More than $4 billion remains invested in companies and sectors deemed unethical, despite three quarters of New Zealanders assuming their KiwiSaver and other managed funds are being invested responsibly.
A study undertaken for charity Mindful Money and the Responsible Investment Association of Australasia (RIAA) surveyed 1000 New Zealanders on the topic of ethical investing.
RIAA chief executive Simon O'Connor said there was an assumption KiwiSaver money was being invested in firms consistent with people's morals, and stayed away from industries linked to human and labour rights violations, environmental degradation and fossil fuels.
However, this was not always the case, he said, and more consumers were keen to take action.
"What's really changed is there's a much greater willingness to switch investments... a huge majority of those not investing ethically, in fact 90 percent, are stating that they're intending to invest ethically in the next year.
"So we're seeing this really changing propensity to want to take action, so we see this as the cusp of huge consumer demand for responsible and ethical investment."
O'Connor said those tasked with investing funds should keep that in mind.
"There's a real risk now that we're investing in a way that doesn't avoid harm or isn't investing in a better future, and that New Zealanders will in fact move their money away from those investments to seek out better investments."
He said default KiwiSaver providers in particular should ensure their funds were ethical. The next round of default providers would have to exclude fossil fuel investments.
O'Connor also said more consumers would be looking to ethical funds because they would likely earn higher returns - 78 percent of those surveyed thought the same thing.
Those with an active interest in ethical investment were also more likely to save and invest more money than those who were not engaged.
However, a lack of independent information was the main barrier for New Zealanders wanting to move their investment to a more value-aligned company.
About half of respondents also said they did not have time to look and compare schemes, with 41 percent choosing their KiwiSaver provider because it was linked to their main bank.