Deadline needed for clean default schemes: Greens

[UPDATED] There are calls for the Government to give KiwiSaver providers a set deadline to divest from companies involved in the manufacture of cluster bombs, landmines and nuclear weapons.

Thursday, March 23rd 2017, 1:35PM

by Susan Edmunds

Four default providers – ANZ, Westpac, Kiwibank and Mercer – still have exposure to the industry despite a furore last year that drew public attention and condemnation to the investments.

Jacqui Dean, Minister for Commerce and Consumer Affairs, has said she expects KiwiSaver providers to drop their investments but has not said when.

The Green Party said that was not good enough.

“The National Government’s weak approach is letting too many KiwiSaver providers off the hook for behaviour that is unethical and possibly illegal.

“Parliament’s intention was clear when it passed a law banning investment in companies producing cluster bombs in 2009.”

Westpac has announced BTNZ, manager of the Westpac KiwiSaver Scheme, was already working to exclude exposure to munitions and tobacco across all KiwiSaver funds. The process is expected to be complete by the end of the year.

A spokeswoman for ANZ said its investment exposure was small.

"We completed full divestment of any direct investments by our funds in controversial weapons and tobacco in September last year," she said.

"None of ANZ’s KiwiSaver funds invest directly in these types of companies. We will be confirming details in the next few weeks of a new investment solution which will ensure there is also no indirect investment in these kinds of companies for members of our ANZ Default KiwiSaver Conservative Fund - none of the other funds have any indirect investments in these companies."

She said the default fund still had some passive holdings because it invested in international equities via a passive index tracking fund.

"These holdings will shortly be transitioned to a fund managed by us to ensure that we have the flexibility to make further changes that our investors might want. It's been important to take the time to develop a future-proofed solution as we recognise that investor views on ethical investing will continually evolve and we want to ensure that we can continue to deliver the best possible investment performance for our members as changes are made."

At Kiwi Wealth, Simon O'Grady said its exposure was via a Vanguard global index fund.

A survey of Kiwi Wealth KiwiSaver members had found they were concerned that the scheme's managers focus on their risk and return, as well as responsible investment considerations

He said his firm had considered shifting to Vanguard's new ethical fund but had decided an off-the-shelf option was not best for investors, because of the cost and tax implications involved.

He said Kiwi Wealth was developing its own strategy, which should be in place within three months.

Sam Stubbs, head of new low-cost KiwiSaver provider Simplicity, said the funds' default status should be suspended until they could exit their investment in banned weapons’ makers.

He said they had had enough time to make the change.

Simplicity uses the new Vanguard clean screen offer – a new global equities index fund that does not have exposure to cluster munitions, nuclear weapons-associated firms or tobacco.

BNZ today announced it would drop investments in companies involved in the production of cluster munitions, anti-personnel mines, nuclear weapons and tobacco or tobacco products.

Tags: KiwiSaver responsible investing