Offshore oil and gas exploration will not meet Masterton District Council’s ethical investment push. PHOTO/GETTY IMAGES
A Masterton District Council committee was yesterday to decide whether or not to give banks a hurry-up on ethical investing.
Last year the audit and risk committee asked officers to look at what the council can do to influence the financial institutions it does business with to not invest in or lend money to fossil fuel-based industries.
A review of council investment policy was also ordered.
Being influencers on ethical investors is something all councils are considering and last year a vote at the Local Government New Zealand conference was narrowly lost on it.
Officers at MDC have come back with a report which says most of the council’s $18 million of investments is kept with the major banks and Wairarapa Building Society in deposits, term deposits, notes, and ANZ bond funds.
“It is difficult to determine the level of influence that an individual customer can have on a bank’s ethical investment behaviours, particularly given the fact that the majority of banks are owned by an Australian parent, meaning that there is an additional level of separation between the customer and the drivers of policy decisions,” the report says.
Committee members will consider whether the council should write to the major trading banks, asking them to transition away from investments in fossil fuel industries and put them on lists of excluded investments.
The report says the letters should be from the mayor and endorsed by the council to give them sufficient weight.
Officers say the council has no ability to dictate to institutions who they have as clients.
Nor can it influence what a bank does with money in a term deposit.
The advice to councillors was that the council seeks to have term deposits with a range of financial institutions based on the best available market rate.
The report says ANZ names a specific list of companies they will not deal with in investment and lending decisions.
Kiwibank is the only bank that lists a fossil-fuel based industry, thermal coal, as a no-go for direct investment. Other industries Kiwibank won’t directly invest in include defence and firearms, gambling services, nuclear power and palm oil.
It does not invest in companies involved in unethical behaviours, such as abuse of the environment, human rights abuses and endemic illegal activities.
Tobacco, controversial and nuclear weapons, and whaling and whale meat processing are also a no-go areas for both direct and indirect investment.
ASB excludes investments if a majority of its customers, when surveyed, don’t like it.
The committee will consider a resolution to note the responsible investment policies of the main banks the council uses.
It will endorse the council’s investment policy with respect to primary investments and a review later this year will refine what ethical and unethical investing principles are.
The issues comes as two major banks reported profits this week.
Westpac NZ lifted its first-half net profit 15 per cent to $509m but its Australian parent reported a 24 per cent drop in profit for the six months ended March.
BNZ reported $550m net profit for the six months ended March, up from $490m in the same six months a year earlier