How Trump's Big Lie got into big bank KiwiSaver schemes

Friday, 25 August 2023

​Fox News helped former United States president Donald Trump spread the Big Lie that the 2020 US election was stolen, but that has not stopped big bank KiwiSaver funds investing savers money in the company.

In April, Fox News’ spreading of post-election misinformation cost it US$878 million (NZ$1.49 billion) when it settled a defamation lawsuit brought by Dominion Voting Machines.

“The truth matters. Lies have consequences,” Dominion’s lawyer Justin Nelson said as he celebrated victory.

Fox News is owned by US-listed company Fox Corp, and even its chairperson Rupert Murdoch dubbed the Big Lie of a stolen election as “terrible stuff damaging everybody”.

And yet, the Kiwisaver schemes of ASB, Westpac, Bank of New Zealand and ANZ all held shares in Fox Corp in March despite claims to be responsible investors who assessed all their investments through environmental, social and governance (ESG) processes.

The social part of the ESG process is often presented as covering companies’ breaching human, labour and environmental principles.

But KiwiSaver providers give themselves scope to eject companies from portfolios when they behave in ways that are anti-social, with Westpac reserving the right not to invest in companies that behave in ways that align with its beliefs.

Such wide scope to exclude companies under ESG policies was illustrated by the fate of NZX New Zealand-listed company DGL, whose shares fell after its founder Simon Henry made comments about My Food Bag co-founder Nadia Lim, which were called racist and sexist.

Some KiwiSaver schemes blacklisted DGL.

Barry Coates, founder of the Mindful Money website, which helps people choose KiwiSaver funds that align with their ethics, said the inclusion of Fox Corp in KiwiSaver portfolios raised questions about the thoroughness of the ESG processes of the big four bank KiwiSaver schemes.

“I don’t know how they could justify it,” Coates said.

Few processes are watertight. Even Mindful Money’s process for analysing KiwiSaver funds did not highlight Fox Corp as being problematic.

“We should have a criteria for people trying to overthrow democratic governments,” Coates said.

Mindful Money found 18 KiwiSaver schemes that owned Fox Corp in both 2021 when the Big Lie was being told, and also in 2023, after it had been exposed as baseless.

The big four banks were reticent in discussing how Fox Corp was assessed under their ESG processes.

ANZ refused to comment.

BNZ said it invested in a way that reduced any potential for harm for “our communities”, but did not say whether Fox Corp had been assessed under its ESG policy, which it claims includes the Māori concept of manaakitanga, which it defines as “growing the long term social, cultural, and financial wellbeing of all New Zealanders”.

ASB said it outsourced its ESG research to a third party, which had assessed Fox Corp against the United Nations Global Compact Principles and related international norms and standards, and “found it meets these standards”.

Westpac’s KiwiSaver scheme is managed by BTNZ, which also measures companies against the UN principles.

Its head of investment solutions Philip Houghton-Brown said: “Fox Corp doesn’t currently meet this exclusion criteria according to our ESG research provider. However, we will continue to monitor the company and may make changes if our provider adjusts its assessment based on the recent legal proceedings or other information coming to light.”

Dr Ella Henry, an Auckland University of Technology professor specialising in international business and strategy, was amazed to hear Fox Corp had a place in KiwiSaver portfolios.

“I’m astounded given the amount of litigation Fox has faced in recent years,” she said.

“I would have imagined that would have raised a red flag.”

Henry has just returned from the US where she had watched Fox News, finding its stance on some social issues was antithetical to New Zealand’s.

Trans-rights activist Shaneel Lal said he would not want his money invested in an organisation that was antagonistic to his basic rights.

”Investing in Fox is a surprising thing for New Zealand KiwiSaver to be doing, and ethically dangerous,” Lal said.

“It’s a platform for misinformation and dangerous lies.”

But deciding not to invest in a media company is not a small decision for a KiwiSaver to make, and Free Speech Union chief executive Jonathan Ayling urged caution.

“ESG are complex. Individuals should absolutely have the right to choose where to invest their money,” Ayling said.

That choice should be provided through disclosure, though disclosure is easier said than done in KiwiSaver, he said.

When big bank KiwiSaver schemes periodically publish their portfolio holdings, they are massive spreadsheets naming thousands of investments.

Westpac’s KiwiSaver Growth fund had just shy of 3000 investments at the end of March.

As a result, the amount of money invested in Fox Corp is a relatively small proportion of each funds’ total.

At Westpac, it’s 0.07 cents per dollar in the Westpac KiwiSaver Growth fund, but in the $2.7b fund that equated to an investment in Fox Corp of just under $1.9m.

In the ANZ Growth Fund the holding in Fox is 0.03%, adding up to nearly $1.4m of the $4.5b fund.

Sam Stubbs, chief executive of Simplicity KiwiSaver, said he was divided.

“I can see the case, but I think you are treading on shaky ground when you have a mainstream media outlet that you want to effectively cancel.

“If what they say is illegal, I get it, but if what they say is controversial, you get into real issues of freedom of speech.”

Simplicity KiwiSaver is one of the 18 schemes that owned Fox Corp shares in 2021 and 2023, Mindful Money data shows.

Ayling has other points to make on ESG processes for the big bank KiwiSaver schemes, which serve a wide investor base of people with a wide range of political opinions.

To say a bank’s ESC processes are faulty because they allow an investment in Fox Corp was imposing political values onto them, Ayling said.

For Coates, the issue is not with the conservative nature of Fox Corp, but about the socially-harmful misinformation it spread.

“I would agree there are such things as lies. I would agree Fox has lied,” Ayling conceded.

“I would also say Fox isn’t the only outlet that has shared material that people would characterise as incorrect.”

He urged caution on investment being used to shut down freedom of speech.

“Money is a form of free speech,” he said.

Stubbs said ESG was still relatively young, and would develop, and part of that would be grappling with hard topics.

“The whole ESG debate is going to politicise money.”

It’s already happened around some classes of investment in New Zealand, and overseas.

In the United States, pension funds had become politicised, with the state of Texas having passed a law in 2021 to prevent state pension funds from investing through fund managers which excluded fossil fuels from their portfolios.

In 2021, when Texas lawmakers were passing their law, the government here banned Kiwisaver default funds from investing in companies from the fossil fuel industry.

Media exposes have also led to KiwiSaver schemes ditching tobacco companies, and weapons-makers.