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Guidance Note
Responsible Investment Disclosure by KiwiSaver Scheme Providers
5.
How detailed should the disclosure be?
5.1
The overriding principle for disclosure of information about investments is that the disclosure must not be likely to mislead, deceive, or confuse investors. Issuers should also keep in mind that the investment statement's purpose is to provide key information to assist a prudent but non-expert investor. Information about a scheme's responsible investment approach should be clear, concise, and written in plain English. The principles below apply to disclosure generally, and may help scheme providers explain about their approach to responsible investing:
Stick to the facts
5.2
The explanation about a scheme's approach to responsible investing must tell investors what the scheme actually does when it takes responsible investment into account, and how it does this. The information can include subjective elements, such as specific environmental, social, and governance issues that are important to the scheme provider or that the provider believes may be important to investors in the scheme. However, the explanation must include the facts as well as any statements of opinion or ideals.
More marketing means more disclosure
5.3
A scheme which expressly markets itself to investors who are seeking environmentally or socially responsible or ethical investment choices will be expected to provide more detail to back up claims about responsible investment made in its offer documents or marketing material. This will include schemes that brand themselves as "ethical" or "socially responsible".
Avoid jargon
5.4
There is a lot of jargon, established and developing, about responsible investment and the various methods and approaches that can be taken to responsible investment. Issuers should explain their approach to responsible investment in plain language. They should avoid jargon or, if jargon must be used, explain what it means. A document full of industry jargon may look impressive, but is unlikely to give an adequate explanation for non-expert readers.
Explain all policies and approaches used
5.5
Disclosure must go beyond rhetoric, and explain the scheme's approach to ESG factors in sufficient detail to be helpful to readers. For instance, a scheme which claims to invest in entities that adopt sustainable practices and good governance should explain how it defines these things and how it determines whether an entity has them. Specific criteria or measures used to assess investments in terms of responsible investment should be described.
5.6
Disclosures must not be misleading, particularly when abstract or subjective terms such as balanced, sustainable, ethical, green etc. are used.
Consider referring to secondary sources
5.7
Scheme providers that take ESG considerations into account can help investors by providing links or references to other material about responsible investment that may give more detail relevant to the scheme's approach to responsible investing. For example, if the scheme uses an external accreditation service, it should provide a reference to allow investors to learn more about the accreditation agency and its services, methods, expertise, and experience.
Note
The Securities Commission cannot give rulings on the interpretation of the law or provide legal advice. Accordingly this is for guidance only. It signals the approach the Commission intends to take to the law. The Commission may publish further guidance notes over time. However, the Commission is not bound by this or any other guidance note
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