Blog 1: Money Advice that Meets you Where you are

The FMA supports New Zealand’s transition to an integrated financial system – one that looks beyond financial returns to also consider non-financial factors. *

An integrated financial system will require organisations to take account of their impacts on the environment, communities, and individuals, alongside traditional financial considerations. And also how these factors impact their organisation, including its financial performance.

There is growing demand for organisations to identify their natural, social and human capital risks and opportunities, and to disclose how these will affect their financial performance. This is the concept behind the widely recognised Environmental, Social and Governance (ESG), and Climate Related Financial Disclosures (CRFD) frameworks.

At the same time, demand for integrated investment products is rising, with heightened interest in products that either exclude investments associated with negative impacts, or fund those associated with positive impacts. These typically take one of two forms: securities such as ‘green bonds’ which often fund specific projects, or ethical or responsible managed funds, including some KiwiSaver schemes.

• As demand for integrated financial products grows, we want to ensure that investors can be confident these products deliver what they promise, and that investors are protected from poor product design and misleading promotion such as ‘greenwashing’.

The FMA’s use of the term ‘integrated financial system’ reflects that other related terms do not have a commonly shared meaning and are not as widely inclusive. This includes the terms ‘ethical’, ‘responsible’, ‘sustainable’, ‘green’, ‘impact’, and ‘ESG’.

The Treasury’s Living Standards Framework describes these non-financial factors as natural, social, and human capitals (in addition to traditional financial and physical capital).