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Because of our commitment to engagement as the best way of getting companies to improve their behaviour, exclusion is a last resort.

When we do make a decision to exclude, our decision is based on the clear process and principles that are set out in our Responsible Investment Framework. International conventions, New Zealand law, Crown actions, and companies' involvement and activities, are key factors in our decision-making process.

Current exclusions

Companies that are directly involved in the following activities are excluded from the Fund:

  • the manufacture of cluster munitions
  • the manufacture or testing of nuclear explosive devices (NEDs)
  • the manufacture of anti-personnel mines
  • the manufacture of tobacco
  • the processing of whale meat
  • recreational cannabis, and
  • the manufacture of civilian automatic and semi-automatic firearms, magazines or parts,

These are more fully set out in the materials linked to this page.

Our exclusion of companies involved in the manufacture of cluster munitions was based on the Cluster Munitions Convention signed by New Zealand in 2008. Background information on the tobacco and NED exclusion decisions is available to download in the panel on the right. In 2013, we extended the group of companies excluded under the NED decision to include a group of nuclear base operators.

We also may decide to exclude individual companies for severe breaches of our responsible investments standards, such as the UN Global Compact, where we consider engagement is 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. When we exclude a company in this way we make the exclusion, and our reason, public.

Our exclusion policy applies to all investments where the Fund holds shares directly. To the best of our knowledge, majority-owners of excluded companies are also excluded. Subsidiaries are excluded if they have any involvement in the excluded activity. We endeavour to apply exclusions to Collective Investment Vehicles (CIVs), to the extent this is feasible and commercially prudent. CIVs are evaluated on a case-by-case basis. The potential for indirect exposure to excluded securities through CIVs is factored into the selection of access points.

Portfolio monitoring and compliance

Our portfolio is monitored on an ongoing basis to ensure compliance with these exclusions.  We use specialist screening agencies to identify companies involved in these activities. We may also receive relevant information from other organisations with expertise in this field or from the companies themselves. We work closely with our managers to ensure they are aware of our exclusions and are applying them correctly.

The Fund's list of excluded companies is regularly reviewed and updated with information from our external screening agencies, peer funds and - from time to time - other stakeholders.