New tool ranks state savings plans for children on environmental, social impact

An online dashboard was launched Thursday to help parents paying into the state’s  Savings Plan for Every Child to assess the environmental and social impact of the various state-approved funds.

The National Insurance Institute operates the plan for every child eligible for a child allowance from birth until they reach age 18, with the aim of enabling young citizens to begin their adult lives with money.

The institute deposits NIS 57 (just under $16) per month into each child’s savings plan. Parents choose from a list of banks or provident funds and can add an additional NIS 57.

ENVA, a start-up company aimed at improving society and environmental protection, analyzes investments in fossil fuels, deforestation, polluting industries, gambling, pornography, tobacco and the sale of weapons for personal use (in the US only). It is partnering with the first of what it hopes will be many firms of professional financial advisers.

ENVA found that out of a total of NIS 23 billion ($6.3 billion) invested in the Savings Plan for Every Child during the third quarter of last year (fourth quarter data will only be available next month), NIS 1.1 billion (over $300 million) was spent on fossil fuel companies. Some NIS 144 million ($40 million) was channeled to the country’s 20 most polluting companies, as identified by the Environmental Protection Ministry.

ENVA’s digital platform (only available in Hebrew) illustrates the negative impact of various funds by giving scores of up to five. It also provides financial information on the fund’s past performance at different levels of risk.

The company’s analysis found that negative-impact investment and good financial returns were not necessarily connected.

For example, the two savings funds that achieved the highest returns on high-risk investments during Q3 last year were the Mor company’s fund, at 29.07 percent, and Analyst’s fund, at 25.96%. They made these profits despite investing only 6.2% and 5.3%, respectively, in companies that negatively impacted society and the environment.

By contrast, the two funds with the lowest returns on high-risk investments, Infinity and Altshuler Shaham (with returns of 23.2% and 23.71%, respectively), took bottom places in ENVA’s ranking because both invested around 10% of their assets in companies with damaging environmental or social consequences.

ENVA CEO Oren Kaplun said the platform aimed to help parents make informed decisions. When funds performed well and invested relatively little in companies with negative impacts, it was a win-win.

He went on, “With just a few clicks on the computer, you can switch from a track that invests thousands of shekels of your children’s savings in polluting companies to one that invests much less in those same companies without giving up on the (financial) return.”

When the child turns 18 — the age he or she can withdraw the cash, with parental approval, the state deposits a NIS 568 ($156) grant into the account. If the recipient leaves the money in the fund until age 21, the institute deposits another NIS 568. (The arrangement has changed slightly for those born after January 1, 2017).

It is possible to move between provident funds or change the investment track at any time. It is not possible to move between banks, but a parent can close a savings scheme in a bank and open one in a provident fund at any time.

The National Insurance Institute pays the scheme’s management fees until the recipient reaches the age of 21.

ENVA also provides free advice on the environmental and social impact of investments in regular pensions, provident funds, training funds (Keren Hishtalmut in Hebrew), and insurance schemes.