Building Your Sustainable Legacy
The Ethical Advisers’ Co-op (EAC) recently released their 2023 Annual Report Building Your Sustainable Legacy. Money Matters was thrilled to contribute. We are the only Kiwi members of the Co-op, which advises 3,948 clients who collectively invest more than $2.91 billion.
EAC Chair Sarah Wood commented that, “The Co-op’s aim is to provide a collaborative network for financial advisers and investment professionals in Australia and New Zealand to exchange knowledge and skills, resulting in a stronger voice, empowered clients, and increased ethical investments in the financial sector.
“Co-op members work together to shape industry practices and policies, fostering the widespread adoption of ethical and responsible investments.”
The Annual Report details the positive impact that the Co-op creates through engagement with companies and fund managers, while also highlighting the Leaf Ratings developed by the Co-op.
Leaf Ratings provide an accessible source of information for the public, advisers and fund managers about how well Co-op members perceive ethical, sustainable and responsibly labelled funds live up to their promises.
The following comments in the report from EAC clients highlight the value of ethical investment advice:
“Our ethical adviser, with deep insight into our financial goals, expertly aligns our portfolio with financial and ESG targets. They offer advice that grows our portfolio, letting us sleep better, knowing we're investing in a better world for our children and grandchildren."
"Thanks to my ethical adviser, I've transformed into a calm, informed investor. My trust in their expertise, particularly impact investments, has been invaluable during my over a decade with them, allowing me to navigate changing financial landscapes while making a positive impact."
The need for more climate action from banks was discussed in the report and in my earlier blog. The report notes that a Co-op client emailed Westpac’s Chief Sustainability Officer, Siobhan Toohill, regarding their concerns around Westpac’s business practices and approach to human rights and environmental issues. Siobhan responded, taking the client’s concerns on board, and provided a range of information and resources such as their Climate Change Position Statement and Action Plan, their Reconciliation Action Plan and their Position Statements which guide their response to sustainability risks, issues and opportunities.
Co-op members directly congratulated and acknowledged The Commonwealth Bank of Australia (CBA) for a new climate policy that excludes financing new oil and gas projects. They also encouraged them to continue to lead the energy transition and strive to do better as their climate policy could still be improved.
The Co-op plays a key role in highlighting the need to raise the level of ethical investment activity. For example, the report notes that “several members completed a survey by Vanguard, providing feedback about poor screening on their ethically conscious funds, Vanguard’s lack of ESG voting, and lack of ESG engagement. EAC members highlighted competitors who do this and that Vanguard’s size and influence could be used for positive ESG outcomes”.
The report includes a discussion about Ethical Investment Week 2023, which I wrote about in an earlier blog. The report refers to our webinar Escaping the Matrix: Your Guide to Good, Returns and our podcast Leaders & Laggards with Jane Arnott.
The report also includes a section ‘In the Spotlight’ with the following about Money Matters:
Co-op members create positive change but it’s often intangible or difficult to quantify. That is not the case for the next adviser in the spotlight. Dr Rodger Spiller (Money Matters) was involved in several proposals to the NZX (New Zealand Stock Exchange) Corporate Governance Review and some of these have been accepted and reflected in the revised Code that took effect on 1 April 2023. Recommendations:
Principle 1 ‘Code of Ethical Behaviour’ needs to be included more effectively. Redefine Principle 1 from ‘Code of Ethical Behaviour’ to ‘Ethical Standards’.
A new Principle 9 ‘Stakeholder Interests’ to be included.
Companies should be required to define and report on a business purpose which aligns with the interests of wider society.
While not all recommendations were accepted, this is an exciting example of engagement with real-world outcomes.
You can read more about Dr Spiller’s impactful contribution to the NZX Review here.
At Money Matters, we are proud to be making a difference with and for our clients. We continue to do the hard work necessary to raise awareness and improve rigour and reporting with regards to ethical investing. Our membership in the Ethical Advisors’ Co-op provides added reassurance for our clients as well as a platform to drive improvement in the industry.
To read the full 2023 EAC Annual Report, click here.
