KEY POINTS:
It was great to hear the New Zealand Super Fund announce this month that it had decided to divest from seven companies involved in cluster munitions and the simulated testing of nuclear explosive devices. Not a moment too soon, considering New Zealand helped to pave the way for the treaty banning cluster munitions, which is now finalised and open for signing.
But there is a long way to go before the fund can really be said to be honouring its ethical investment policy undertaking as a guardian of New Zealand's "reputation as a responsible member of the world community".
For a start there is further "nuclear housekeeping" to do, including sweeping out companies that manufacture intercontinental ballistic missiles or supply nuclear weapons facilities. Moreover, in these times, climate change is up there with nuclear weapons as a threat to humanity's continued existence. So any ethical investing policy must take account of environmental impacts.
But it is next to impossible to reconcile the fund's current investments with environmental responsibility. Exxon Mobil tops the list of Super Fund holdings with an investment of $61.8 million or 0.5 per cent of the fund's holdings. The world's largest oil company has an unparalleled record for environmental crime from the Exxon Valdez spill of 1989 to its financial backing for campaigns aimed at undermining climate change action. Exxon Mobil stands out among energy companies for what Greenpeace terms its "addiction" to oil and refusal to pay any attention to renewable energy sources.
Closer to home, the Super Fund invests nearly $1 million in Freeport McMoran Copper and Gold, the company responsible for a grossly destructive mining operation in Indonesian-ruled West Papua. The American mining giant operates one of the world's largest and most lucrative gold and copper mines in the midst of pristine rainforest and glacier-capped mountains.
You can check out the scale of Freeport's operation on Google Earth. The open-cut mine, not far from the Carstensz Pyramid, Oceania's highest mountain peak, spirals deep into the earth.
Freeport deposits the tailings from the processing of mineral rich ore as a silty sludge into the Ajkwa River system at a rate of about 230,000 tonnes a day - the outpouring settles out in a giant dead zone stretching across the lowlands to the coast. The tailings also leach out into the Arafura Sea.
This riverine system of mine waste tailings disposal is now banned in most parts of the world because the sediments containing heavy metals cause long-lasting ecological devastation. The World Bank no longer finances such projects. In addition, millions of tonnes of waste rock pile up in the high alpine valleys where they leach out unstable metal sulphides and eyewitness evidence indicates that the irreversible hazard of acid rock drainage is now occurring.
For the tribal Amungme and Kamoro people the mine has meant the destruction of their traditional subsistence way of life based on hunter-gathering and fishing in the forest and left them in poverty. The mine has decapitated a mountain considered to be sacred and has brought in hordes of outsiders with the social costs that go with the influx of migrant labour: prostitution, alcohol abuse, violence and a soaring incidence of HIV/Aids.
At the same time Freeport delivers eye-watering earnings to its top executives and shareholders. Chairman Jim Bob Moffet and chief executive Richard Adkerson last year each pocketed more than $113 million in salary, bonuses and other forms of compensation.
In the late 1970s, Papuan resistance to the mine met with indiscriminate military bombing and strafing operations. Since that time, human rights abuses in the mine area include arbitrary detention, torture and killings as well as the displacement of thousands of villagers.
The Indonesia Human Rights Committee has urged divestment from Freeport for more than two years. Former Finance Minister Michael Cullen told us that Freeport was under review because its practices could breach ethical guidelines, but all investment decisions were up to the fund's board of guardians. The Super Fund's head of responsible investment, Anne-Maree O'Connor, freely admits concerns about environmental practices at the mine. But, implausibly in our view, she expresses hope that New Zealand may persuade Freeport to change its practices.
To its credit, the Super Fund lists all its equity holdings on its web page, unlike the other Crown financial institutions (CFIs): the Earthquake Commission, the Accident Compensation Corporation, the Public Trust, New Zealand Post, the National Provident Fund and the Government Superannuation Fund Authority. Official Information Act requests reveal that the Earthquake Commission and the Government Superannuation Fund Authority each have over well over $3 million invested in Freeport, while the Public Trust makes a much smaller contribution to the full total of over $8 million.
The figure climbs to a full investment total for all CFIs of nearly $56 million if Rio Tinto investments are included.
This year, a US court decided to proceed with a trial against oil giant Exxon Mobil for its alleged involvement in killings and torture committed by military forces and paid for by the mining company in Indonesia's Aceh. A similar lawsuit has been lodged against Freeport by a Papuan tribal chief who claims that the mine pollution is slowly poisoning his people.
Inevitably there will be a day of reckoning for companies like Freeport and Exxon Mobil when their crimes against communities and the environment will be exposed and condemned. In the meantime, institutions should weigh up the real cost of their investments - our common future is at stake.
* Maire Leadbeater is a member of the Indonesia Human Rights Committee.
