Sovereign Bond Investing and Human Rights: An Analysis of New Zealand’s Retail Investment Funds

Do kiwis invest
In nations with strong rights stands
For a brighter dawn?

Groundbreaking research draws attention to human rights dimension of sovereign bond investing

This paper finds that as of March 2024, more than half a billion dollars of KiwiSaver and other retail investments were lent to governments on ‘high alert’ for human rights violations. This is a chance for Aotearoa New Zealand to lead change.

This research helps people get more insight into what their money is supporting when they invest. Specifically, it reveals the details of Kiwisaver and other retail investments in government bonds. Until now this asset class has been largely ignored, despite significant attention being paid to the ethical dimension of other types of investments – especially shares in companies.

Better products mean a shared opportunity for investors and fund managers 

If investment funds applied consistent human rights due diligence across all asset classes, New Zealand investors and fund managers alike would benefit. Ethical investment products help build a more sustainable financial system. There’s real potential for new investment products that make it easier to focus sovereign bond investing in countries with strong human rights records. Fund managers could take pride in offering them, and investors could feel confident their money supports a fairer world.

Bank-run funds were leading the ‘high alert’ investments

Bank-run funds accounted for three-quarters of lending to high-alert countries despite managing a smaller share (two-thirds) of retail investments. 

Certification isn’t enough

Over two-thirds of the high alert investments came from funds certified by the Responsible Investment Association Australasia (RIAA), showing current standards don’t screen for sovereign bond investments linked to human rights violations.

Turning regulation into advantage

Aotearoa New Zealand’s strong financial disclosure rules already support transparency, which permitted this ground-breaking research. Expanding human rights due diligence across all investments would build on this strength and position Aotearoa New Zealand as a global leader in ethical finance.

Motu Research calls for action

We urge fund managers and industry bodies to lift standards, for index providers to create human rights–focused products, and for investors to demand more ethical options.

Citation

Anne-Marie Brook, K. Chad Clay, and Zoe Shepherd. 2025. "Sovereign Bond Investing and Human Rights: An Analysis of New Zealand’s Retail Investment Funds." Motu Working Paper 25-10. Motu Economic and Public Policy Research. Wellington, New Zealand.