunities to invest in positive outcomes for the climate, people and the environment. The leading KiwiSaver and investment providers are starting on that journey.
Investing ethically is a sound financial strategy, but it is also the way that we can take responsibility for our money and support peace around the world. And in this climate crisis, we can avoid fossil fuels and fund climate solutions. We can use our money for good.
Barry Coates is founder and CEO of Mindful Money. Previously he was a Green MP and director of Oxfam NZ.
