Insights
What to say to doubters

We get it, not everyone thinks your decision to invest ethically is rational. You've probably heard the criticisms: "Your sacrificing returns" or "Avoiding weapons or oil companies is crazy." But investing ethically can be profitable while helping to balance a better future. So, next time someone challenges your ethical investments, here’s how you can respond.

It's time to rethink this. In fact, we believe investing ethically can do just as well, if not better, in the long run [1]. Take our Pathfinder KiwiSaver Funds, for example – their 5-year performance often ranks top three of their category according to the Morningstar KiwiSaver Surveys [D]. Although it’s important to remember that returns will always go up and down, (that’s the nature of investing), there is research showing the logic behind ethical investing and strong returns.

ESG metrics, like good governance, considering human rights across supply chains, looking after employees and minimising a companies impact on the environment are taken into account by RIAA certified products. And the good news is, that according to different reports [2], (based on an analysis of RIAA certified products compared against benchmarks), these companies are more likely to deliver favourable financial returns to investors over a long-term period.

There is no denying, conflict is a trillion-dollar industry [3]. But this “argument” relies on two things: one, that you value returns more than you value human life, stability or humane conflict resolution. And two, that you’re losing out on money you can’t get elsewhere. While short term gains can be huge during times of intense conflict, it’s not the only money around.

You might have heard the idea that investing in weapons is investing in the protection of democracy – enabling countries to defend themselves. However, as an investor, you have no control over who those weapons manufacturers supply - they could sell weaponry to either, or both sides of a conflict.

Let’s not forget that invested money goes to shareholders of the company, not just the company itself. As a shareholder, you’re voting with your money, because a company with a higher share price can mean improved access to capital for expansion; indirectly the company can still benefit via your investment in them.

When it comes to investing in oil (fossil fuel related activities) it’s a similar trade off: short term profit for long term instability (meet Oblivia Coalmine).

The science is clear: to meet our climate goals, and avoid worsening of climate disasters, society needs to significantly reduce our reliance on fossil fuels. According to the Intergovernmental Panel on Climate Change (IPCC), trillions of dollars in fossil fuel investments risk becoming stranded assets as we make progress towards meeting our climate goals [5].

And investors have taken notice and are responding to the scientific findings. Over NZ$70 trillion in assets is being committed to some form of fossil fuel divestment and reallocation of capital. This shift is not just about ethics, but also about financial prudence

Most people want to do the right thing; our research (and that of Mindful Money and RIAA) shows that investors want to invest ethically. Only a rare minority of people invest like pirates, all personal gain with no consideration of the cost.

However, you don’t know what you don’t know, and this has meant that KiwiSaver members are often shocked to discover where their money is actually going.
It can be hard to do the right thing in a system that’s calibrated to reward (and report on) financial metrics rather than humanitarian or environmental ones.

In the same way that you’d go to the doctor for a check-up – you can always suggest people do a quick health check on their KiwiSaver. Mindful Money, the charity dedicated to providing investors with transparency, shows what each KiwiSaver is invested in, if there are any areas of concern, along with returns after fees and taxes.

Hopefully this gives you some clear direction to answer any questions that pop up with confidence. Investing ethically isn’t just a trend—it’s a powerful strategy for building your future, while helping to create a better future for all.

If you would like help with any other curly questions, reach out, we are always happy to answer them, honestly. We want as many people as possible to be excited about by the positive impact they can have when choosing where to invest their KiwiSaver.

[1], Mindful Ethical KiwiSaver funds outperform all KiwiSaver funds - Mindful Money

[2] Plan for Life Actuaries & Researchers, RIAA-Responsible-Investment-Benchmark-Report-Aotearoa-New-Zealand-2024.pdf, Voices of Aotearoa: Demand for Ethical Investment in New Zealand 2024 - Mindful Money

[3] Government GDP: How does the USA make a profit from war? | by Riya Rode | Medium, Defense spending and arms trade - statistics & facts | Statista

[4] IPCC, 2023: Climate Change 2023: Synthesis Report. Contribution of Working Groups I, II and III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change. https://www.ipcc.ch/report/sixth-assessment-report-cycle/

[D] Disclaimer: Results were from the Morningstar KiwiSaver Survey September Quarter End 2024 and the Morningstar KiwiSaver Survey December Quarter End 2024.

In the September survey the Pathfinder KiwiSaver Growth Fund returns ranked 1st out of 19 Multisector Growth Category Funds, the Pathfinder KiwiSaver Conservative Fund ranked 1st out of 16 Multisector Conservative Category Funds and the Pathfinder KiwiSaver Balanced Fund ranked 1st out of 22 Multisector Balanced Category Funds, for a period of 5 years as of 30/09/2024. © 2024 Morningstar, Inc.

In the December Survey the Pathfinder KiwiSaver Growth Fund returns ranked 1st out of 19 Multisector Growth Category Funds, the Pathfinder KiwiSaver Conservative Fund ranked 1st out of 16 Multisector Conservative Category Funds and the Pathfinder KiwiSaver Balanced Fund ranked 3rd out of 22 Multisector Balanced Category Funds, for a period of 5 years as of 31/12/2024.

All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution in New Zealand.

Pathfinder Asset Management Limited is the issuer of the Pathfinder KiwiSaver Plan and Pathfinder Investment Funds. Product Disclosure Statements for the offers are available here. Learn more about how we invest ethically by reading our Ethical Investment Policy. Past performance if no guarantee of future returns. We encourage all investors to seek financial advice prior to making investment decisions.