Ethical and socially responsible investing (SRI) has become one of the fastest-growing areas of KiwiSaver in New Zealand. Many providers now offer some form of ethical screening or ESG (Environmental, Social, and Governance) consideration — but the depth and rigour varies enormously.
Here’s what you need to know before choosing an ethical KiwiSaver fund.
What Does “Ethical” Mean in KiwiSaver?
“Ethical” is not a regulated term in NZ KiwiSaver. Providers use it loosely — some exclude only the most obvious harmful sectors, others apply rigorous positive and negative screens across their entire portfolio.
Common screening approaches:
| Approach | Description |
|---|---|
| Negative screening | Excludes specific industries (weapons, tobacco, gambling, fossil fuels) |
| Positive screening | Actively selects companies with strong ESG practices |
| ESG integration | Considers ESG factors as part of investment analysis (not purely exclusion-based) |
| Impact investing | Directs capital toward measurable positive outcomes |
| Best-in-class | Invests in the top ESG performers within each sector, including some fossil fuel companies |
The difference matters: a fund that excludes only cluster bombs while still holding oil majors is very different from one that screens out all fossil fuel producers, weapons manufacturers, and companies with poor labour practices.
Key Ethical KiwiSaver Providers in NZ
Pathfinder KiwiSaver
One of NZ’s most rigorous ethical KiwiSaver providers. Pathfinder applies extensive negative and positive screens, with full transparency on what’s excluded and why. Sectors excluded include weapons, tobacco, gambling, fossil fuel extraction, and companies with material ESG controversies.
Fees: Growth fund approximately 1.25%–1.35% — higher than passive providers but reflective of active ethical management.
Simplicity
Simplicity excludes certain harmful sectors (cluster munitions, tobacco) from its index funds. Its ethical screening is less comprehensive than Pathfinder but more transparent than most bank providers, and its 0.31% fee makes it the lowest-cost option with any ethical overlay.
Booster
Booster offers a dedicated Socially Responsible fund range with sector exclusions including weapons, tobacco, gambling, fossil fuels, and nuclear power. Reasonable fees and a broad fund range.
Generate
Generate’s growth fund applies ESG consideration as part of its active management process, though it is primarily an active performance-focused manager rather than a dedicated ethical fund.
BNZ
BNZ’s KiwiSaver funds exclude a list of specific industries including cluster munitions, anti-personnel mines, biological and chemical weapons, tobacco manufacturing, and gambling. The exclusions are relatively standard — not as deep as Pathfinder.
Summer KiwiSaver (formerly Kiwibank/Kiwi Wealth)
Summer applies exclusions around weapons, tobacco, gambling, and significant fossil fuel extraction. Their ethical commitment is embedded in their investment philosophy.
Koura
Koura offers customisable KiwiSaver portfolios with ethical overlay options — allowing members to tilt their portfolio toward or away from specific sectors.
Performance of Ethical Funds
A concern often raised about ethical investing is that excluding certain sectors (fossil fuels, weapons) limits diversification and therefore returns. The evidence in NZ:
- Over 3–5 year periods, NZ ethical KiwiSaver growth funds have broadly matched or slightly underperformed conventional growth funds — though results vary by provider and period
- The exclusion of fossil fuel companies was actually a return positive during 2020–2023 as energy stocks underperformed
- Higher fees on ethical funds (1.2%–1.35% vs 0.31% for passive) do create a drag that is difficult to overcome
The honest position: You may sacrifice some long-run return by choosing a high-fee ethical fund vs a low-fee passive fund. The extent of that sacrifice depends on the fee gap and the specific ethical screens applied. Some investors view this as an acceptable cost; others prioritise returns.
Greenwashing: What to Watch For
Not all “ethical” KiwiSaver funds are equally rigorous. Red flags:
- Vague language — “we consider ESG factors” without specifying exclusions or screens
- Best-in-class within fossil fuels — still holding oil companies that score highest on ESG metrics
- No public exclusions list — ethical providers publish exactly what they exclude and why
- Light screening only — excluding cluster munitions (already banned under NZ law) while holding tobacco, gambling, or fossil fuels
Questions to ask your provider:
- What industries or activities do you exclude?
- Do you publish a list of excluded companies?
- Do you engage with companies on ESG issues, or just exclude?
- How are ESG screens applied — negative screening, positive screening, or both?
Ethical Funds vs Low-Cost Passive Funds
For members who want ethical investing at low cost, the options are limited:
| Provider | Ethical? | Fee (growth) | Notes |
|---|---|---|---|
| Pathfinder | Comprehensive | ~1.30% | Most rigorous screens in NZ |
| Simplicity | Light exclusions | 0.31% | Lowest cost with any ethical overlay |
| Booster SR | Moderate | ~0.85% | Dedicated SRI range |
| BNZ | Light exclusions | ~0.55% | Bank convenience, standard screens |
There is currently no NZ KiwiSaver provider offering both comprehensive ethical screening and a low-fee passive structure. Simplicity comes closest on cost, with light exclusions. Pathfinder is the rigour leader but at a higher fee.
See the ethical KiwiSaver providers compared article for a detailed side-by-side.
Frequently Asked Questions
Does ethical KiwiSaver perform worse than conventional funds? Over long periods, the evidence is mixed. Higher fees on dedicated ethical funds are a consistent drag. The exclusion of fossil fuels has varied in impact depending on the period. Members who choose ethical funds typically accept a potential small return sacrifice in exchange for alignment with their values.
Are all KiwiSaver providers required to disclose their ethical policies? Providers must disclose their investment policies and objectives in their Product Disclosure Statement (PDS). However, “ethical” is not a regulated label — providers self-define it. The FMA requires accurate disclosure but doesn’t certify funds as ethical.
Can I get an ethical KiwiSaver fund and still capture the employer match? Yes — ethical funds are just a fund type within KiwiSaver. The employer match and MTC apply regardless of which provider or fund type you choose.
What’s the difference between ESG and ethical investing? ESG (Environmental, Social, Governance) is a framework for evaluating companies based on non-financial factors. Ethical investing often incorporates ESG analysis but goes further — using it to exclude or include companies based on value judgements. A company can score well on ESG metrics while still operating in sectors some investors consider unethical (e.g. a “clean” mining company).