Insights
War: learn how your KiwiSaver can and can’t avoid it.

With the recent military action by both Israel and America against Iran, and the protracted conflict in Gaza and Ukraine, we thought it was a good time to explain the limitations and opportunities of ethical investing when it comes to conflict.

The asymmetry of what’s happening in Gaza has driven people to think of ways they can support Palestinians. The Russian invasion of Ukraine produced a wave of solidarity among citizens keen to protect sovereign nation states. Divestment activist groups have been producing lists of companies they deemed bad actors in these conflicts and suggesting people stop investing in them.

This is investing as protest (provesting?).,. but how effective is it?

At Pathfinder, we’re very familiar with looking at money as a tool for multiple things. It can grow your bank balance through compounding interest and returns. It can influence how you feel depending on how you make it and how much of it you have. It can fund harmful activities, and it can fund helpful ones. You can earn it, spend it, invest it and even give it away.

Currency is a medium of exchange, and, in a capitalist model, its tendrils touch almost everything; the good, the bad and the boring. So what happens when we want to remove ourselves from something we think is bad – what can we do to extricate ourselves?

- Limit investment in activities you don’t want to support

- Hunt out solutions to problems you’re worried about in the form of investments designed to address or mitigate them.

- Spend your returns on improving society in ways you’re passionate about (like donations to causes you’re concerned with or buying from companies you admire).

These reflect the ability of an investor to use their purchasing/investing power to vote for what they think is right. But there are limits to what is achievable when using money as a tool to protest against perceived injustice.

- If you’re in a pooled investment, like KiwiSaver, you can’t pick and choose your investments individually. But you can choose an active manager that best aligns with what you think is good and bad. Make sure to read their ethical (or responsible) investment policy and ask them any questions you have about how they apply it.

- The label ‘positive’ isn’t easy to apply to many companies. As at 31 July 2025 current top 10 company holdings in the S&P500* are Apple, NVIDIA, Microsoft, Amazon, Meta, Alphabet (Google), Broadcom, Tesla, Berkshire Hathaway and Alphabet again (this time with class C shares which means you can’t vote if you own them). Companies like these can be primarily focused on providing a product or service to generate profits for shareholders. While it is true that many corporate leaders want to help improve the world, this isn’t typically their main focus. If you’re looking for a company specifically designed to ‘do good’ you can also look outside listed companies

- which means private companies. These can be early stage (venture capital) or later stage (private equity). For Pathfinder the sweet spot is to find these business ventures that are both purpose-driven and offer attractive prospective investment returns. These companies form part of our broader investments in private assets, which comprise small proportions (between 1% and 7% at 31 July 2025) of our Kiwisaver funds[1]

- Amongst other things, active managers use data providers to know if a company is doing harmful things. The companies self-report and don’t have to disclose all activities, especially if they’re not financial. Not all data providers ask, and not all companies provide information on what you might think is harmful.

- With ethical issues, intent is important because it shapes our perception of events. It’s tricky to capture intent. A company doesn’t always know how their products will be used or their long-term impacts, and it’s hard to be sure what they intend.

- Things are made of many parts, and while it’s easier to avoid investing in a company selling a straightforward end-product (like a gun), it’s harder to decide whether a company which sells small components should also be avoided if those components end up in gun or complex weapons system

- A company might make money from a variety of sources and sometimes the activity we're aiming to exclude can be hard to identify within them, especially if it’s a very small part of a huge global business.

Finally, there is complexity around how ‘proximate’ (or close) a company is to an activity we want to avoid. For example, we might want to avoid investing in a company that manufactures fighter aircrafts, but what about the bank that funds the company or the accounting software the company uses to pay their staff? Where and how to draw the line is harder than you might think in a hyper-connected world.

According to Mindful Money's analysis of fund investments at the end of March 2024, $240 million of KiwiSaver money and $248 million of retail investments was invested in companies involved in the manufacture of weapons. Yet 80% of New Zealanders wanted to avoid weapons and firearms and 91% wanted to avoid human rights violations (which often headline wars) according to the Voices of Aotearoa: Demand for Ethical Investment in New Zealand report 2025.

At Pathfinder we are pro (all) human(s) rights and while we accept the need for national security, we stop short at capitalising on it via investments in weapons.

In practice, we use exclusions when seeking to avoid investments that assist conflict.

We respect everybody's right to choose an investment manager that meets their financial expectations and aligns with the influence they want to have on the world. So, if you are you looking to limit your exposure to fatal weapons and military action for conflict resolution – we'd love to have you invest with us.

You can read more about how we apply our exclusions and use revenue thresholds to define them in this article Pathfinder’s position on Gaza and on page 12 of our Ethical Investment Policy.

[1] Investments in private companies are classified under Kiwisaver regulation as ‘other assets’. You can read our Quarterly Fund Updates (linked) for the current percentage of each Pathfinder KiwiSaver Fund invested in other assets. You can see our long-term targets for investing in other assets here.

*(a stock market index that tracks the performance of the 500 largest publicly traded - or listed - companies in the United States)

Pathfinder Asset Management Limited is the issuer of the Pathfinder KiwiSaver Plan and Pathfinder Investment Funds. A Product Disclosure Statement for the offer is available at pathfinder.kiwi. Learn more about how we invest ethically by reading our Ethical Investment Policy & Exceptions Register on our website.

Photo by Mahmoud Sulaiman on Unsplash