Super Fund caught investing in tobacco

The Green Party has caught the New Zealand Superannuation Fund investing in tobacco, failing once again to live up to their own self-imposed standards as a responsible investor.

A parliamentary written question today revealed that the New Zealand Superannuation Fund holds 80,000 shares in Shanghai Industrial Holdings Ltd - a company involved in the manufacture of tobacco - despite a promise from the Fund to divest from tobacco-related industries in 2007.

"The Super Fund directors have acknowledged their oversight, but their long record of complacency towards ethical investment makes it no surprise that they have been caught investing in tobacco," said Green Party Co-leader Dr Russel Norman.

"The Fund directors have been caught out previously for unethical investment behaviour after it was revealed they were profiting from the whaling industry and the cluster munitions industry.

"This is not a professional way to manage a $19 billion investment fund and risks serious damage to our reputation as a responsible member of the world community.

"I hope the directors will now reconsider their position of continuing to invest in and profit from the nuclear weapons industry."

The Superfund currently has a $2.1 million investment in Larsen & Toubro, India's largest defence engineering company, involved in the manufacture of a fleet of nuclear-armed submarines.

"Our Super Fund should be nuclear free," said Dr Norman.

The decision to divest from tobacco created a strong precedent. Tobacco is not an illegal product, but the Super Fund directors ruled in 2007 that investment in this sector was inconsistent with our responsible investment standards. Their decision was based on 'product safety issues' and New Zealand's commitment to specific international conventions, namely the Framework Convention on Tobacco Control.

"We are a signatory to the Nuclear Non-Proliferation Treaty and I suspect there are obvious 'product safety issues' with nuclear weapons. The bottom line is, we should have nothing to do with investing in this immoral industry," Dr Norman said.

Transcript of Written Question #06011, dated August 2, 2011:

Question: What is the value in New Zealand dollars, if any, of the New Zealand Superannuation Fund's investment in Shanghai Industrial Holdings Ltd?

Finance Minister, Hon Bill English: As at 1 August 2011, the Fund had 80,000 shares in Shanghai Industrial Holdings Ltd, with a NZD value of approximately $333,000.

The Fund has also responded with the following statement: "We are aware that Shanghai Industrial Holdings Ltd has a private subsidiary, Nanyang Brothers Tobacco, which is a manufacturer of tobacco. Nanyang Brothers does not issue securities and so is not tradeable. Nevertheless, since 2007 we have had in place a policy of excluding companies whose activities include the manufacture or production of tobacco. To date we have used several different screening methods to ensure our portfolio exclusions are complied with. All of these screening methods involve the use of industry classifications. Shanghai Industrial Holdings Ltd is an example of a company which, because it is involved in a broad range of activities including tobacco, it is classified as an industrial conglomerate and so is not captured by the screening process. We were aware of this issue and have recently completed a project to broaden our screening methodology to resolve it. This has grown the number of companies on our tobacco exclusions list. Pending circulation to our external investment managers, the expanded list will be available on the Fund's website - as the current list has been since 2007 - by 30 August. The list will include Shanghai Industrial Holdings Ltd. We have often said that our Responsible Investment programme relies on a number of sources of information, including third parties with interests in Responsible Investment matters, such as the Green Party. As such, we appreciate such matters being brought to our attention."