Ways that Kiwis can invest with a focus on climate
If you are looking for ways to invest your money in a sustainable and ethical manner, you might be interested in some of the best climate-focused investments available to New Zealanders. These are investments that aim to support the transition to a low-carbon economy, reduce greenhouse gas emissions, and promote renewable energy and clean technology. In this blog post, we will introduce you to some of the options you can consider, as well as the benefits and risks of climate-based investing.
One option is to join a KiwiSaver scheme that follows environmental, social and governance (ESG) principles. ESG funds are also known as socially responsible funds, and they use factors to evaluate companies and reduce their risks. ESG funds support investing in line with the broader interests of society, such as human rights, diversity, animal welfare, and environmental protection. For example, Pathfinder Investments is an asset management company that believes in investing ethically and only invests in high ESG (Environmental, Social and Governance) companies. They actively seek out high ESG companies and exclude companies engaged in industries or activities they believe to be harmful. They believe that high ESG companies are better for our planet and its people. They also tilt their portfolio towards positive investment themes such as renewable energy and community housing. They aim to grow your wealth via good investments in areas such as healthcare, water infrastructure and technology.
Another option is to invest directly in renewable energy projects or companies in New Zealand. Renewable energy is energy that comes from natural sources that are constantly replenished, such as wind, solar, hydro, geothermal and biomass. Renewable energy has many benefits, such as reducing greenhouse gas emissions, enhancing energy security, creating jobs and supporting local communities. New Zealand has a strong renewable energy sector, with about 85% of its electricity coming from renewable sources in 2020. There are also opportunities for further growth and innovation, as New Zealand aims to achieve 100% renewable electricity by 2035 and to transition to a carbon-neutral economy by 2050. To support these targets, the government has established a $400 million Green Investment Fund, a $27 million National New Energy Development Centre and a $70 million Clean Energy Centre. Some examples of renewable energy projects or companies that you can invest in are Meridian Energy, Contact Energy, Tilt Renewables, Infratil and NZ Windfarms.
However, climate-based investing also comes with some risks and challenges that you should be aware of. One risk is that climate-based investments may be subject to market volatility and regulatory uncertainty, as the transition to a low-carbon economy may affect the profitability and competitiveness of different sectors and industries. Another risk is that climate-based investments may not perform as well as conventional investments in terms of returns or diversification, especially in the short term. A challenge is that climate-based investing requires careful research and due diligence, as there may be a lack of clear standards or disclosures on how companies measure and report their environmental impact or performance. You may also need to consider your own values and preferences when choosing which climate-based investments to pursue.
In conclusion, climate-based investing is an option for New Zealanders who want to align their money with their values and contribute to a more sustainable future. There are various options available, such as joining an ESG KiwiSaver scheme or investing directly in renewable energy projects or companies. However, climate-based investing also involves some risks and challenges that require careful consideration and evaluation. Before making any investment decisions, you should consult a qualified financial adviser who can help you assess your goals, risk appetite and suitability for climate-based investing.
To discuss your options further please book in a time for a free no obligations discussion click here or call 029 4367432 and have a chat with George Bayley who has been closely involved in climate focused investment for the past 20 years.
