NZ Superannuation Fund excludes four companies
New Zealand Superannuation Fund excludes four companies on responsible investment grounds
The New Zealand Superannuation Fund today announced that it had excluded four companies from its $19 billion investment portfolio, following a review of engagement priorities.
The companies were excluded for severe breaches of the Fund’s responsible investment standards where engagement was unlikely to be effective due to the context of the company’s operations or to a lack of responsiveness from the company to the issue.
Company Criteria Holdings as at 30 June
Freeport-McMoRan Copper & Gold Inc.
Freeport-McMoRan has been excluded based on breaches of
human rights standards by security forces around the
Grasberg mine, and concerns over requirements for direct
payments to government security forces by the company in at
least two countries in which it operates. Despite
improvements in Freeport McMoRan’s own human rights
policies, breaches of standards by government security
forces are beyond the company’s control. This limits the
effectiveness of further engagement with the
KBR (formerly Kellogg Brown &
Root) has been excluded following severe breaches of
anti-bribery and corruption standards over a long period of
time and on-going concerns relating to employee safety. The
Fund considers that engagement with the company is unlikely
to be effective due to on-going litigation and the
company’s limited responsiveness in the
Tokyo Electric Power Company
been excluded based on a long history of breaches of
environmental and safety standards prior to and including
the Fukushima nuclear plant crisis. In 2012 Japan’s
National Investigative Committee criticised TEPCO’s
performance and its continued reluctance to learn from
Zijin Mining Group
The Zijin Mining Group has been excluded following severe breaches of environmental and safety standards including toxic spills and emissions, and a tailings dam collapse which led to multiple fatalities. In 2010 Chinese regulators prosecuted the company and criticised its slow response to improving systems despite earlier warnings. The company faced multiple lawsuits in China. NZ$371,391
The Fund said the exclusion decisions were based on information from its specialist screening agency Morgan Stanley Capital International (MSCI), which identifies where companies breach global standards of good corporate behaviour such as the UN Global Compact, and reviews how companies respond to these breaches. The Fund also draws on information from other sources including similar funds overseas.
“In making a decision to exclude a company from our portfolio, one of the tests we apply is whether engagement with the company might realistically lead to sufficient improvements. We have come to the conclusion that further engagement by the Fund with these companies is not likely to be effective. We would rather focus our efforts on companies where we believe we can make a difference.”
The Fund’s responsible investment standards are set out in its responsible investment framework, available on www.nzsuperfund.co.nz. Under this framework the United Nations Global Compact is the key benchmark against which the Fund measures corporate behaviour.
The Fund also excludes companies that are directly involved in the manufacture of cluster munitions; in the manufacture or testing of nuclear explosive devices; in the manufacture of anti-personnel mines; in the manufacture of tobacco, and in the processing of whale meat.
The Fund’s global equity portfolio, which is managed externally, includes shares in more than 6,500 companies around the world, and tracks global equity indices including the MSCI large-cap equity index, the MSCI emerging market index and the MSCI small-cap index. Investments in these companies move in and out of the Fund primarily according to their market capitalisation rather than through active stock picking. The portfolio is monitored for compliance with exclusions applied to the Fund on a daily basis.