The NZ Superannuation Fund (NZS) has been inundated with information requests in the wake of its decision to exclude five Israeli banks, clogging up administrative resources.
As reported in March, the almost $60 billion sovereign wealth fund sold down shares in five Israeli institutions – First International Bank of Israel, Israel Discount Bank, Bank Hapoalim, Bank Leumi and Bank Mizrahi-Tefahot – on February 14 this year after deeming their lending to housing developments in the occupied Palestinian territories represented a breach of the fund’s responsible investment framework.
The NZS responded to two Israel Institute of NZ Official Information Act (OIA) requests in May, following up with replies to two more extensive queries published this month.
The Israel Institute earlier called on the NZS to halt the bank stock divestments as the move was “the subject of challenge by us and that no action should be taken until that is resolved”.
However, NZS had already sold the shares – held via global equities index portfolios – at the time.
But in its latest OIA requests, the Israel Institute sought further details on the NZS decision including investment committee papers, qualifications of individual authors of papers used to justify the stock sell-down (and specifically of Anne-Maree O’Connor, head of responsible investment), as well as any communications “about possible divestment from companies involved in ‘other occupations’”.
While supplying an extensive cache of documents, in reply the NZS says in a letter that most of the information – requested in almost 20 separate communications from the Israel Institute – had already been handed over.
“We also wish to record, for good order, that upon receiving this request we advised you that the nature and volume of your requests is becoming problematic,” the NZS reply says. “Aspects of the questions overlap, broadly framed and are complex to process. We note that you are lodging requests across other agencies for similar information, as we are also being consulted by these agencies in respect of requests they are handling.”
The NZS has been at the sharp end of several responsible investment queries, of late, including a legal challenge in relation to holdings in companies involved in Western Sahara phosphate-mining and distribution.
However, this March in the Auckland High Court, Justice Woolford struck down the request to review the NZS decision to retain certain Western Sahara-related holdings, giving weight to the fund’s responsible investment process.
“Engagement with a company with ESG issues may be more effective in changing a company’s practices for the better than withdrawal of investment in the company altogether (exclusion),” Woolford said in the ruling.
Meanwhile, fellow Crown Financial Institution, the $50 billion plus Accident Compensation Corporation (ACC), has just published its exclusion list, effective June 30 this year.
The ACC excludes holdings in about 400 companies operating in 10 sectors (subject to certain threshold measures), covering: tobacco; anti-personnel mines; nuclear explosive devices; cluster munitions; whale meat processing; cannabis; North Korean munitions; mercenary activities; automatic or semi-automatic firearms; and thermal coal producers.
In addition, the ACC ethical investment policy prohibits allocations to securities issued by 14 governments – all based in Africa or the Middle East (with the exception of North Korea).
Currently, the ACC lists zero OIA requests regarding investments.