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Crown Funds Shown to Invest in Tobacco

Friday 2 December 2006

New Zealand Pension and Crown Funds Shown to Invest in Tobacco Companies

Research undertaken by the Council for Socially Responsible Investment around May 2005 has shown that all five of New Zealand’s Crown Financial Institutions invested in tobacco companies and/or companies with arguably questionable human rights behaviour or environmental impacts.

Earlier this year, the Chairman of the Council for Socially Responsible Investment Dr Robert Howell wrote to all the Crown Financial Institutions asking them for a list of the companies they invested in, a list of any companies they had excluded from investment, their policies for investment and how they implemented these.

The information the Crown Financial Institutes returned showed:
- all of the Crown Financial Institutes (New Zealand Superannuation, Earthquake Commission, Government Superannuation, National Provident Fund and Accident Compensation Corporation) invested in major tobacco companies (see table following). The companies invested in included: British American Tobacco, Imperial Tobacco, Reynolds American.

Dr Howell said:
“As a country we have made a considerable effort and committed resources over decades to reduce cigarette smoking. Yet our public investment funds are still investing in tobacco companies. These investments would not be acceptable to a very large number of New Zealanders” .

Further information returned showed:

- the National Provident Funds invested in BJ Services, a company which is working in Myanmar (Burma). “Myanmar is known for its appalling human rights record,” says Dr Howell.

- Many Crown Financial Institutes invested in companies about which the New York based pressure group ICCR (Interfaith Centre for Corporate Responsibility) holds concerns. The ICCR is a group of 275 faith-based organisations with US$110 billion under management. ICCR have concerns about the human rights protection afforded by the following companies (all invested in by one or some of New Zealand’s Crown Financial Institutes):

- Boeing [ICCR particularly concerned about Boeing’s behaviour in China]

- Burlington Resources [ICCR particularly concerned about indigenous rights in the company’s forests in Peru]

- Delphi Automotive [ICCR concerned about the company’s policies to protect human rights, using underage or forced labour, and workers’ health and safety]

- Exxon Mobil [ICCR concerned about Exxon Mobil’s operations in Angola, Cameroon, Chad, China, Equatorial Guinea, Indonesia and Nigeria.]

- Newmont Mining [ICCR recommended a review of social and environmental liabilities, especially in Peru, Indonesia, Ghana and USA]

- Occidental Petroleum [ICCR particularly concerned about operations in Columbia]

- Time Warner [ICCR recommended about China operations]

All Crown Financial Institutions are subject to an ‘international criterion’ which states that Crown investors must ‘avoid prejudice to New Zealand’s reputation as a responsible member of the world community’.

Yet Dr Howell said that the New Zealand Superannuation, Government Superannuation and the National Provident Funds showed from the information they returned, “they have never excluded any companies from their investment choices on the ‘international reputation’ criterion.”

“This is meant to be the main non-financial criterion for our Crown Financial Institutions, and is meant to guide and inform their investments. It is clearly not strong enough as a criterion. There is no difference from an organisation that invests purely for short-term financial gain.

The international reputation criterion is inadequate and should be replaced. Their ethical guidelines need to be strengthened,” he said. “Moreover all the Crown Financial Institutions need to include more information about how they are implementing criteria for investment. ”

The Council for Socially Responsible Investment is a charitable trust that was set up in 2003 to provide practical guidelines and methodologies for ethical investment by religious groups (e.g. churches), business organisations, Government organisations and individuals. As part of this, the Council advises organisations on workable ways of assessing, identifying and measuring their own investments to ensure they have invested well and ethically.


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