The NZ$18bn (€10.3bn) New Zealand Superannuation Fund has rejected media criticism over investments in the controversial Grasberg mine in West Papua, Indonesia.
The Guardians of the fund have responded to a feature article in New Zealand’s monthly Metro magazine entitled ‘Blood Money’ which was highly critical of the fund’s investments in mine operators Freeport McMoRan Copper & Gold and Rio Tinto plc.
The fund said it only has “very small, passive investments” in Freeport and Rio Tinto.
“Nevertheless, we have over the past five years repeatedly communicated our concerns about the social and environmental issues associated with the operation of Grasberg to company management,” said Guardians’ Chief Executive Adrian Orr.
Orr said the fund’s engagement and that of other investors and NGOs has improved the practices at the mine and their disclosure. He argued this would not have happened if the fund and others had simply divested.
“For us, walking away might be simpler and quicker than staying engaged, it might avoid critical coverage, but it changes nothing.”
He continued: “We fully integrate social and environmental principles within our investment processes and we act on those principles.“The fund stressed that it does not invest directly in the Grasberg facility, the largest gold mine in the world and where workers have been on strike since September.
NZ Super has passive investments of close to NZ$20m in the mining firms but only about NZ$1.3m in Freeport, the mine operator.
The Metro article contrasted NZ Super’s approach with the exclusion stance of the Norwegian Government Pension Fund, which has blacklisted Freeport and Rio Tinto since 2006 and 2008 respectively for environmental damage.
But NZ Super said it is not a useful comparison, due to different legal frameworks and investment mandates.
“Walking away might be simpler but it changes nothing”
NZ Super argues it engages with companies when it sees significant problems, disputing the article’s claim that it has no answer to the charge that the Grasberg mine fails its standards on human rights, corruption and environmental harm.
“This is a fundamental misunderstanding of engagement and of responsible investment generally,” it says. The article, it argues, mistakenly equates responsible investment to exclusion.