Pathfinder clarifies ethical investment exceptions after censure

KiwiSaver provider Pathfinder is apologising for not providing enough information about its ethical investment policy exceptions in its advertising - a failure which landed the company an FMA censure.

Thursday, December 19th 2024, 11:04AM

by Kim Savage

The Financial Markets Authority found Pathfinder made misleading statements about the nature of its KiwiSaver Funds’ ethical investments in two advertisements on social media and its website relating to animal testing and fossil fuels.

The FMA was concerned about a lack of information and qualification which informed investors that Pathfinder’s funds held investments in five companies involved in animal testing for pharmaceutical purposes and one company that uses fossil fuels to generate electricity. The companies concerned have been granted exemptions in line with Pathfinder’s ethical investment policy.

In a statement, a spokesperson for Pathfinder says the KiwiSaver provider removed the ads as soon as the FMA raised concerns and has added more detailed information about its ethical investment policy to its website and blogs.

“Notably, the FMA has not censured us for acting in breach of our Ethical Investment Policy, rather they are highlighting a failure to qualify the two advertisements with information about our exceptions at the time the advertisements were running.

“For failing to do this, we apologise and accept the censure,” the statement reads.

Pathfinder is standing by its ethical investment policy and its allowance of exceptions, saying companies are only admitted to portfolios in exceptional circumstances and must adhere to strict conditions.

“As of today, we’ve granted 6 companies an exception.

“In terms of scale, depending on the KiwiSaver fund, our investment in these is between 0.8% and 4.6% of the fund’s value,” the company’s statement reads.

Contact Energy is Pathfinder’s only fossil fuel exception and has been allowed in because it is in transition, with the company expecting to be more than 95% renewable by 2027. As for animal testing, Pathfinder gives the example of synthetic skin producer Polynovo, which if successful could result in lower future demand for animal-sourced surgical products.

“Ethical investing isn’t simple, it’s a process we committed to well before we launched our KiwiSaver plan.
“As we continue to learn and grow, we will continue to find ways to help investors align their KiwiSaver with their values,” the company says.

Tags: Pathfinder