Ethical investing in New Zealand is about putting your money where your mouth is. It means choosing investments that align with your personal values, whether that’s avoiding companies involved in fossil fuels, supporting human rights, or promoting animal welfare. It’s about making a difference in the world while also growing your wealth.
What Exactly is Ethical Investing?
Ethical investing, also known as responsible investing or socially responsible investing (SRI), is an investment approach that considers both financial returns and positive social and environmental impact. It’s not just about making money; it’s about making money in a way that feels good to you. Ethical investing recognizes that you have the right to decide what your money supports. This means you can feel more secure, empowered, and confident in your financial decisions. Many New Zealanders want to invest ethically but may feel lost without enough information to compare their options, as highlighted by Mindful Money. Ethical investment aims to help you transition your money to reflect your core values.
One of the challenges of ethical investing is that the definition can be a bit fuzzy. What’s considered “ethical” can vary from person to person because it depends heavily on individual values. Mindful Money notes that the New Zealand government also hasn’t set hard standards on what “ethical investment” must mean. However, there are some common themes. For many Kiwis, ethical investing means avoiding companies that: violate human rights, are cruel to animals, invest in fossil fuels, or invest in weapons. Think of the historical examples like the movement to stop investments in South Africa during apartheid, or the faith-based push against companies involved in slavery.
Why Should You Consider Ethical Investing?
Beyond aligning your money with your values, ethical investing can also offer other benefits. Some research suggests that ethical funds can perform just as well, if not better, than traditional funds. Here’s why:
- Better risk management: Companies with strong environmental, social, and governance (ESG) practices tend to be better managed overall, which can translate to lower risk.
- Avoiding controversial industries: Steering clear of industries like fossil fuels can protect you from potential financial losses as these sectors face increasing pressure and regulation.
- Positive impact: Knowing that your money is contributing to a better world is a reward in itself. You’re supporting companies that are working to solve social and environmental problems.
Ethical KiwiSaver funds have been shown to outperform average KiwiSaver funds according to Mindful Money. Avoiding areas with environmental concerns makes them a financially sound investment. It helps to steer clear of the financial penalties handed down to unsafe companies as well as dodging the costs of fines for safety breaches. Funds that include fossil fuels drag down returns.
How to Get Started with Ethical Investing in New Zealand
Here are some practical steps you can take to start investing ethically in New Zealand:
1. Define Your Values
What issues are most important to you? Are you passionate about climate change, animal welfare, human rights, or something else? Make a list of the things you want to support and the things you want to avoid. This will be your guide as you choose investments.
2. Research Your Options
New Zealand has a growing number of ethical investment options, including KiwiSaver funds, managed funds, and individual company stocks. Here’s where to look:
- KiwiSaver Funds: Many KiwiSaver providers offer ethical or sustainable funds. Check their websites and product disclosure statements (PDS) to see what their investment policies are. Look for funds that align with your values.
- Managed Funds: Several fund managers in New Zealand specialize in ethical investing. They do the research for you and create portfolios of companies that meet certain ethical criteria.
- Individual Stocks: If you’re comfortable doing your own research, you can invest directly in companies
The Future of Ethical Investing in New Zealand
Ethical investing is a growing trend in New Zealand, as more and more people realize the power of their money to make a difference. According to Mindful Money, there is definite demand and desire for ethical investment in New Zealand in 2025. As awareness increases and more ethical investment options become available, it’s likely that this trend will continue to accelerate.
One of the key drivers of this growth is the increasing awareness of climate change and other environmental issues. Many investors are concerned about the impact of their investments on the planet and want to support companies that are working to reduce their carbon footprint and promote sustainability.
Another driver is the growing recognition of social issues, such as human rights, labor standards, and inequality. Investors are increasingly looking for companies that treat their employees fairly, respect human rights, and contribute to the well-being of their communities.
As ethical investing becomes more mainstream, it’s likely that we will see more innovation and sophistication in this area. This could include the development of new ethical investment products, the use of more sophisticated data and analytics to measure social and environmental impact, and greater collaboration between investors, companies, and policymakers.
Potential Challenges with Ethical Investing
Although ethical investing has been gaining traction, there are a few challenges to keep in mind:
- Defining “Ethical”: As mentioned earlier, what constitutes “ethical” can be subjective and vary greatly from person to person. This ambiguity can make it difficult to compare different investment options and ensure they truly align with your values.
- Limited Investment Universe: Ethical screens can sometimes limit the range of investment opportunities available, potentially affecting diversification and returns. However, this is becoming less of an issue as the ethical investment market grows.
- Data Availability: Assessing the ethical performance of companies can be challenging due to inconsistent reporting standards and a lack of comprehensive data on social and environmental impacts.
- Potential for Greenwashing: As the demand for ethical investments increases, so does the risk of greenwashing, where companies exaggerate their ethical credentials to attract investors.
Despite these challenges, the benefits of ethical investing outweigh the drawbacks for many people. By being aware of these potential issues and doing your research, you can make informed decisions and ensure that your investments truly reflect your values.
FAQ: Your Questions About Ethical Investing Answered
Here are some common questions people have about ethical investing:
Does ethical investing mean sacrificing returns?
Not necessarily. While some people believe that ethical investing involves sacrificing financial returns, studies have shown that ethical funds can perform just as well, if not better, than traditional funds. The key is to do your research and choose funds that are well-managed and diversified.
How do I know if a fund is truly ethical?
Look for funds that are transparent about their investment policies and holdings. Check their websites and product disclosure statements (PDS) to see what their investment criteria are. Also, look for independent certifications or ratings from organizations like the Responsible Investment Association Australasia (RIAA).
Can I invest ethically through my KiwiSaver?
Yes, many KiwiSaver providers offer ethical or sustainable funds. Check with your provider to see what options are available. If they don’t offer an ethical option that you like, consider switching to a provider that does.
What if I only want to avoid specific types of companies, like those involved in fossil fuels or weapons?
That’s perfectly fine. You can choose funds that have specific exclusions based on your values. Many ethical funds offer different levels of screening, so you can find one that aligns with your specific concerns.
Is ethical investing only for wealthy people?
No, ethical investing is for everyone, regardless of their income or net worth. You can start with small amounts and gradually increase your investments over time. Many KiwiSaver funds have low minimum investment requirements, making it accessible to most people.
References
(These are the sources used in the creation of the document.)
Digital Advisor. (2021). Choosing the Fund that Fits. Mindful Money.
Digital Advisor. (2023). Ethical Investment 101: A Guide to Investing Based on Your Values. Mindful Money.
Digital Advisor. (2025). Demand for Ethical Investment in New Zealand 2025. Mindful Money.
Digital Advisor. (2025). Mindful Ethical KiwiSaver funds outperform average KiwiSaver funds. Mindful Money.
Digital Advisor. (2025). Find a fund that fits your values. Mindful Money.
Stop just thinking about making a difference – start doing it! Take a look at your current investments and see if they line up with your values. Even small changes can have a big impact. Explore the ethical KiwiSaver options available, research companies that are making a positive difference, and choose to support them. Your money has power. Use it wisely, use it ethically. Start today!
