The New Zealand Government has announced bold new plans to prevent default providers of its ‘opt-in’ retirement provision, KiwiSavers, from investing fossil fuels.
Yesterday’s announcement follows a government review into the schemes, which were set up over ten years ago and manage an estimated NZ$57bn (€32bn) in workers’ savings.
The New Zealand Government’s consultation, which closed in September and was led by the Ministry of Business, Innovation and Employment, included consideration on whether to strengthen the responsible investment approach of its nine default providers or maintain the status quo.
"We want Kiwis over time to move more away from fossil fuels and one way we can show that message is by making sure KiwiSaver investment money isn’t heading towards companies or shares that are fossil fuel bound".
It asked respondents to provide feedback on two proposed options. The first would “require mandatory exclusions of certain industries or companies” and the second would force default providers to “follow a standard method of disclosing responsible investment criteria”.
The Government, it seems, has opted to pursue the former, announcing plans to introduce the new fossil fuel exclusions next year to coincide with selection of new default providers, expected in July 2021.
Among the existing KiwiSaver providers are the likes of Westpac New Zealand, ANZ New Zealand Investments, and Mercer.
The schemes are reported to invest around NZ$1bn (€560m) in fossil fuels.
According to a tweet from the New Zealand Labour Party, whose leader Jacinda Ardern is currently Prime Minister of the country’s coalition government, the proposed new rules will also make “fees simple & transparent”.
Speaking on national television, Kris Faatoi, Minister of Commerce said:
“We want Kiwis over time to move more away from fossil fuels and one way we can show that message is by making sure KiwiSaver investment money isn’t heading towards companies or shares that are fossil-fuel bound”.
James Shaw co-leader of New Zealand’s Green Party, which forms part of Ardern’s coalition, described the move in a blog as a “significant change” one that puts “people and planet first”.
But Paul Goldsmith, a politician from the country’s opposition centre-right National Party, described the announcement as “virtue signalling”.
“If she [Ardhern] thinks it’s a sin to invest in oil and gas, does she also think it’s a sin to fill up your petrol tank?”, he asked.
It is reported that the government will also introduce enhanced restrictions around weapons manufacturers.
In 2015, KiwiSaver’s investments made the headlines for all the wrong reasons after an exposé by the national press revealed that many of the scheme’s default options were invested in ‘sin stocks’ – most controversially, manufacturers of weapons that are banned under the New Zealand law.
The scandal led to questions in the country’s parliament and the filing of a police complaint in Auckland by Amnesty International. It also led to many of the implicated providers introducing investment exclusions.
The New Zealand Government’s announcement is the latest part of its ambitious sustainability push. See RI’s recent country profile.