No more KiwiSaver fossil fuels

KiwiSaver default funds will stop investment in fossil fuels to help New Zealand transition to a low emission economy next year, says the Government.

Finance Minister Grant Robertson and Commerce and Consumer Affairs Minister Kris Faafoi said their announcement reflects the Government’s commitment to addressing climate change.

The end to investment in fossil fuels applies to the 690,000 people who were automatically enrolled in a default KiwiSaver fund when they started a new job. It does not apply to KiwiSaver providers outside the Government’s default providers.

The fossil fuel exclusion follows a similar exclusion on investment in companies involved in illegal weapons like cluster munitions and anti-personnel landmines, which has been in place for several years.

Robertson said the Government was also changing default settings from “conservative” to a “balanced” fund, saying the change is intended to make a real difference to people’s financial wellbeing in retirement.

The terms of the nine default providers expire in June next year, when the Government will appoint new providers. The changes are due to come into effect from July next year.

Faafoi said in 2017, the $47 billion NZ Superannuation Fund adopted a climate change investment strategy that resulted in it removing more than $3b worth of stocks that exceed thresholds for either emissions intensity or fossil fuel reserves, without negatively affecting performance.

“So we know that moving away from investments in fossil fuels doesn’t have to mean lower returns.”