In this recent presentation, Robert highlights the variety of terms used by these institutions to highlight their 'ethical' credentials. These include 'sustainable', 'ESG' (Environment, Social and Governance) and 'responsible'. In the majority of instances, these are not validated and, as a result, the methodologies used to implement these notions result in funds investing in unethical companies. Examples are provided in the slides, dealing with Kiwisaver funds and the NZ Superannuation Fund.

The case study of Simplicity (available on the Wise Response website) provides a template for the assessment of validity (Section 2.3). While the example showed that the notion of do no harm is valid, its application was faulty, investing in banks that supported the fossil fuel industry.

In considering the application of ethical principles, it is necessary to take into account how the moral domain is defined. This domain is made up from basic humanitarian principles, international conventions, laws, codes of conduct, policies, and the values underlying these.

The presentation identifies four steps in assessing if a fund is ethical:


1) definition of values
2) which categories of investment should be excluded
3) when engagement is appropriate
4) can reporting demonstrate adherence


The slides discuss steps two and three and the need to consider the tactics available for a successful outcome. The fourth step is usually poorly done.

The slides also discuss some reform options for Crown Financial Institutions regarding their assessment and engagement functions.

Finally, there are some brief comments about the need for the State Services Commissioner’s Code of Conduct to be more explicit about human-Earth responsibilities and to extend this to all entities involving Government investment, also suggesting that the original aim for the establishment of the NZSF needs to be rethought in the light of the likely collapse of the international trading order in the near future.

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