Investor’s approach to assuring ethical and sustainable work practices

Investors need to know and understand about responsible investments, and the impact their investment decisions can have on ethical and sustainable work practices.

Investors can play a key role in the delivery of fair treatment of workers by taking positive actions to make sure their investment strategies value and consider ethical and sustainable work practices.

Demand and support for ethical and sustainable work practices, including fair treatment of workers, is increasing. Unfair treatment of workers can negatively impact on a company’s profitability and long-term sustainability by:

  • damaging brand reputation, goodwill, and loyalty
  • affecting the ability to retain or attract quality staff
  • affecting the productivity and wellbeing of workers
  • threatening the viability of a business. 

What are ethical and sustainable work practices?

Read more about what we mean by ethical and sustainable work practices: 

What are ethical and sustainable work practices

Your role as an investor

As an investor, or an agent for an investor, such as a financial advisor, you can make sure that the companies you are investing in have ethical and sustainable approaches in relation to the fair treatment of their workers. Such approaches are both socially conscious and contribute to the long-term sustainability of these companies and their workforce. This concern should extend beyond the company itself to include the supply chains that supply its goods or the franchisees that provide its services.

On the other hand, companies that do not treat workers in a fair, ethical and sustainable manner present significant risks to your investments. These risks raise questions about these companies’ viability as an investment and the harm that they can cause to the people they employ, the sectors that they operate in, and the reputation of New Zealand as a country.

The GNDI Global Director Survey Report 2018 found that:

“Ethical behaviour, health and safety, and employee engagement were the three most relevant environmental and social issues, and risks for directors. Unethical behaviour ultimately damages organisations and their personnel. Lost customers, employees and sales, and the loss of a hard-won good reputation can take years to rebuild. Some organisations may never recover. Conversely, running a company with consistent integrity and high ethical values is simply good business.” 

GNDI Global Director Survey Report 2018 – Institute of Directors New Zealand (external link)

Actions you can take as an investor

To make sure your investments (new or existing) are with companies that treat workers fairly, both directly and through their business networks and supply chains, you can start by making enquiries of the business, including checking their annual report and their website for details of the following. 

Question: Do they have a code of conduct or policy outlining their position on human and labour rights (including compliance with employment standards)?

Ideal response: Details of the code or policy implementation should be provided, along with the most recent example of the document. Read about what could be included in a code of conduct policy:

Creating and communicating a code of conduct

Question: Do they regularly report on the social area of sustainability including fair treatment of workers? Does it include a commitment to report any situations where they, or their supply chain, have been found to be in breach of employment standards? 

Ideal response: Details of the report and monitoring arrangements – what areas it covers, how often it is done, and the most recent copy should be sought.

This could be provided in the form of a separate Corporate Social Responsibility (CSR) or sustainability report, or a section in their annual report.

Question: Do they have a supply chain map (may be in their sustainability reporting) that shows where they see the greatest risk of poor treatment of workers and a mitigation approach?

Supply chain mapping

Ideal response: Information identified through a map of the supply chain or a risk table. Read about some examples of risk factors to consider:

Risk factors to manage [PDF, 225 KB]

Question: Do they have ways to obtain an 'employee voice' and/or offer a whistleblowing service that encourages workers, customers and suppliers to speak up if they see unethical or illegal behaviour that violates the company’s ethical code of conduct or human and labour rights expectations?

Ideal response: Details of how workers, suppliers and customers throughout the supply chain can provide feedback or report issues about their treatment. If issues have been identified then there must be a process for remediation.

Question: Do they hold a certification/accreditation that has robust employment rights criteria and is externally audited, and do they require their suppliers to hold one? 

Ideal response: Details of their policy and of the accreditation/certification should be provided which show who it applies to and that it:

  1. ensures employment rights criteria goes beyond simply requiring employers to comply with employment law as a term of contract
  2. requires due diligence over the supply chain and/or require suppliers/subcontractors to be accredited
  3. provides for third party auditing, including confidential employee interviews.

Investors who are company directors may also be interested in the resources on our page for directors.

Director’s approach to assuring ethical and sustainable work practices

Responsible investment

Responsible (or ethical) investment is a term used to describe how to choose where to invest taking into account not only the financial performance of a company, but also considering their ESG performance ‘Environmental (planet), Social (people), and Governance (prosperity)’  in investment decisions. This approach aims to combine better risk management with improved portfolio returns, and to reflect investor and beneficiary values in an investment strategy.

UN Principles for Responsible Investment

The United Nations launched its Principles for Responsible Investment (PRI) in 2006. These voluntary and aspirational principles were developed by investors, for investors. They offer ways to incorporate ESG considerations when deciding where to invest.

Find out more, including possible actions you can take:

UN Principles for Responsible Investment (external link)

Responsible Investment Survey

In 2020, the Responsible Investment Association Australasia (RIAA) and Mindful Money commissioned a survey about responsible investment and found that more than three-quarters of New Zealanders with KiwiSaver or other investments believe that ethical or responsible investments are more profitable in the long term. The study also showed that:

  • New Zealanders want to avoid investing in companies that do not reflect their values.
  • Human rights violations and labour rights abuses top their list of concerns, followed closely by harm to the environment.
  • There is strong growth in the demand for socially responsible investments.
  • Of those New Zealanders who do not consider that they invest ethically or responsibly at present, most intend to do so in the next year.

Responsible Investment: New Zealand Survey 2020 – Mindful Money (external link)

Responsible Investment Association Australasia (external link)

Choosing KiwiSaver and investment funds that respect workers

There are a growing number of KiwiSaver and investment funds that have policies to respect human rights in supply chains and ensure high standards of practice in the companies they invest in. They monitor their company investments for any evidence of modern slavery, and take action to divest or engage with the company where there are violations.

You can take action when choosing your KiwiSaver investment partner or other investment funds, and not invest in funds that have weak or non-existent social and ethical investment policies. Choose funds that can make a positive contribution to fair work and human rights protection.

More information on ethical investment


Sorted has a series of saving and investing guides.

Saving and investing – Sorted (external link)

Mindful Money

Mindful Money is a free service that shows human rights issues in Kiwisaver and investment funds, and has a fund finder to identify funds with high ethical standards. They also have the following resources.

What is responsible investment? – Mindful Money (external link)

Does ethical investment earn good financial returns? – Mindful Money (external link)

Responsible Investment Association of Australasia

The Responsible Investment Association of Australasia (RIAA) is an industry member association that certifies responsible investment funds, and supports its members on ESG issues.

Responsible Investment Association of Australasia (external link)

Ethical investing

The Financial Market Authority (FMA) has information on what to look at when considering ethical investments.

Ethical investing – Financial Market Authority (external link)

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Page last revised: 17 November 2021

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