People who consider ethics when making key life decisions (where to eat, where to work, how to vote) trust that how they invest their money can also be done ethically.
Lily Richards is the creative director and freelance writer at Pathfinder.
View: “Wake up but not sustainable”.
“The whole thing is a hoax”.
“Please note, if you want to make money for retirement, don’t use your KiwiSaver advice. Got it.”
These are just a few comments on the ads I help run for Pathfinder, an ethical KiwiSaver provider. Reading this sometimes ruins my will to live, but most of the time I find it fascinating because it illustrates how many people don’t believe you can make money from ethical investing.
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The proliferation of such comments proves two things: First, men have too much time on their hands (about 99% of the negative comments Pathfinder receives are from men), and second, many believe that good people don’t make big money .
I’d even go so far as to say that there is a stigma around rich people that shows that they can’t be moral either. I mean, caring about how their actions affect others and committing to making decisions that balance their overall well-being with their collective well-being.
The notion deeply rooted in our hearts is that being rich means being selfish. This may not be surprising given Milton Friedman’s shareholder revolution in 1970, when he declared that “the social responsibility of business is to increase profits.”
This creates an intellectual framework for power- and money-hungry people, using the parlance of economic theory to justify outright greed without considering the wider consequences. As Peter S Goodman, global economics correspondent for The New York Times, put it: “Executives can justify abhorrent behavior — polluting the air, accelerating climate change, laying off American workers, and moving production overseas — —Because not doing these things is tantamount to extorting shareholders.”
The world we now live in is a daily reminder of the consequences of elevating those who are driven only by profit to positions of power. So when executives change their attitudes and start saying they now believe in “stakeholders,” not just “shareholders,” some misgivings are justified. Interestingly, it goes both ways. People who want to profit deeply disbelieve in the idea of doing things in an ethical way. People who consider ethics when making key life decisions (where to eat, where to work, how to vote) trust that how they invest their money can also be done ethically.
So, is there a Venn diagram of a good and profitable overlap? That’s what investment firms like Ethics Australia, Pathfinder and Prince Harry’s pet project Ethics are doing. Australian Ethical manages $6 billion as of 2022, up from $4 billion in 2021. New Zealand’s Pathfinder KiwiSaver just came out on top for investment returns in every fund category, according to Morningstar. Morningstar measures s20 conservative funds, 30 balance and 29 growth.
The three-year return is considered a reasonable but still relatively short period from which any conclusions can be drawn. If you are in KiwiSaver, it is generally recommended that you hold a growth fund for at least ten years and a balanced fund for at least six years.
However, it shows that the tide is turning. Investment firms are making money using a framework that considers more than just profit. Mindful Money, a New Zealand charity founded by former Greens MP Barry Coates, makes it transparent about what their investments actually support. It awarded Pathfinder Best Ethical KiwiSaver Provider for two consecutive years (2021 and 2022).
This provides at least some level of third-party verification that members in KiwiSaver are not as negatively impacted by their investments as others. It also awarded Devon’s new Global Sustainability Fund, the New Zealand Superannuation Fund for its commitment to net zero and carbon action, and Ethical Investing New Zealand as the best ethical consultancy.
Whether the Facebook trolls will switch to investing in renewable energy if they can deliver superior returns, only time will tell, but I think the big returns from ethical investing are delivering good returns for much of New Zealand. That is, an opportunity to practice what we as a nation love to preach.
Champions of a “green lifestyle” We are a person who wants to keep waterways clean, ecosystems thriving, birds nesting and children feeding. But we also aspire to own a Bach, vacation on a tropical island, and eat well in retirement. Being told we can have both seems too good to be true, but it’s not: it’s true, and it’s good.
This review is general information only and does not take your personal circumstances into account. It is always a good idea to seek professional financial advice. Future performance is not guaranteed.