In recent times, perhaps more visibly prior to COVID-19, it has been satisfying to see growing interest in, and demand for, ethical investment products. Ethical is the term most often used by New Zealand investors[1], whereas fund managers like Harbour use terminology such as “ESG” (Environmental, Social and Governance) and others might refer to “Responsible Investing”.
Taxonomy issues aside, what one investor considers ethical is likely to be different to another. This is because ethical involves making value judgements about certain activities, depending on your personal beliefs and preferences.
Generally, Harbour applies an integrative process to ESG rather than making blanket exclusions based on ethical judgements. By way of example, for companies who are undertaking a significant programme of reform to improve their corporate behaviour and their impact on our planet, it is not usually possible to change overnight; rather it is a process of adapting that takes place over a number of years. It may therefore be counter-productive to withhold capital from them while they are on this journey. In fact, for impact, the best thing to do might be to provide more capital and encourage companies to move in a better direction.
And if we are going to hold the companies that we invest into to such high standards then it follows that we must be “walking the talk” ourselves. This means asking ourselves not what we can do but what we should do, which was a central theme of the Australian Royal Commission[2] that concluded a little over a year ago. Just because you can do something, doesn’t mean you should.
Our Prime Minister is reminding us to be kind in the current state of upheaval to our normal daily lives. In our industry, we know how privileged we are to be employed, working alongside talented and committed colleagues, doing the best that we can for our clients.
We have been thinking about the best thing we could do to help people in need right now, alongside our existing long-term commitments to improve the lives of those less fortunate and more vulnerable. And we would strongly support our industry colleagues in the numerous recent endeavours focussed on children, on our healthcare staff and those who are struggling to make ends meet at this challenging time. I know it was disappointing to see some of our industry claiming the Government’s wage subsidy because they can. I also know that most of them will likely be paying it back because they should.
We all need to display empathy and look to how we can assist in cushioning the blow for the people and businesses that are struggling right now.
Let’s look out for each other. Kia kaha.
[1] New Zealand Consumer Survey 2018 shows that a large majority of the public expect that all KiwiSaver and investment funds will be invested ethically (71%).
[2] The Australian Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry conducted throughout 2018 and reported on in February 2019.
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Harbour Asset Management Limited is the issuer and manager of the Harbour Investment Funds. Investors must receive and should read carefully the Product Disclosure Statement, available at www.harbourasset.co.nz. We are required to publish quarterly Fund updates showing returns and total fees during the previous year, also available at www.harbourasset.co.nz. Harbour Asset Management Limited also manages wholesale unit trusts. To invest as a Wholesale Investor, investors must fit the criteria as set out in the Financial Markets Conduct Act 2013. This publication is provided in good faith for general information purposes only. Information has been prepared from sources believed to be reliable and accurate at the time of publication, but this is not guaranteed. Information, analysis or views contained herein reflect a judgement at the date of publication and are subject to change without notice. This is not intended to constitute advice to any person. To the extent that any such information, analysis, opinions or views constitutes advice, it does not consider any person’s particular financial situation or goals and, accordingly, does not constitute personalised advice under the Financial Advisers Act 2008. This does not constitute advice of a legal, accounting, tax or other nature to any persons. You should consult your tax adviser in order to understand the impact of investment decisions on your tax position. The price, value and income derived from investments may fluctuate and investors may get back less than originally invested. Where an investment is denominated in a foreign currency, changes in rates of exchange may have an adverse effect on the value, price or income of the investment. Actual performance will be affected by fund charges as well as the timing of an investor’s cash flows into or out of the Fund. Past performance is not indicative of future results, and no representation or warranty, express or implied, is made regarding future performance. Neither Harbour Asset Management Limited nor any other person guarantees repayment of any capital or any returns on capital invested in the investments. To the maximum extent permitted by law, no liability or responsibility is accepted for any loss or damage, direct or consequential, arising from or in connection with this or its contents.