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AMPOctober 27, 2023

Is your KiwiSaver fuelling the climate crisis?


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New Zealanders are generally a kind-hearted bunch. Eighty-eight percent of us don’t want our retirement fund enabling environmental damage, and three-quarters of us would prefer our KiwiSaver didn’t finance planet-heating fossil fuels, according to one survey.

The folks at AMP found similar results when they surveyed their customers a few years ago: “sustainable or responsible investing” was up there alongside “low fees” and “good returns” in terms of importance. So, the company pivoted in 2021, putting sustainability at the core of their investment philosophy with a four-pillared approach.

First, this meant excluding any exploration, extraction, storage, or transportation of fossil fuels from their portfolios. “We don’t want to be involved with creating any more fossil fuel reliance. We’ve been around for 170 years and would like to be around for another 170,” says Aaron Klee, General Manager, Investment Management and Services.

“Thinking about young people just starting with their KiwiSaver now, what will the world look like for them in 2050? Aligning how we invest money with that intergenerational perspective is important.”

Avoiding the bad is just one part of sustainable investing. Having a climate kōrero is another way fund managers push for change. AMP, through its investment partners, engages with companies to shift their practices, and with the wider industry to influence sustainability.

But most importantly, sustainable investing means supporting the good stuff. In this space, AMP’s strategy is to “lean into companies with higher environmental, social and governance (ESG) ratings or companies that are decarbonising,” says Klee. “The next phase for us is leaning in harder and investing capital into creating solutions that help the world progress on this journey of decarbonisation.” They’ve committed to reaching net-zero carbon emissions across their portfolios by 2050 or sooner.

Investing for positive impact doesn’t come at the sacrifice of performance, either. Data from the past decade shows that sustainable investing stacks up, while models also forecast better future returns – especially for investments in climate solutions. Put simply: “You want to own things that people want for the future,” says Klee.

So how can you tell whether your KiwiSaver is fixing, rather than underwriting, the climate crisis? Transparency and evidence is super important. Investing “recipes” should be clearly articulated by providers, Klee says. “Everybody’s talking about responsible or sustainable or ethical investing. That’s just normal now. Our job is to make sure that the ingredients inside match the label. It’s part of walking the talk.”

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