There is a lot of jargon around these days that it is hard to keep up with. What does responsible investing mean? Is it just another piece of jargon that is boring or difficult to understand and bears no relation to our day-to-day life?
On a simple level, responsible investing could be like shopping for eggs in the supermarket. When you find the eggs on the supermarket shelves, you are confronted by a range of different choices – bio organic eggs, paddock eggs, free-range, caged, cage-free, barn raised, and the list goes on. There is such a wide variety of eggs you could select, with a range of prices to match your choice. So how do you choose? Would you buy solely on price going for the cheapest eggs no matter what? Or would you prefer organic eggs or maybe you are concerned for the chickens’ welfare and would not select eggs from caged chickens?
So on a personal level in this scenario, with the eggs, you could be considered to be behaving like a responsible investor. You are deciding which would be the best eggs for you on which to use your money.
On a broader level, responsible investing is like that example of deciding which eggs you will buy. When you (or your KiwiSaver provider on your behalf) are investing responsibly you are considering investments which reflect your values and possibly reflecting how a company is managing its responsibilities, say to the environment or its community.
Another name you may have heard is ethical investing. It is a term that has been discussed a lot recently and is an alternative name for responsible investing. Simply when investing, like buying those eggs from a supermarket, responsible or ethical investing is looking at not only the financial return (or the price) of the investment but whether that investment aligns with your personal (Christian) values.
You may recall either working for, or hearing about, companies that were out to maximise their profit no matter the cost. However, over recent years, there has been a change to balance the interests of shareholders with other stakeholders (e.g. the environment).
One example of this we will all have noticed recently is the big change to our supermarket shopping with plastic bags no longer being available to store our purchases. There had been a community concern for the effect of plastic bags on our environment, with the sheer numbers in our landfills or in our oceans for example. So because of the community concern with their use, supermarkets no longer use plastic bags.
Just as the community has become more concerned with issues, like plastic supermarket bags, there has also been a concern about where KiwiSaver funds are invested. At Christian KiwiSaver Scheme we endeavour to avoid investments in such products as tobacco, guns and other arms manufacturing, gambling, and adult entertainment as they are out of line with Christian values. How companies behave with regards to the environment, their employees and others, how they govern themselves, and how they reward their management are things we also think about when making investment decisions.