Ethical Investing Update

Ethical Investing Update

As we have signalled, we are working on a big project this year to become internationally certified as Ethical Investment Advisers, and to be able to provide our clients with certainty over what 'nasties' they have exposure to within their portfolio.  This is an update on where we are up to.

UNPRI Academy and RIAA Certification
Carey has completed her United Nations Principles of Responsible Investment Academy Certification, and is now in the process of becoming Certified by the Responsible Investment Association of Australasia (RIAA).  

Part of this certification requires the adviser to belong to a professional association.  Carey and Peter have belonged to Financial Advice New Zealand (FANZ) and its precursors since they became advisers - (Carey in 1997 and Peter in 2002).  Paul is also now a member.  Membership of FANZ requires a higher level of Continuing Professional Development than the legislation, incorporating a specific level of ethical education.

Peter and Paul are currently undertaking the study to be able to sit their UNPRI Academy Certification, and our goal is for all three of us to be RIAA certified by the end of 2022.

There is a lot of new information on the course, including information on how UNPRI signatories fulfil their Active Engagement commitments, and how they manage proxy voting and source information on ethical investing.  We will tell you more about this as our knowledge of what your fund managers are actually doing develops.

Identifying 'Nasties'
Since August 2020, Moneyworks have partnered with the charitable organisation Mindful Money to develop systems so that we can report to our clients about what 'nasties' are in their portfolios.  In addition to this commercial partnership, Moneyworks is sponsoring the Mindful Money inaugural awards (you can find out more about these by clicking here.)

Identifying the nasties is quite a data manipulation project, which we would be unable to do without the skills of our 'Administrator Extraordinaire' - Millie (our robot).  We are currently programming Millie to analyse your portfolio and KiwiSaver providers allocation to nasties (based on Mindful Money information), and then produce a report to you showing what allocation to each category and which companies you have.

Understanding the 'Nasties'
While the reporting may identify 'nasties' this is based on subjective assessments and the actual infringing issue may not be material in your actual overall exposure.  Therefore our next step is to fully understand what the 'nasty' companies are doing, and assess whether there is enough good in the company to outweigh what the 'bad' is.

As part of this exercise we are analysing each of the existing fund managers in our portfolio to understand what their approach is to ethical investing (in light of the 'nasties' that are found in their portfolios), as well as researching new funds that might work in our more rigorous 'Ethical' portfolios.  This is a very time consuming, but interesting and rewarding exercise, and the way in which the fund managers respond is also informative.

Modelling portfolios
As part of this project, we have recognised that Millie has the ability to model historic performance for different mixes and matches of investments in a portfolio, which we will be able to use to build our portfolios going forward.  This will assist in informing our portfolio building, but is only a tool.

Looking forward
We are looking forward to being able to share this information with you in 2022 (when all the systems have been built and robustly tested).


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