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Investment Insights

What should I look out for when it comes to Responsible Investing?

Kiwi Invest

Written by Kiwi Invest

Keeping you up-to-date with all the latest updates at Kiwi Invest.

Friday 6 September, 2019

Taking responsibility seriously? That feels smart.

Responsible Investing (RI) doesn’t just bring the obvious benefits in Environment, Social, and Governance (ESG) outcomes.

In today’s business landscape, it also makes good financial sense – as a company’s ESG reputation can increasingly impact business performance and resulting shareholder value.

While some providers may apply a Responsible Investing label to a token fund, or a narrow list of obvious exclusions, identifying a genuinely ‘responsible’ partner can come down to a few key tests.

 

A TRUE RESPONSIBLE INVESTING APPROACH WILL:

Apply RI principles through every investment fund

The first and most obvious test. If responsibility only flows into a single token fund, you’re left with only a small portion of responsibility – or a less diversified investment mix.

Proxy vote on ESG issues, through companies they are invested in

This translates beliefs into action – as your fund manager uses the weight of their fund’s overall investment, to actively influence ESG outcomes through a broad range of companies, worldwide.

Apply more comprehensive exclusions

Instead of excluding investments based on a narrow list of products or sectors – your fund manager should factor in a company’s behaviour, and its overall environmental and social impact.

Be upfront is responsibility affects costs

Sometimes, implementing an RI strategy can come with increased management costs. Your provider should ensure you are aware of this – and any ‘opportunity costs’ to your overall portfolio.

 

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