By Keiller MacDuff, RNZ News senior reporter
The managers of the New Zealand’s $86 billion Super Fund failed to properly address human rights issues when considering whether to exclude companies from its investments, the High Court has found
Justice Simon Mount granted an application by the Palestine Solidarity Network Aotearoa (PSNA) for judicial review of Guardians of New Zealand Superannuation’s policies relating to ethical investment.
In a decision released today, Justice Mount declared parts of the fund’s policy documents, standards and procedures, and its sustainable investment framework were “unreasonable and unlawful”.
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The court also ordered the crown entity to pay PSNA’s legal costs.
PSNA co-chair John Minto said the decision was a victory for Palestinian rights, while Guardians of New Zealand Superannuation said it was considering its next move.
The sovereign wealth fund was created in 2001 to help provide for New Zealander’s superannuation costs.
By law, Guardians are required to invest the funds on a prudent commercial basis, manage and administer the fund with best-practice portfolio management, and avoid prejudice to New Zealand’s reputation as “a responsible member of the world community”.
Backbone of case
That last duty formed the backbone of the case taken by PSNA, who have long lobbied the Guardians to divest from companies it claims to be complicit in human rights abuses in the occupied Palestinian territories.
The Guardians excluded development, construction and technology companies involved in settlements in the Occupied Palestinian Territories in 2012.
In 2021, following years of lobbying by PSNA, the Guardians also excluded five Israeli banks from its portfolio on the grounds there was an unacceptable risk the banks were materially contributing to breaches of human rights standards and that engaging with the banks themselves was unlikely to be effective.
PSNA continued to request the exclusion of other investments due to alleged human rights breaches and focused on four companies that featured on a United Nations Human Rights Council database of companies trading with illegal Israeli settlements — Airbnb, Booking.com, Expedia, and Motorola.
Justice Mount said the chief executive of the Guardians replied to the group in mid-2024 noting none of the companies “currently meets the exclusion threshold under our Sustainable Investment Framework”.
In later correspondence, the Guardians’ head of sustainable investment reiterated that stance, which led PSNA to indicate it would seek the judicial review.
In his findings, Justice Mount noted the Guardian’s 2020 policy documents identified several standards and benchmarks that were later removed — including the Principles for Responsible Investment, principles of the UN Global Compact, and a broad reference to “other good practice standards”.
Earlier policy removed
The earlier policy referred to several sets of standards described as “universally recognised by the world community — with signatories including investment managers, investee companies and the peers of Guardians — and unlikely to be superseded”.
The 2020 policy stated its applicable principles were based on the UN Global Compact, in particular the requirements to support and respect human rights and “no complicity in abuses”.
It also set a threshold for excluding government bonds where there was “widespread condemnation or sanctions by the international community and New Zealand has imposed meaningful diplomatic, economic or military sanctions”.
Justice Mount noted the almost 3000 pages of evidence filed for the judicial review allowed him to gain a picture of how the Guardians had used their policy documents in practice.
The judge noted the Guardians’ approach to excluding investments was not entirely coherent and the policies failed to meet the basic requirements of the law when alleged breaches of human rights standards were concerned.
The Guardians had a duty to reformulate its policy documents to be consistent with the Act, he said.
Minto celebrated the court’s ruling.
Fund raking in money
The group was confident the Super Fund would divest from Airbnb, Booking.com, Expedia and Motorola once it had rewritten its policies to comply with the law, he said.
The High Court judgment showed the Super Fund had invested $67 million in the four companies.
Minto said the fund was raking in money from appalling breaches of international law by Israel in the Occupied Palestinian Territories of Gaza, the West Bank and East Jerusalem.
The country’s leading sovereign wealth fund should be setting the benchmark for all New Zealand investment funds, not deriving money from war crimes and massive human rights abuses, he said.
The lack of a clear grounds to exclude companies from investment because of human rights abuses were particularly problematic, Minto said.
“This is beyond outrageous. Our largest sovereign wealth fund, owned by the government on behalf of the people of New Zealand, has no specific references to human rights standards in its investment exclusions policy.”
The case had revealed the exclusions policy was weakened and direct references to human rights standards were removed the year after the fund divested from five Israeli banks, Minto said.
Replaced with vague policy
“The Super Fund replaced a principled policy with an entirely vague and subjective assessment of companies which meant they could resist pressure from human rights groups such as PSNA.
“The fund was entirely making up legal sounding excuses as it went. It meant they could now keep on their books other companies which abuse the human rights of Palestinians,” he said.
“The Super Fund owes us all an apology and in particular an apology to Palestinians here and in Palestine, whose suffering is helping pay the price of the fund’s increasing wealth.”
Guardians of New Zealand Superannuation chief executive Jo Townsend said the crown entity was still considering its response to the decision.
“We recognise that we are investing on behalf of all New Zealanders, and that gives people a legitimate interest in how we manage the fund,” she said.
“We will thoroughly evaluate today’s decision and determine how best to respond to it,” she said.
The UN Human Rights Council database featuring the four companies is from a list of 97 companies involved with illegal Israeli settlements.
The database came about following a 2016 UN Security Council resolution, co-sponsored by New Zealand, that led to diplomatic rupture between the two countries and Israel recalling its ambassador.
Israeli media reported at the time that Prime Minister Benjamin Netanyahu warned Foreign Affairs Minister Murray McCully proceeding with the resolution wold be considered a “declaration of war”.
This article is republished under a community partnership agreement with RNZ.
