Invest more ethically

Ethical investing — a.k.a. sustainable, responsible or ESG (environmental, social, governance) investing — is basically about:

● Taking an interest in where your KiwiSaver and other savings are invested.

● Supporting companies you like.

● Avoiding or discouraging companies whose activities you don’t like.

Ethical funds have different approaches. Some avoid companies involved in weapons, tobacco, animal testing and the like. Others invest only in “good” companies on, say, environmental issues. And some deliberately invest in “unethical” companies, hoping to persuade them — through shareholder voting — to change their ways.

Don’t take the fund manager’s word for it. Many funds indulge in “greenwash”. They hope that, by calling themselves green or ethical or sustainable or social, people will just accept that. Don’t!

Check your fund on the Smart Money tool on sorted.org.nz. There you’ll find each fund’s 10 biggest investments, and a link to a full list. If you wonder about some investments, ask your provider.

On the Mindful Money website you can:

● Check your fund, and see the percentage of its investments involved in animal cruelty, environmental harm, fossil fuels, human rights violations, social harm and weapons.

● Find a fund that suits you ethically.

A note about risk. Before you switch to an ethical fund, check that it’s at the right risk level for you. You don’t want to find yourself in a fund largely investing in shares if you can’t cope with the ups and downs of the markets. If you prefer a smoother ride, choose a lowerrisk fund. In the long run, it probably won’t grow as fast, but it will be less volatile.