The NZ Superannuation Fund (NZS) has almost 60 stocks under review on responsible investment grounds but no new exclusions lined-up, according to a recent release.
In reply to another Official Information Act (OIA) request lobbed by the Israel Institute of NZ, the NZS confirms it is “currently considering 58 stocks under our Responsible Investment Framework”.
“There are currently no companies which are… being ‘actively considered’ for exclusion – which we interpret as the point where a recommendation to exclude has been prepared for our Investment Committee to review and endorse and for our CIO to then consider and approve,” the NZS response says.
The now $60 billion sovereign wealth fund had tackled over 150 portfolio companies on human rights issues during the first nine months of 2021 in concert with third-party corporate engagement firm, BMO, the statement says. BMO was appointed in 2015 to run offshore corporate engagement for the NZS as well as the Accident Compensation Corporation fund and the Government Superannuation Fund.
According to the OIA reply, the fund had also received 22 written complaints regarding human rights concerns since the start of 2021 including 15 relating to Myanmar and five on China.
In February this year, the NZS sold down shares in five Israeli banks – First International Bank of Israel, Israel Discount Bank, Bank Hapoalim, Bank Leumi and Bank Mizrahi-Tefahot – citing the institutions’ involvement in funding Jewish settlements in Palestinian territories.
The NZ government co-sponsored a 2016 UN resolution condemning the Israeli settlements established in Palestinian land across east Jerusalem and the West Bank.
However, NZS has come under sustained pressure from the local Israel lobby group after cutting the five Israeli banks from its global equities portfolio.
The Israel Institute subsequently lodged a series of OIA requests regarding the NZS decision in an information-gathering exercise ahead of potential litigation.
Dr David Cumin, Auckland University lecturer and Israel Institute representative, said in June this year the group was still exploring legal action against the NZS.
“The [NZS] Guardians do not seem to have discharged their required duty of care to administer ‘best practice’ policy as required by law,” Cumin said at the time.
“They appear biased because they have not used expert advice and seemed to rely only on information provided by BDS campaign proponents. The worst consequence of their perverse decision is political and entirely ultra vires of their remit…
“The Guardians divestment from Israeli banks masquerades as an ‘ethical decision’ but is likely to be discussed and interpreted in embassies in Australia and in America as a double-standard applied to Israel.”
In its most recent Freedom of Information Act (FOI) disclosure – the OIA equivalent across the ditch – in September this year, the Australian government-owned Future Fund reveals it held small stakes in four of the five Israeli banks ditched by the NZS.
The A$225 billion plus Future Fund could soon be exempt from FOI obligations for underlying investment disclosures under a new law currently drifting through the Australian federal parliamentary system.
Since 2011 the Australian sovereign fund – designed to offset long-term government employee pension liabilities – has published 24 FOI disclosures.
By contrast, NZS has published about 65 OIA responses over the last eight years.
Under the 2021 Investment Funds Legislation Amendment Bill, the Future Fund would escape most FOI obligations except for internal operations.
Introducing a second reading of the proposed legislation in August, Stuart Robert – federal Minister for Employment, Workforce, Skills, Small and Family Business – told the Australian parliament that the Future Fund (and related entities) “regularly produce, negotiate and receive documents from third-party fund managers that include confidential, competitive and commercially sensitive information”.
“The risk of disclosing highly sensitive commercial and proprietary material has led to investment managers withholding information or reducing their engagement with the board and the agency,” Robert said. “This presents an investment and governance risk. In particular, it can result in reduced access to investment opportunities and negatively affect investment outcomes.”
Debate on the second reading of the bill resumed last week.