Exclusions
Exclusions are a part of our overall sustainable investment approach.
We may exclude companies from the Fund because of the products they are involved in or because of their environmental, social and governance (ESG) practices. Sovereign bond exclusions may be applied in certain circumstances involving sanctions against nation states.
A decision to exclude a company or security from the Fund follows our Sustainable Investment Procedures. The information provided here is a high-level summary only.
We publish a list of exclusions every six months, including the relevant category of exclusion.
Product exclusions
Product exclusions apply to companies involved in certain products or activities. In broad terms, our process for considering product exclusions takes into account matters such as New Zealand public policy, international censure against the industry or activity, any special circumstances, and consistency with our statutory mandate.
We currently apply the following product exclusions to the Fund (as more fully set out in our Sustainable Investment Procedures):
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the manufacture of cluster munitions
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the manufacture or testing of nuclear explosive devices (NEDs)
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the manufacture of anti-personnel mines
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the manufacture of tobacco
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the processing of whale meat or conducting whaling
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recreational cannabis
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the manufacture of civilian automatic and semi-automatic firearms, magazines or parts.
Poor environmental, social and governance (ESG) practice exclusions
We may in certain circumstances exclude a company based on its ESG practices.
ESG practice exclusions are a discretionary escalation tool and are generally rare within our broader sustainable investment approach. Investor best practice guidance recognises that exclusion does not necessarily follow from unsuccessful engagement and may not be the right outcome in any given circumstance, for example because continuing to hold may preserve investor voice. Refer to our Sustainable Investment Procedures for our detailed procedure on exclusions for poor ESG practices.
Sovereign bond exclusions
As set out in our Sustainable Investment Policy and Sustainable Investment Procedures, we exclude the government (sovereign) bonds of a nation state where there is widespread condemnation or sanctions by the international community and New Zealand has imposed meaningful diplomatic, economic or military sanctions aimed at that government.
Sanctions
We must comply with sanctions required under New Zealand law, including sanctions imposed by the United Nations Security Council.
In practice, our listed portfolio also reflects sanctions imposed by a number of major States. This is because our custodian, investment managers and other financial market intermediaries must comply with them. The same applies to collective investment vehicles (e.g. funds) we invest in, which must comply with the sanctions laws relevant to their investment activities.
Overview of our monitoring, engagement and exclusion processes
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