Insights
Hot topic: Animal Testing

Animal testing and investing is a complex topic. According to Mindful Money, the website designed to give New Zealanders transparency on their investments, Pathfinder's KiwiSaver Growth and Balanced Funds (they don't include Conservative Funds) are designated 'Free from Animal Cruelty'. This is based on the holdings having been proven to have less than 0.01% (one hundredth of one percent) invested in companies that test non-pharmaceutical products on animals.

To get this designation a fund needs to have no investments in:

Companies involved in testing products on animals for cosmetic, personal care, household product, chemical and other uses (excluding for pharmaceutical products, medical devices, biotech, human food and pet food).

Companies involved in the production of fur & speciality leather products (where animals are raised purely for skins).

Factory farming (poultry only)

Animal welfare issues (such as animals for entertainment – think marine parks or rodeos or livestock export).

We seek to avoid exposure to all animal testing; however, we hold a small number of companies who test on animals for medical purposes because these companies have been granted special exceptions under our Ethical Investment Policy. Exceptions are only granted in limited circumstances. This article explains those circumstances, connects you to the current exception list and explores why we want to minimise testing on animals.

The Pathfinder KiwiSaver Plan was inspired by a cruelty-free investment firm that our Co-founder and CEO admired. The DNA of our KiwiSaver therefore includes ‘respecting animals’ as one of the three pillars our Ethical Investment Policy is structured around.

We support efforts to find effective alternatives to testing on animals, and believe that medical innovation and respecting animals don’t have to be mutually exclusive.  In fact, we can see a future world where there is no testing of consumer products or medicines on animals.

Our adopted approach has been to only hold a company that tests on animals if it has been granted an exception by our Ethics & Investment Committee.

Ethical investing requires us to make some principle-based rules about what we won’t invest in – we call these exclusions.

This list of exclusions reduces the universe of things we can invest in, but we believe that on average it leaves us with plenty of investment options.

In rare instances, a company might meet all but one of our ethical investment criteria and because we’re about progress, not total perfection, we may grant it an exception.

For example, a company might test on animals in the process of developing a product that would prevent animals having to be tested on in the future. Our Ethics and Investment Committee might decide that on balance this could be worth investing in, because it helps usher in a future where there will be no animal testing.

The Committee grants exceptions on a case-by-case basis depending on the circumstances and factors related to the investment in question.

Below are three things we consider (Transition, Transformation or Financial) before we will grant an exception:

Transition: acknowledging a company’s commitment to business transition.
A company may be in the final stages of a transition out of an excluded activity, or intentionally have taken on another’s environmental liabilities to transition them out of an excluded activity, with a clear pathway to achieving that. If we see leadership, commitment and a clear plan to transition from a company, we may decide to invest in that company.

Transformation: investing for change.
A company may be striving to change an industry or process such that it will in future transform out of being an excluded activity.

Financial: portfolio construction imperatives.
Our investment team determine if we are unable to create a portfolio with appropriate diversification and/or risk & return characteristics without that company.

You can read the companies we’ve granted exceptions to on our website, here.

And you can feel assured that investing in a way that respects animals remains part of the DNA of our company and we will continue to innovate in this space.