KEY POINTS:
Cluster bomb makers and nuclear weapons testers are now officially off limits for the Government's $12 billion Super Fund.
Formerly known as the Cullen Fund, the fund has released its list of companies it will no longer invest in.
It is selling $37 million of shares holding in six companies that make cluster munitions, one of which is "also involved in the simulated testing of nuclear explosive devices".
The sale follows the Government joining up with 93 other countries in signing an international treaty banning the production or use of cluster munitions, and "a comprehensive review of the nuclear weapons issue," said Guardians of New Zealand Superannuation chief executive Adrian Orr.
Investments by the Government fund in weapons makers has drawn strident criticism from the Green Party in particular.
Party co-leader Russel Norman said earlier this year fund had actually increased its investment in cluster bomb makers, despite the Government hosting a conference which aimed to have cluster bombs banned.
It was "blatant hypocrisy" for the Government to take dividends from the manufacture of cluster bombs, while at the same time calling for a ban.
"These investments need to stop, before our reputation as a peace-loving nation is damaged."
The fund has previously resisted calls to quit companies involved in weapons manufacture and those that have major holdings in Myanmar.
Pulling out of these companies should not have a material impact on the kind of returns earned, say the Fund's guardians, since they account for less than one per cent of its investments and the money will now be invested elsewhere.
It hopes to have finished selling its stakes in these companies by the end of January next year.
Past exclusions from the fund have included companies involved in landmines, whaling and tobacco."
Orr said the guardians believed that the simulated testing of nuclear explosive devices was critical to the development of those devices. This meant that share holdings in two of the companies - Honeywell International and Lockheed Martin, together worth $13 million, would be sold.
What was more difficult, said Orr, was deciding what to do with companies that "are in some other way involved in nuclear weapons programmes such as in manufacturing delivery systems or in managing military bases."
Orr said investment in companies involved with delivery systems or bases was commonplace amongst other funds. Other government funds like ours around the world hold these investments.
"It is also common for governments, including New Zealand's, and consumers to have commercial dealings with those companies. For example, both majority government-owned Air New Zealand and New Zealand's defence force buy aircraft and other products from some of these companies," said Orr.
Many of the companies identified by the review made products used every day, he said, including, aircraft, fire alarms, and elevators. Some of these companies were also involved in renewable energy technologies such as fuel cells and zero-emission hydrogen buses.
"This highlights how complex these decisions are."
The Super Fund, also known as the Cullen Fund after its originator, former finance minister Michael Cullen, was set up to help pay for the future cost of New Zealand Superannuation.
The Government puts around $2 billion a year into the fund, which is invested around the world. It was worth $12 billion at the end of October and is expected to grow to around $100 billion by 2025.
Companies named by the Super Fund:
Alliant Techsystems - Landmines, cluster munitions
Goodrich Corporation - Cluster munitions
General Dynamics - Landmines, cluster munitions
Hanwha - Cluster munitions
Honeywell International - Simulated nuclear bomb testing
L-3 Communications - Cluster munitions
Lockheed Martin - Cluster munitions, nuclear bomb testing
Northrop Grumman - Cluster munitions
Poonsang Corporation- Cluster munitons
Raytheon - Cluster munitions
Singapore Technologies Engineering -Landmines, cluster munitions
Textron systems - Landmines, cluster munitions
(The fund has already sold its stakes in Alliant, General Dynamics, Singapore Technologies Engineering and Textron Systems due to their involvement in making anti-personnel mines)
