The Rise of Ethical Investing

Ethical investment, also known as Socially Responsible or ESG (Environmental, Social, Governance) investment, is about putting your money where your values are. These investments allow you to support companies and industries that aim to make a positive impact, whether that’s reducing carbon emissions, promoting fair treatment of workers, or driving social change. 

When I first got into this space, the common view from clients was that ethical investing came at the cost of performance. These days, though, that belief is gradually changing. 

More Kiwis are shifting their mindset when it comes to money. They aren’t solely focused on growing wealth anymore, now they want to grow it responsibly. From Cape Reinga to Bluff, more people are asking, what is my money actually doing while it’s sitting in an investment fund? 

A common way to assess whether an investment fund is ethical is by looking at ESG factors. When reviewing securities in a fund, the fund managers use a mix of research, data, and screening tools to evaluate companies before adding them to the portfolio. 

Environmental is about how a company affects the planet. This includes emissions, pollution, and how natural resources are used. 

Social looks at how people are treated, whether it’s staff, customers, or the wider community. 

Governance covers how the business is run. Are the leaders making fair, transparent decisions? Is there proper accountability? 

These areas give investors a better sense of how a company operates and whether it’s likely to hit any bumps down the line. Companies with poor ESG practices are often more exposed to risks like legal issues or reputational damage. 

In the past, some people thought ethical investing meant settling for lower returns. But that view is starting to shift. More evidence is showing that ethical funds can perform just as well as traditional ones, and sometimes even better.  

And for those who want to take things further, impact investing is an option. Rather than just avoiding harm, it’s about putting your money into projects that aim to do real good, such as renewable energy, social housing, or businesses making a difference in their communities. 

Around the world, ethical investing is gaining traction thanks to big challenges like climate change, inequality, and social justice. And back here in Aotearoa, it is really picking up pace. As of late 2022, more than half of all professionally managed investments in New Zealand were guided by responsible investing principles. In fact, over a million KiwiSaver members (roughly 39%) were already in funds that consider environmental, social and governance factors. 

The trend is clear, where we choose to invest matters. More and more people are deciding they want their investments to make a difference, and it is not just investors guiding the way. These days, businesses everywhere are leaning into ESG, not just for the planet or people, but because investors are paying attention. 

A great local example of ethical and sustainable business in action is Forest Lodge Orchard, a cherry orchard just outside Cromwell, that is proving that sustainable farming practices are not only possible, but they’re also even profitable. 

When owners Mike and Rebecca Casey moved home from Sydney in 2019, they were simply looking for a piece of land with some space after 12 years of living in a big city. After purchasing a property on the outskirts of Cromwell, a decision to establish a cherry orchard has led Forest Lodge to become the world’s first 100% electric, zero fossil fuel orchard. 

Mike, a former software developer with a strong interest in climate issues, was surprised by how much diesel a standard orchard burns just to operate day-to-day. So, he started looking for better, cleaner ways to run things. 

Today, everything at Forest Lodge is powered by electricity, from vehicles and power tools, through to irrigation pumps and frost fighting fans. They even imported a Monarch Electric Tractor, the first to be sold outside of the United States. The tractor does all their heavy towing, spraying and mulching, and with no diesel (or driver) its running costs are $2 an hour. They have also installed solar panels and a large battery room to store power, and Mike has written an algorithm to buy and sell power from the national grid. 

The benefits haven’t just been environmental. When they had their first harvest in 2022, they found customers were happy to pay up to 15% more for cherries grown with sustainability in mind. It’s proof that even a traditional industry like farming can adapt, innovate, and reward investors by embracing ESG principles. 

Finding the Right Fit  

With more funds jumping on the “ethical” bandwagon, it’s getting harder to tell which ones actually walk the walk, and which ones are just dressed up in feel-good marketing. Greenwashing is when a fund looks sustainable on the surface but doesn’t really back it up. And yep, it happens more than you’d think. 

So how do you spot the real deal? 

A genuine ethical fund will be upfront about what it invests in and what it avoids. If a fund says it's sustainable but still holds fossil fuel companies or weapons manufacturers, it’s worth asking some questions. The good ones are transparent, clear about their criteria, and usually happy to show exactly where your money is going. 

It’s also worth doing a bit of digging. Look for funds that publish their holdings and explain how they apply things like ESG principles. If they’re vague or hard to pin down, that’s a bit of a red flag. 

This is where chatting with a financial adviser can make a real difference, especially one who gets what’s important to you. They can help you sort through the noise, spot the genuine ethical options, and make sure your investments match both your values and your goals. 

At Lifetime, we believe good investing isn’t just about numbers on a screen. Our advisers are focused on helping you making smart, long-term decisions that are evidence based and built around what’s important to you. 

We start by asking, What’s important about money to you?  

Maybe it’s investing in a way that’s more sustainable or avoiding industries that don’t sit right with you. Whatever it is, we listen first, then shape a plan that reflects your values and your goals. 

There’s no one-size-fits-all solution, just clear advice, thoughtful planning, and a focus on helping you grow your wealth in a way that feels right. 

This article is for general information purposes only and does not constitute personalised financial advice. The content is based on information current at the time of writing and may be subject to change.