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Savings & Investment

Socially Responsible Investing Q&A

We'd welcome the opportunity to talk to you regarding your investments and retirement savings. If you would like to transfer your KiwiSaver to MAS or talk with a MAS adviser about the Medical Assurance Society KiwiSaver Plan or Retirement Savings Plan, simply fill out the SRI contact form and we will be in touch.

 

 

1. What is socially responsible investing (SRI) and what does this mean to MAS? 

SRI is a way of allowing investors to leverage the power of their investments for social good. It either applies the use of an exclusionary policy i.e. not investing in companies involved in certain industries, or through deliberate investment in companies aligned to positive social change.

Often SRI is linked to sustainable or ethical investment strategies. Many are now choosing to invest their money in ways where they can gain a good return but also make a positive impact.

SRI is a fast growing area with over US$8.72 trillion in total managed assets in the USA alone. *

MAS has excluded investment in sectors that are harmful to the environment or human health, so Members can invest with confidence, aligning their money with their values.

Our negative screening policy applies to all Member funds (KiwiSaver and RSP) and the MAS funds that support our obligations to pay Member’s life and general insurance claims.

For more information on SRI, we encourage you to visit Responsible Investment Association of Australasia

* Source: US SIF Foundation

2. What is your approach for screening investments? 

We use Sustainalytics to screen potential investments based on defined criteria. Sustainalytics is a global ESG specialist. They employ around 300 professionals and have received industry recognition for the quality of their research.

Screens cover level of business involvement, and standard analysis to ensure investment holdings are compliant. Screens are refreshed quarterly.

We expect most, if not all, securities to be covered under this methodology. Any securities not covered must be separately analysed and approved before being invested in.

Any underlying investment (e.g. Exchange Traded Funds) can only be considered approved from an ethical perspective if they pass the above screening.

Select 'underlying' managers will run their own exclusion processes. However these processes are similar to the MAS mandate, with at a minimum the same exclusions.

3. Is there going to be any impact on my fees? 

The portfolios’ annual fund charges have reduced from mid-September in the range of 0.02% to 0.25% depending on the portfolio. For example, we estimate the reduction to be around 0.02% p.a. for the Defensive Portfolio. As you move up the portfolio risk spectrum, the reductions are more significant. We estimate the charges to reduce by around 0.25% p.a. for the Global Equities Portfolio. This reduction is due to efficiencies in investment management that we have been able to make. The investment management fee MAS charges remains the same.

4. Do you expect returns to be impacted by this change?

There is an increasing pool of evidence that investing responsibly does not result in sacrificing investment returns. Research by Deutsche Bank (2012) found that responsible investment was shown to have a positive impact in 77% of studies, 22% showed no impact, while only 1% had a negative impact.

A 2015 report by the Morgan Stanley Institute for Sustainable Investing found that “investing in sustainability has usually met, and often exceeded, the performance of comparable traditional investments”.

The Forum for Sustainable and Responsible Investment lists several studies, including the Morgan Stanley report mentioned above, regarding the performance of socially responsible investments. 

5. How does MAS keep up to date with developments in SRI?

To help demonstrate our commitment to responsible investing, and to ensure we continue to enhance our understanding and keep abreast of global developments, MAS have become members of Principles for Responsible Investment (PRI) and Responsible Investment Association of Australasia (RIAA). The PRI was founded in 2006 and works in partnership with the United Nations. We are also certified by the RIAA as being true to our responsible investment undertakings.

6. Is divesting out of fossil fuels really going to make a difference?

Globally we need to reduce carbon emissions into a downward trend. By divesting from companies whose primary, majority or core function is the extraction or burning of fossil fuels, it is a great start. If you take that approach one step further, by investing in clean energy and energy efficient sectors, we can help drive the global transition to a low-carbon world. 

7. This is a great start but what's next?

Like our Members, we are concerned about the health and well-being of New Zealand and the planet, so it was important to start somewhere. Our first move has been to divest from companies that don’t fit our Socially Responsible Investment approach.

We understand the perception of what is socially responsible, sustainable, or ethical varies greatly from person to person, and over time. For this reason, our investment approach will be subject to review and change.

 

The Product Disclosure Statement for the Medical Assurance Society KiwiSaver Plan is available here. The Product Disclosure Statement for the Medical Assurance Society Retirement Savings Plan is available here. The Trustees of the Medical Assurance Society KiwiSaver Plan and the Medical Assurance Society Retirement Savings Plan are the issuer and manager of each of those Plans.