NZ fund managers may be given a right-of-reply to ‘ethical’ judgments promulgated on the Mindful Money website following a fiery meeting last week between the business founder and an industry body.
In a joint statement, Boutique Investment Group (BIG) chair, Simon Haines, and Mindful Money founder, Barry Coates, said the two parties had agreed to “identify useful steps to bring us all closer together” on often widely different interpretations of environmental, social and governance (ESG) practices.
Given the “lack of a common vocabulary” on ESG there is “plenty of room for different actors with different perspectives to misunderstand each other”, the release says.
Mindful Money ranks many NZ funds according to its own ‘issues of concern’ ESG criteria while also recommending certain products to investors based on individual preferences (collecting a commission for sales generated through the site).
However, fund managers have often privately expressed frustration with the process, prompting a proposal emerging out of the BIG-Mindful Money talks to enable direct input from investment providers.
“The suggestion is that the fund manager would be able to explain their position on the Mindful Money website. From this kind of dialogue, customers would then be able to understand why there are differences between Mindful Money and the fund manager, and that this is not because either side is attempting to mislead,” the joint statement says. “This concept is subject to being workable from a technical perspective and so is likely to be a few months away.”
Furthermore, the product-ranking site, which tends to focus on securities exclusions as a measure of ethicalness, will also consider how to give more weight to fund manager ESG practices such as engagement, stewardship and investment in companies driving “positive benefits”.
“Longer term, we are also thinking about whether we can move toward more commonality in our use of language,” the joint communiqué says. “It may be helpful to advance this outside of regulatory processes in order to provide the terminology that is both relevant to investment practices and understood in the wider world.”
BIG is a forum of mainly compliance and legal experts representing forum the majority of non-bank fund managers in NZ.