KEY POINTS:
A socially responsible investment campaigner has welcomed a decision by the NZ Super Fund to stop investing in companies which make cluster bombs, but says the Government needs to lay out the rules for all its Crown financial entities.
Yesterday the guardians of the NZ Super Fund announced plans to exclude companies that remain involved in the manufacture of cluster munitions once the Government has signed an international treaty on the weapons.
Negotiations are underway and are expected to be completed this year.
But Robert Howell, chairman of New Zealand's Council for Socially Responsible Investment, said the investment heads of New Zealand's Crown financial entities - the Super Fund, ACC and the Earthquake Commission - were being given too much free rein to pick and choose which areas they would and would not invest in.
All the entities have to abide by a law which means they must avoid prejudicing New Zealand's reputation as a responsible member of the community.
But Howell said the law was too broad. He said research by the council in 2005 had revealed all three entities were investing in companies that were unacceptable from a human rights point of view.
One area in particular was tobacco investment. Howell said ACC had stopped investing in tobacco companies in 2005 but the NZ Super fund continued to invest in tobacco companies up until last year.
"While I applaud the munitions stance I would like to see it done in a principled way rather than an ad-hoc way. There needs to be much stronger legislative direction in order for the sort of moral investment that would be consistent with New Zealand values."
Howell said the Government's strong stance on sustainability and climate change should also be reflected in the investment policy of its Crown entities.
Guardians' chief executive Adrian Orr said the guardians had been reviewing the issue of cluster munitions against its responsible investment guidelines for some time but they were not subject to specific restrictions under international law and to date it had been very rare for funds to engage with or exclude investments in companies which made them.
However, he said, with the forthcoming international treaty the guardians could unambiguously conclude that such practices breached its responsible investment standards.
The Super Fund's responsible investment policy guidelines includes consideration of globally accepted responsible investment standards, international conventions, national law and significant Crown actions. If an issue arises the guardians have a preference to seek to influence the company through engagement but under certain circumstances they will divest and exclude them.
