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PartnersSeptember 17, 2019

Why sustainable investing matters – and how to take a stand with your KiwiSaver

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Most KiwiSaver funds are managed by one of the big Australian banks, which create returns through investments in fossil fuels, human rights violations, tobacco and weaponry. With attitudes shifting towards sustainability, what can ordinary investors do?

This month 16-year-old climate activist Greta Thunberg completed a journey across the Atlantic in a zero-emissions yacht to attend a UN conference on climate change, attracting worldwide media attention in the process. Meanwhile, between 2011 and 2016 the number of people turning vegetarian or vegan in New Zealand rose by 27%; the number of electric vehicles registered in New Zealand each month is now almost triple what it was in 2017.

But despite this increasing interest in sustainability and accountability, thousands of New Zealanders still inadvertently invest in sectors that are doing harm to the planet. Sectors like fossil fuels, tobacco, military weapons and palm oil.

Over half of all KiwiSaver accounts are with one of the big Australian banks: ANZ, ASB, Westpac and BNZ. ANZ manages the most funds of all the providers, with 25% of New Zealanders’ KiwiSaver money invested by the Australian bank. The companies ANZ invests in include fossil fuel extractors, weapons manufacturers and gambling business. It includes companies with human rights and environmental violations and those who still test their products on animals.

But there are also a handful of KiwiSaver providers dedicated to more sustainable investing, and despite popular belief, these funds are outperforming their corrosive counterparts.

MAS, an insurance and financial services firm focused on New Zealand professionals, is in charge of seven sustainable funds. Its CEO Martin Stokes says the decision to go sustainable was easy – they just listened to their customers.

“We’re part of society, we’re not just adjacent to it. We’ve come to the realisation that we need to advocate for companies that we believe will have a meaningful long-term positive impact,” he says. “In particular in a context where both the planet and humans on it are increasingly vulnerable to perils that are man made.”

A recent Colmar Brunton survey revealed 72% of New Zealanders expect their KiwiSaver investments to be made responsibly and ethically. Animal rights violations, human rights violations and tobacco were at the top of the list of sectors people wanted to avoid. But only 8% of people had actively made the move to an ethical provider. 

It’s a perpetual problem for the finance sector: most people tend to switch off when it comes to money. Many of us perceive changing funds as too complicated, but in reality the whole process can take as little as five minutes. 

Molly Harris Olson, CEO of Fairtrade Australia and New Zealand, says the finance world can be hard to understand. Statistics show that people do want to do what’s right ethically, but the jargon surrounding finance and investment is discouraging. She says ethical investment providers need to work on ways to make the language more accessible.

“We keep changing the language of it and it’s really hard for people to get their heads around so they end up walking away. The way we have designed the system is that it’s a ‘don’t ask, don’t tell’ economy. How do we get people engaged? It requires trust.”

This trust, Stokes says, is built through transparency and access to information. “Consumers have to ask their providers or their investment advisors for as much information as they possibly can about the definition that’s used to determine whether investments are in or out, or how they’re screened.”

A very subtle stock image (Getty Images)

Despite wanting to take an ethical approach, people are also concerned sustainable investment won’t give the same returns, says Stokes. But according to the data, the opposite is true.

“We were very mindful to look backwards and review what returns would have been over the prior 10 year period if the exclusions had been in place, and interestingly, the portfolios would have performed slightly better.”

Stokes wasn’t surprised by the data. It made sense that companies with far-reaching views on their environmental and social footprints would end up better off financially too

“By investing in those companies that are not involved in activities that we think will do long-term harm, we are investing in a better long-term outcome. We think the evidence is that those sustainable portfolios will out-perform over time.”

At a recent sustainable investment conference, finance minister Grant Robertson said he recognises that a lot needs to change to bring the sector up to speed. 

“There is still a long way to go,” he said. “Over $4 billion of Kiwis’ investments are in areas of concern. I would like to see not only more of the money invested locally, but into more sustainable and ethical portfolios.”

The problem is there’s no clear definition of the term ‘sustainable’ when it comes to investing. Former Green MP Barry Coates runs a website called Mindful Money that provides information about investing and where the money goes. He says there is a role for government in defining some of the key terms like ‘sustainable’, and ‘ethical’.

“Even within the variations of what people want, you can still define the words around investment. Some basic rules around transparency, around excluding sectors that most people don’t want to be in, but still allowing some variation for personal needs… There may be a role for government to do some regulation around this in the future.”

Stokes agrees that customers should know exactly what they’re getting with an ‘ethical’ or ‘sustainable’ fund.

“It is too easy to greenwash something without it being verified at an analytical level. At some point there probably needs to be some standards or some reference that consumers can look at.”

Transparency is important to MAS, and Stokes wants consumers to be given easier access to find out where their funds are put. 

“If their funds are invested in things they’re not comfortable with, there’s an opportunity to look around and find something that might better be matched to what’s important to them and what their values are.” 

He’s anticipating an emerging market for sustainable investment as more research is done about its benefits for companies and their investors. With growing consumer demand for ethical, sustainable and environmentally friendly marketplaces, it’s only so long until the big players in the financial sector have to start paying attention, he says.

“There is a strong sense that communities and individuals are demanding much more responsibility and accountability of the organisations they deal with.”

This content was created in paid partnership with MAS. Learn more about our partnerships here.

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KILT has created a line of clothing that’s reflective of the community’s realities (image: supplied).
KILT has created a line of clothing that’s reflective of the community’s realities (image: supplied).

PartnersSeptember 16, 2019

The clothing label that’s built a bond with Kiwi women through online interaction

KILT has created a line of clothing that’s reflective of the community’s realities (image: supplied).
KILT has created a line of clothing that’s reflective of the community’s realities (image: supplied).

Napier-based women’s clothing company KILT is a big brand with local charm. Josie Adams finds out how they’ve adapted their boutique strategy to work on a national level.

Having grown up in the internet era New Zealand fashion label KILT has developed a unique relationship with its customers via an online connection. Founded in 2003, KILT now has 16 stores in New Zealand, but it’s still considered boutique. Scattered from Takapuna as far south as Invercargill, the women’s clothing store fosters a sense of community, uniqueness, and connectedness even though it’s a nationwide brand.

From their first store in Palmerston North, Kiwi women have helped shape the brand and its values; it’s designed for them, and in many ways by them. The clothes and concepts all integrate a smart Kiwi sensibility with a feminine sense of community. Business Manager Lauren Hart believes KILT’s enduring appeal is a result of its network: between stores, customers, and everyone in between.

“It’s really important for us to be able to connect with our boutiques and for them to connect and share,” she says. 

KILT uses social media to showcase its designs as flatlays, a format Kiwi women enjoy seeing. Photos: KILT’s Instagram.

KILT’s success in turning that connection and relationship with its clients into a successful business has been achieved through the power of ultra-fast broadband. “This has been essential to us growing as a business,” Hart explains. “It means that at any time we can get a snapshot of how our boutiques are going.”

After the business’s first store took off, it wasn’t long before the brand spread across the country. The team knew each store’s success would be reliant on the group’s; KILT is a community, not a franchise. This meant establishing an online presence that was authentic to the original brand.

“Broadband helps us to get our images uploaded to our website much faster than before,” says Hart, emphasising how the quality of an internet connection can affect the business even on a micro-level. At a higher level, it means KILTies – what the business calls its customers – can buy online from anywhere in the world, and KILT staff can monitor the process simultaneously.

The business holds online group conferences that they call “huddles”. KILT ladies from boutiques across the country all Skype in at the same time to share insights, inspiration, and customer feedback. “Before having ultra-fast broadband, we’d often have connections dropping out or stuttered during the video calls.”

Customer feedback has been the cornerstone of KILT’s business practice since its inception in 2003. Founder Melissa Williams worked out of a loft above the first boutique, where she could hear customers’ requests and feedback in real time. If a cut needed to be a little more fitted, or a coat needed a different kind of lining, she could tell by the voices coming through the floor.

Today, KILT designs its garments using the same principles. “KILT has always grown from our customers’ feedback and we really appreciate hearing from them,” says Hart. The website now has an online survey available to its customers, as well as live web chat with stylists. Customers also give feedback and stay in touch with the designers and stylists at KILT via social media.

A KILT staff member puts together a garment. Photo: KILT

The business relies on long term connectedness as well as short term, and its customers help define the business’s future direction. “We do a health check survey every three years, which is more in depth, to make sure we’re doing exactly what our customers want us to be doing.”

It’s meant the brand has created a line of clothing that’s reflective of the community’s realities. Instead of collections, the KILT prefers to create individual pieces that mix and match into existing wardrobes. The average Kiwi woman isn’t investing in an entire capsule collection with each change of season, and thanks to feedback and communication KILT’s network offers, it can cater to this. Hart says that KILT’s pieces can be worn and loved throughout the years, “so our customers can keep their own unique style”. 

This longevity wouldn’t be possible without the business’s investment in communication; both at an individual level and on a wider scale. 

Today, with 16 stores nationwide, KILT remains a fan favourite. It’s small and local at the same time as being an internationally-selling brand. None of this would be possible without the broadband that powers its online sales and keeps the community in touch and empowered.

This content was created in paid partnership with Chorus. Learn more about our partnerships here

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