Older people deserve more credit for the rise of ethical investing

Wednesday, 18 September 2019

OPINION: The sparky-eyed Millennial out to save the world is overshadowing the other great investment eco-warrior: The baby boomer.

Humans love a simple story, and the trope about the socially-aware young changing the world makes for good reading.

But when it comes to ethical investing, the revolution is being driven by those with white hair as much as it is the young.

Older people are often overlooked as a force behind the rise of ethical investment.

It's a terrifically powerful dynamic duo as the Baby Boomers have the money now, and the Millennials will be tomorrow's wealth class.

* KiwiSaver, cluster bombs, mines and nukes

* No KiwiSaver scheme scores more than C+ on ethical rating scale

* NZ cosmetic firms unhappy about China insistence on animal testing**

Two reports on attitudes should have elevated the importance of moneyed older people in the shift to investing for a return, and to avoid companies which do awful things, like infringe human rights, flog cigarettes, or are involved with making or servicing indiscriminate weapons like land mines and atom bombs.

Nearly three-quarters of people (72 per cent) told Mindful Money they expected their investments to be made responsibly and ethically, and 62 per cent would move their investments, if they discovered their money was being invested in activities inconsistent with their values. Talk is cheap though, and many people don't take responsibility for where their money is invested.

First the 'Bank of Barry' operated by the silver-haired eco-warrior Barry Coates, a former MP whose Mindful Money service is attempting to get more people choosing ethical KiwiSaver funds, paid for market research which highlighted the bad things people really did not want their money invested in.

Unreported lines from that report showed older New Zealanders (aged over 50) were more likely than average to expect their investments to be made responsibly and ethically by fund and KiwiSaver managers.

They were also most likely to choose the KiwiSaver provider they perceived was best on sustainability.

By contrast, younger New Zealanders (aged under 30) were less likely than average to move their money out of investments that were inconsistent with their values, even though they were more likely to believe ethical funds performed better over the long-term.

The second piece of research was released by DIY share investment service Hatch.

Barry Coates, former Green MP and founder of Mindful Money.

Hot off the press, this showed no discernable difference between the desire to invest responsibly between Millennials and Baby Boomers.

Both reports show how when asked about investing responsibly, a large proportion of people nod fervently and claim they support it.

This supposed support has not been reflected in their investment choices however.

People are busy. They care, but many do not enough to actually take action.

Fortunately, something incredible has been happening. The KiwiSaver providers have woken up to the broad ethical make-up of the population.

There's been a growing awareness that KiwiSaver providers have to reflect the morals of their investors in a broad sense, which has led to them ditching things like tobacco investments and weapons-makers following media coverage that began back in 2015.

There's also a growing level of ethics competition with the likes of Simplicity, CareSaver and ASB working hard to position themselves to win the business of the actively ethical investor, as opposed to the ones who talk, talk, talk, but take no action.

That means it's now easy for people to invest according to their ethics, and that even if they make no choice, they're not invested in cancer-causing tobacco, or in the worst the weapons-industry has on offer.

GOLDEN RULES:

* Be an intentional investor

* Get interested in your money

* Make your voice heard