What it means to be an ethical investor

Want to make sure your investments align with your values? Here’s how.

In the same way we might choose to catch the bus, use reusable shopping bags, or only buy sustainably-sourced products, we can also choose where our money gets invested.

You may have heard of this as ethical, sustainable or responsible investing – which really just means an approach to investing designed to create positive social and environmental outcomes, as well as aiming to generate good returns.

Another part of ethical investing is also about what you don’t invest in. Like companies involved in industries such as tobacco, alcohol, gambling and controversial weapons (to name a few).

How do you get into it? It’s actually not that hard. If you have a KiwiSaver or managed fund, you can start by checking your provider’s sustainable investment credentials or reading up on its responsible investment policy, which you should be able to find online.

One easy way to check if your provider’s investment aligns with your values is to see if it’s signed the United Nations’ Principles for Responsible Investment (PRI), which is a public way companies can show their dedication to build a more sustainable financial system. Another thing to look out for are independent certifications, such as those offered by the Responsible Investment Association Australasia (RIAA), an organisation that operates the world’s first certification programme for responsible investment products.

You could also ask how your Provider is reducing its own carbon footprint.

There are also tools online, like Mindful Money, which can help you find the right fund that aligns with your values. On the Responsible Returns website (which is run by the RIAA), it’ll ask what issues you want to support and what issues you want to avoid and come up with a few suggestions, helping you decide if the fund you’re in now is really the right one for you.

For Mercer, which has been on a responsible investment journey since 2006, when it became a founding signatory (as a consultant) of the PRI, being a sustainable investment provider means actively investing in some companies involved in providing solutions to the world's sustainability challenges, like renewable energy, water infrastructure, waste management, and pollution control.

The Mercer KiwiSaver scheme has been externally certified by the RIAA, and its commitment to responsible investing was also recognised by the PRI in its 2020 assessment report, where Mercer received an A+ for Strategy & Governance and an A rating for all asset classes.

You can find more about Mercer’s approach in its most recent sustainable investment report.

The above article is general information and does not purport to give financial advice. The Mercer KiwiSaver scheme and Mercer FlexiSaver are issued by Mercer (N.Z.) Limited. Product Disclosure Statements are available free of charge at seatatthetable.co.nz.