Dirty money: Why your KiwiSaver fund may not be as ethical as you think
What if, when it comes to weapons, it was the “responsible” thing for a KiwiSaver manager to buy shares in companies producing defensive weapons? A recent Mindful Money survey found 80% of New Zealanders don’t want their money in weapons.
But the moral landscape is shifting for some as the industrialisation and digitisation of warfare change the goalposts, with drones and anti-aircraft batteries protecting innocent Ukrainian civilians while chips meant for microwave ovens end up in Russian missiles.
Despite their members’ reluctance to support arms manufacture, KiwiSaver companies’ investments in weapons have surged by 40% in the past year.
Mindful Money’s annual stocktake of which pots of gold our KiwiSaver and other managed fund investments are chasing found total weapons investments by KiwiSaver companies reached $392.4 million for the year to March 2025.
In data released exclusively to the Listener, the responsible investment charity found that of a total $128 billion invested by 406 KiwiSaver funds, $11 billion is invested in activities that New Zealanders say they want their savings to avoid. Apart from weapons, these include human rights violations, environmental harm, animal cruelty, fossil fuels and social harms such as tobacco, gambling and pornography.
The charity’s founder, Barry Coates, says the chase for higher returns is behind the increase. In addition to direct investment in weapons companies, KiwiSaver providers are also increasing their holdings in non-weapons companies supporting operations in Gaza, such as bulldozer maker Caterpillar and Amphenol, which makes hi-tech connectors, sensors and antennas.
Our KiwiSaver funds’ exposure to weapons has increased mainly because defence and weapons stocks have done particularly well in the current geopolitical environment. There is money to be made selling to governments involved in Ukraine, Gaza and other wars. In short, money pours into stocks likely to surge in value, and that has happened with weapons in 2025. The same happened for fossil fuels when the Ukraine war broke out.
This creates tensions for many investors. Although it is tempting for fund managers to go for short-term financial returns, most Kiwis don’t want to invest in weapons, as Mindful Money’s 2025 survey of 1000 people in February confirmed. Many of them realise the companies that sell weapons to our friends also sell weapons to others who pass them on to our enemies. Ukraine has analysed Russian bombs and drones and found that the components come from weapons producers around the world.
The weapons investment surge isn’t limited to KiwiSaver funds. The trend is mirrored across New Zealand’s broader investment and fund management sector. Mindful Money uses the Companies Office Disclose Register to source data to match investments with its database of companies of concern.
Drawing the line
This country’s most ethical KiwiSaver and other fund managers aren’t going to start investing in weapons any time soon. But they’re willing to discuss it, something investors might find confronting. Some of the questions discussed at the Responsible Investment Association of Australasia’s annual conference in Auckland last month included: “Are they controversial weapons?” “Who are the end users?” “Do they have dual-use technologies?”