KiwiSaver recently hit $111 billion in funds under management, with the Financial Markets Authority estimating that 90 percent of that money is now managed using some sort of ethical approach. That’s a total of $100 billion now managed ethically in some way.

“Members of the public understand that their investments have consequences for the issues they care about – climate change, a healthy environment and social well-being,” says Barry Coates, co-CEO of the charity Mindful Money, which provides a tool where investors can check the ethical make-up of their funds.

“Knowledge is power, and Kiwi investors are using it.”

Coates says the improvement is driven by growth in consumer awareness and demand and as investment providers come to see it makes sense to reduce the growing financial risks of poor environmental, social, or governance practices.

“As more New Zealanders demand ethical investment options, we’re witnessing a fundamental shift in the market,” he says.

This shift to a more ethical approach has seen a significant fall in the proportion of investment in unethical issues over the last six years, Coates says. This includes a 74 percent drop in investment in tobacco products, a 69 percent drop in pornography and adult entertainment-related investments, a 33 percent fall in alcohol, and a 31 percent drop in weapons.

“We’re seeing promising signs that the investment sector is starting to shift gears.”

Not all good news

However, Coates says there is still $9.3 billion invested in harmful activities.

“Some fund managers are too focused on short-term returns. Examples are increased investment in the world’s worst oil and gas companies when oil prices rose after Russia invaded Ukraine, or investments in weapons companies that have profited from bombing in Gaza,” he says.

Coates says over the long term, there is evidence that ethical investment returns are at least as high, or higher than conventional investing.