The screening of KiwiSaver funds to avoid unethical investments is largely responsible for a massive increase in responsible investments in New Zealand, topping $42.7billion at the end of 2016.
Following the controversy last August concerning KiwiSaver funds investment, there was a ''massive increase'' in the use of ''negative screens'' to avoid investments in tobacco and controversial weapons, Responsible Investment Association Australasia (RIAA) chief executive Simon O'Connor said.
''It's one of the most significant global changes to happen to the sector in 2016 and highlights that New Zealanders are not prepared to build their retirement savings at any cost,'' he said when launching the RIAA's third annual ''responsible investment benchmark report'' in Auckland.
The report showed ''core'' responsible investments, made up mainly of screened funds, jumped from $1.6billion in 2015 to $42.7billion at the end of 2016.
''This jump is primarily due to the introduction of negative screening of multiple issues by the majority of New Zealand's KiwiSaver providers,'' Mr O'Connor said.
The research was based on data covering the year to December from 21 asset managers, super funds, financial advisers, banks and community investment managers.
Mr O'Connor said for the first time the survey asked asset managers to identify the key drivers of responsible investment growth.
The top three responses were that environmental, social and governance risks were identified as being of increasing importance.
The other two were the alignment of investment strategy with underlying investors' values/beliefs and the increased demand from institutional and retail investors for responsible investments.
''Kiwis communicated clearly that they are not willing to make their dollars at the expense of the planet or its people when there are responsible alternatives that outperform,'' Mr O'Connor said.
The responsible investment of assets under management had increased 67%, from $78.7billion in 2015 to $131.3billion assets as at last December.
''Consumers and investors alike are taking a stance and aligning their investments to their values,'' Mr O'Connor said.
However, the survey respondents also identified a lack of awareness by the public and a lack of viable responsible investment products as a constraint on industry growth.
Mr O'Connor said the RIAA was addressing those factors with the launch of its Responsible Returns webtool, connecting consumers who cared about responsible and ethical investing, with products to match their interests and concerns.
