At Booster, we are an industry leader in offering socially responsible investing options to KiwiSaver investors. Not only do we consider environmental, social and governance (ESG) factors within our investment decisions, we also offer socially responsible funds that go further and exclude investments in a range of controversial areas*.
Recently, we talked to our members to find out if our current exclusions were still relevant, and if there were additional exclusions we should look to add to our list.
Based on that feedback, we’re excited to announce we’ve added six new exclusions to our socially responsible funds – taking the total number of exclusions up to 15.
Companies that derive more than 5% of revenue from the manufacture of non-medical products that are tested on animals.
Intensive animal farming (factory farming)
Companies that derive more than 5% of revenue from the operation of factory farms (those which operate with close confinement and/or intensive systems for livestock).
Companies that derive more than 10% of revenue from the export of live animals for slaughter, husbandry and breeding systems, including specialised transportation services specifically designed to facilitate live exports.
Companies that derive more than 5% of revenue from the production of palm oil and/or ownership of plantations.
Companies in the food/beverage and household/personal product industries that are users of palm oil in their supply chain and have less than 90% of their palm oil sourced certified by the Roundtable of Sustainable Palm Oil (RSPO). A known user of palm oil that does not disclose as per RSPO standard will also be excluded.
Companies deriving 5% or more revenue from the production of recreational cannabis.
Companies deriving 15% or more aggregate revenue from the production, distribution, retail, and supply of recreational cannabis.
Companies that are involved in the processing of whale meat.
The new exclusions give our socially responsible funds more depth and address some of the evolving values many investors wish to apply when looking to invest ethically.
For instance, animal testing has grown as a concern amongst Kiwi investors. It sits alongside two further animal welfare issues: intensive animal farming and livestock exports.
The details of the new palm oil exclusion addresses some of the feedback raised by members we talked to at a focus group, who were more concerned about companies that owned or produced palm oil over companies that use palm oil in their supply chain – given how prevalent the use of this product is in consumer products. Their preference was that we engage with companies that use palm oil and use our influence as investors to encourage them to find more sustainable alternatives.
Therefore, our palm oil exclusion is specifically aimed at the companies that generate more than 5% of their revenue from the production of palm oil and/or the ownership of plantations. We will also exclude companies in the food/beverage and household/personal product industries that use palm oil in their supply chain and have less than 90% of their palm oil certified by the Roundtable of Sustainable Palm Oil (RSPO).
We took a similar approach with our new exclusion of recreational cannabis. Across both the focus group and survey responses, there was a meaningful portion of members who would prefer companies involved in recreational cannabis to be excluded from our SRI funds.
Based on member feedback, we’ve also reviewed one of our current exclusions to better reflect current social views and concerns.
The SRI focus group showed a clear preference for excluding investments in companies that target vulnerable segments and/or market alcohol irresponsibly, rather than excluding all companies involved in alcohol production and retailing.
The practicalities of differentiating between the two can be difficult, so while our starting point will continue to be excluding alcohol companies*, the feedback from members helps us to understand and focus on the main issues of concern.
We also asked members if our current nuclear power and GMO exclusions were still relevant and if we needed to review them.
A significant majority of the survey responses were in favour of us continuing to exclude nuclear power companies*. Opinion was more divided on the GMO exclusion, so we decided to keep the current exclusion as is with no changes.
Choosing to invest in a way that aligns with their values is a growing area of interest for many investors.
And, we believe that investing ethically doesn’t have to be at the expense of investment returns. In fact, our SRI funds have performed as well as – if not better – than our non-SRI funds. Across the industry, our SRI Balanced and SRI High Growth funds have ranked in the top 3 funds in their respective risk categories for 3 year returns to 30 June 2021. We anticipate that the addition of our six new exclusions will not have any material impact on the long-term returns or volatility of our SRI funds.
Continuing to develop our socially responsible investment options ensures we can offer choice for investors who wish to save for their future ethically – along with having certainty over how their money is invested.
*We exclude investments in directly held companies, directly held investments, and managed fund investments that generate more than an incidental proportion of revenue from controversial industries or sectors. See our Approach to Responsible Investing policy for more details.