Writer Daniel Smith looked into KiwiSaver funds and found they aren’t just a bank account that keeps your money safe until you retire. They’re investment funds, and you do actually have a choice in what they invest in.

Watching my flatmate assemble a model airplane with tiny tweezers, while eating porridge with equal concentration, it is hard to imagine that this person is aiding the supply of weapons to the Saudi military. 

But he is, and you might be too.

It was recently revealed that the ANZ KiwiSaver fund had been investing in companies selling weapons to the Saudi military. The following outrage seen in New Zealanders has shown that many people have no idea what their KiwiSaver dollar is doing. 

ANZ has launched a review into its KiwiSaver funds, but my flatmate’s response was one that I think many people in New Zealand had upon finding out that information. 

“Oh shit. That is not good.”

Up until now, my flatmate had believed that KiwiSaver was a separate bank account that the government has set up to encourage people to save.

But KiwiSaver is not the government encouraging people to save, it is the government encouraging people to invest. You give part of your income to an investment fund, and that fund invests the money with the aim of bringing you more money in return. 

That money you see in your KiwiSaver account is actually floating around in various businesses who use it, ultimately, in an attempt to maximise their profits.

KiwiSaver is encouraged at the highest levels of government, but what the funds actually invest in is less strictly enforced. Even Jacinda Ardern did not know her investment with ANZ KiwiSaver was involved with the Saudi military. 

So, do you know where your money is invested? 

John Berry, co-founder and CEO of ethical KiwiSaver fund Caresaver says that unfortunately most Kiwis have no idea.

“I think that most people have not asked themselves the question, ‘What am I invested in, and is it consistent with my values?’ But when people do ask those questions they are really interested in the answers,” he says.

John says most people are surprised many “companies that engage in animal testing; fossil fuels; human rights violations; and environmental violations are included in many KiwiSaver funds.”

He says KiwiSaver presents an opportunity not just to avoid the bad stuff, but to invest in change that you want to see in the world. 

“The first step is avoidance, to say ‘Let’s stop investing in things that are causing harm’. But then the next step is what do you actually do with your money? For me, the most exciting thing about ethical investing is that you focus on investing in good companies and sustainable themes for the planet.”

But for those of us who need to pull out our phones just to calculate a 20 percent discount, how are we supposed to actually figure out which KiwiSaver schemes are best?

To get at the truth behind the reports, John directs me to Mindful Money.

Mindful Money is the work of longtime climate warrior and former Green MP Barry Coates. It is a charity run largely by volunteers who spend hours combing through company data, so that people like me who go into an anaphylactic shock after seeing a number with more than two decimal points don’t have to go anywhere near a spreadsheet.

Once they have sorted through reams of company data, Mindful Money ranks and evaluates different KiwiSaver funds based on individual values that users select. 

“It’s funny because the same people who are invested in places like ANZ take their canvas bags along to the supermarket, they avoid plastic, they recycle, they bike or take public transport or buy electric vehicles,” says Barry. 

“People in their everyday lives do things in order to help the environment and be good for society. But when it comes to their money people somehow switch off.”

When I dug into my KiwiSaver fund, I realised that far from being able to lord it holier-than-thou over my flatmate, my fund had invested in Rio Tinto, the Australian iron ore mining company who in May 2020 willfully destroyed a 46,000 year old aboriginal Australian cave system

Personally, on my list of companies, Rio Tinto is pretty close to the last place on earth I would want my money invested. Once I had this information, I quickly switched KiwiSaver to a fund one with far stricter mining exclusions. 

But it is crazy to think that until I looked, I was blissfully unaware that my savings were wrapped up in something I felt so strongly against.

According to Barry, it is important to remember that “the way you invest your money is one of the most powerful levers you have for doing harm or doing good in the world. You need to make a choice. You can choose to do harm or you can choose to do good but you should find out what your choices are.”

At this point in the conversation, the sneering face of my inner libertarian rears its smug head to ask, “But what about making money?” Well, you terrifying element of my psyche, we were just about to get to that.

Many people believe, largely due to decades of cynical PR spin from climate-impacting industries like oil and gas, that investing ethically means making less money. Thankfully this is just plainly untrue.

In the world in general and in New Zealand specifically, ethically-minded funds make higher returns than their counterparts. The reasons for this is because of the sorts of financial risks that an ethically-minded fund avoids. 

Ethical funds don’t risk getting sued for environmental liabilities, or risk being put on blast by the United Nations for workers’ rights abuses, or risk losing capital through investing in rapidly depreciating markets like fossil fuels. 

But don’t just take the word of one bleeding heart ex-Green MP. Read this report here, or this one, or this one, or this one, or this one here, and there’s this one too.

So if you can make money while making the world a better place, then why isn’t everyone doing it?

Well, I think there are two reasons.

One is that money is a little bit boring. You can use it to buy stuff, but mostly it is just numbers flashing on a computer screen. It is hard to imagine that where your savings are invested impacts the lives of children in a far-away country. But just because it is hard to imagine does not mean it doesn’t happen. It does.

The other is that people think it is too hard to change KiwiSaver. It isn’t. It takes two minutes. Do some research, find out what scheme suits your values, go to that fund’s website, punch in your IRD number and a proof of identity, and hey presto your money is being moved from helping build weapons of war to creating sustainable energy solutions.

And to all of us who are wondering whether their decisions actually make a difference, John Berry says that “whether you are a young person with a thousand dollars or an older person with a hundred thousand dollars, it actually doesn’t matter, as everyone is part of the overall KiwiSaver collection. Regardless of how big your KiwiSaver balance is, everyone has the potential to have an impact.”

There are lots of people with their hands out wanting your dollar. Some of them believe in stopping climate change, some of them blow up ancient aboriginal sites.

Choose wisely.