Speaking at the Responsible Investment Association Australasia (RIAA) Conference in Auckland yesterday, Simplicity’s Sam Stubbs said investors should make more of an effort to put the strategy at the centre of their business: “Investment firms that have ethical and normal portfolios are really saying what matters more is getting clients’ revenue, rather than the fundamental ethics of their business. You either are thinking that way, or you are being hypocritical.”

Stubbs said fund managers could be failing their fiduciary duty to clients by not following a responsible investment strategy. He said thousands of “compelling” studies proved responsible investing delivered better returns. “The question is not why would you invest in this way, but why wouldn’t you? And are you failing your fiduciary duty to clients to make them more money, by not doing it? It is not a “nice to have” anymore, this is an absolute necessity if you are going to do your job as a fund manager.”

In a later session, Booster's David Beattie defended asset managers offering ethical and "normal" strategies, saying the extent of responsible investing was down to clients. 

Stubbs took part in a panel discussion on climate change at yesterday’s conference. He said climate change was one of several issues for fund managers to consider, rather than the most important. A study from RIAA and responsible investing platform Mindful Money this week revealed Kiwis considered animal welfare their biggest ESG concern. Stubbs added: “Is climate change more important than animal welfare? Is it more important than other issues that matter to our investors? I think the conversation for New Zealand fund managers has been very easy. We all ran off and excluded arms and tobacco easily. Now we have a whole raft of exclusions to talk about.”

The growing number of exclusions demanded by ESG-conscious clients could create tension between investors and banks that lend to “excluded” sectors, Stubbs added: “We are getting to the sharp end of the stick in New Zealand. We have to make domestic decisions that could see us piss off clients of other divisions of the businesses we work for.”

In the panel on climate change, Slade Robertson, managing director at Devon Funds Management, said domestic fund managers had become more active on climate change, helped by global initiatives led by investment giants such as CalPERS, the Californian pension fund. He said managers could “collaborate” to hold companies to account on climate change matters. He added: “We are moving in the right direction. As investors, we now know how to target our efforts as shareholders. We have a much better ability to gather data. There has been a level of collaboration between asset owners and managers.”