Ethical investment charity Mindful Money said until recently, the shift towards ethical investment had come from small and medium-sized KiwiSaver funds, but the latest recorded period showed major players had significantly cut back on harmful investments too. Photo: 123RF
KiwiSaver providers are cutting back on harmful investments, as larger fund managers begin to follow the lead of their smaller counterparts.
Analysis by ethical investment charity Mindful Money, showed investment in harmful products fell by about $800 million in the six months ended September 2023, to $7.9 billion.
Mindful Money said it was the biggest fall since the charity started to track ethical investment five years ago.
It said until recently, the shift towards ethical investment had come from small and medium-sized funds, including Pathfinder, Medical Assurance Society, Simplicity and Always Ethical.
But in the latest recorded period, major players had significantly cut back on harmful investment.
ASB saw a 37 percent drop in harmful investments in the six months ended September, followed by AMP at 22 percent and ANZ at 16 percent.
Investment in tobacco companies fell 72 percent, well ahead of weapons, which saw the second-biggest fall in investment at 35 percent.
Mindful Money chief executive, Barry Coates, said it was a "major shift in the KiwiSaver scheme".
"The change in investment patterns by KiwiSaver providers is important. This means far less funding is going from KiwiSaver investors into companies that create harm," he said.
However, Coates said $7.9b of KiwiSaver funds being invested in unethical companies should concern investors.
Investment in fossil fuel companies was at the highest level on record, according to Mindful Money, at $3.29b.
More than a third of the fossil fuel investment was in companies increasing exploration and production, the charity said.
"These investments are also financially risky. The companies still increasing their production, and the KiwiSaver providers investing in them, are risking huge losses from a decline in production and from stranded assets - the infrastructure and reserves that will become unusable in the future," Coates said.
"The International Energy Agency predicts fossil fuel demand will decline after 2028, a few short years away. The rate of decline is likely to be steep."