New Zealand Green Party continues attacks on ethical policy of NZ$19.2bn sovereign Super Fund

Fund accused of potential breach of government cluster bomb treaty commitment.

New Zealand’s Green Party has continued its attack on the ethical investment policy of the NZ$19.2bn (€11.2bn) New Zealand Superannuation Fund, by accusing it of investing in companies assisting in the manufacture of cluster bombs. It said the investments could contravene the country’s commitments to an international treaty to curb cluster bomb production. The Green Party said answers to parliamentary questions revealed that the fund invests NZ$2.5m in five related companies. It said the companies are: GenCorp, Kaman, Saab AB, Tata Power, and Zodiac Aerospace. New Zealand adopted the Cluster Munitions Convention in 2008 making a commitment to “never under any circumstances assist or encourage” the industry. Green Party Co-leader Dr Russel Norman, said: “I think the average New Zealander would be shocked to know their retirement savings are being invested in cluster bombs. We are growing increasingly concerned that the Superannuation Fund is repeatedly breaching its own guidelines on ethical investment. Their repeated oversights risk serious damage to our reputation as a responsible member of the world community.” The Green Party said the Superannuation Fund also invests more than $93m in companies other sovereign funds such as the Norwegian Government Pension Fund had blacklisted.The party has produced a list of companies it says the fund should examine: “The Super Fund has invested $9.3m in companies involved in the production of nuclear weapons, $29.7m in companies cited for severe environmental destruction, $17.5m in companies committing human rights violations, and $2.7m in a company that supplies weapons to the Burmese Government. Earlier this month, the fund faced questions in New Zealand’s Parliament over its stake in tobacco producer Shanghai International Holdings Ltd. (SIHL), the Hong Kong-listed conglomerate. Bill English, New Zealand Finance Minister, in a written answer to a question from the Green Party, disclosed that the fund holds 80,000 shares worth some NZ$333,000 in SIHL, whose subsidiary Nanyang Brothers Tobacco Co. Ltd. is the largest tobacco manufacturer in Hong Kong. The fund – which has had a tobacco exclusion policy since 2007 – explained that it had categorised SIHL as an industrial conglomerate and thus it was not captured in its exclusion screening process. The fund says it is sending a revised company screening list to its asset managers and that shares in SIHL will be sold. Norway’s Government Pension Fund excluded SIHL in March this year. New Zealand Super, a founding signatory of the United Nations Principles for Responsible Investment

(UNPRI), is widely regarded as one of the most active responsible investors in the world and is rated by the UNPRI as among their top-performing signatories. In a response to the Green Party, the fund said its approach was to lobby problem companies rather than exclude: “We have engaged with 710 companies globally in the past two financial years alone on issues including bribery and corruption, environmental damage and human rights.” It said the majority of the companies identified by the Green Party were held passively and that the combined value of the holdings was a small fraction of one percent of the fund. It said some of the companies identified by the Greens, including Larsen & Toubro, Serco Group and Boeing Company did not meet its public exclusion criteria, because they do not produce or test nuclear explosive devices.The Green Party says Larsen & Toubro, the Indian multinational, is manufacturing a fleet of nuclear armed submarines for the Indian Government.
The Super Fund said it was aware of actual or reported breaches of its ESG standards by the remainder of the list including bribery and corruption, severe environmental damage, human rights and the reported manufacture of cluster munitions. It said its approach involved either engaging on actual breaches, monitoring for reported breaches, or research into potential breaches: “We do not name the companies because we are focussed on addressing and changing behaviour. Confidentiality is often desirable for that process, the outcomes of which are either improved behaviour or divestment.”List of companies cited by the New Zealand Green Party

Security Value in NZD at 15 August 2011
1. Larsen & Toubro 1,801,956
2. Serco Group plc 184,123
Boeing Company 1,864,087
4. Tata Power Limited 442,927
5. Safran SA 522,532
6. Finmeccanica S P A 261,745
7. BAE Systems plc 1,746,118
8. GenCorp Incorporated 126,037
9. ITT Corporation 1,950,315
10.Jacobs Engineering Group Incorporated 133,322
11.MOOG Incorporated 118,450
12.Rockwell Collins 626,920
13.Kaman Corporation 35,587
14.Zodiac Aerospace 216,971
15.Saab AB 1,649,543
16.Dongfeng Motor Group Company Limited 2,731,695
17.Wal-Mart Stores In 12,060,374
18.Wal-Mart de Mexico SA de CV 3,275,070
19.Norilsk Nickel 6,978,242
20.Barrick Gold Corporation 4,300,878
21.Rio Tinto Plc 4,360,793
22.Rio Tinto Limited 8,632,309
23.Sterlite Industries India Limited 732,081
24.Vedanta Resources Plc 68,154
25.Freeport McMoRan Copper & Gold Incorporated 5,450,746
26.Elbit Systems Limited 1,035,334
27.Sesa Goa 330,226