NZSF responds to palm oil; Wilmar enquiry
Posted On: Monday, 13 March 2017

The NZ Super Fund’s shareholding in Wilmar is a passive one held by virtue of our ‘owning the market’.  We invest thousands of listed companies worldwide to get diversified exposure to global sharemarkets. The value of these investments is determined by a range of factors including market capitalisation, the company’s representation in market indices and the overall size of the NZSF.

We do not disclose the names of the companies we engage with on responsible investment matters as these engagements are conducted on a confidential basis.  However, we can say that both palm oil and human rights continue to be high priorities for our engagement programme, both individually and in collaboration with other investors.  We are committed to engagement as the best means of encouraging companies to improve their policies and practices.

The UN Global Compact Principles provide the basis of our expectations to companies under our Responsible Investment Framework. We advocate that companies support fundamental human rights, in their own operations and within their sphere of influence. We believe that companies should properly identify and manage material social issues associated with their business operations, including through protection of human rights, good community relations and stakeholder engagement.

We support the UN Guiding Principles on Business and Human Rights to prevent, address and remedy human rights abuses and its underpinning guidance to companies.  We actively promote human rights standards amongst companies and investors, including in New Zealand where last year we hosted a training session on human rights for directors and investment managers in partnership with the Human Rights Commission.  

We monitor all the companies in our portfolio for breaches of responsible investment standards, engage on issues we consider to be a high priority, and will consider divestment (as a last resort) where we consider engagement is ineffective or not a good use of our time and resources.

We have responded to the Amnesty International report on labour and human rights abuses in the palm oil industry directly with companies through our engagement. The issue of abuse of this sort in agricultural supply chains is not reserved for palm oil alone.

On palm oil, we have actively encouraged the Roundtable on Sustainable Palm Oil (RSPO), of which Wilmar is a member, originally focused on deforestation, to lift its standards even further by including human rights assessments. (http://www.ceres.org/press/press-releases/investors-major-brands-call-for-stronger-standards-from-palm-oil-certification-group - and see attached letter).  The RSPO is a not-for-profit organisation that unites stakeholders from the 7 sectors of the palm oil industry: oil palm producers, processors or traders, consumer goods manufacturers, retailers, banks/investors, and environmental and social non-governmental organisations (NGOs), to develop and implement global standards for sustainable palm oil.

To add some background on our engagement activities, we have been participating in the United Nations Principles for Responsible Investment (UNPRI) palm oil engagement working group since its inception in 2011. From mid-2017, the UNPRI working group is joining forces with Ceres (www.ceres.org) to expand engagement on palm oil to include other commodities. Building on the respective efforts of both organisations in this area, engagement efforts will expand to include palm oil, soy, beef and timber, and other regions, such as Latin America. Engagement efforts will be focused on eliminating deforestation and addressing issues related to soft commodity production such as poor working conditions and land rights.

Previously, the UNPRI working group has focused its efforts on palm oil buyers, growers, traders and processors (the names of the companies being targeted by the working group are confidential) as well as on sustainable certification of palm oil through the RSPO.  

The UNPRI working group’s efforts have been predominantly focused on palm oil operations in Malaysia and Indonesia. Specific objectives of the group include:

  • Improving transparency and quality of disclosure related to land ownership and use and level of RSPO certification.
  • Achieving full commitment by companies to no deforestation, no development on peatlands and no human rights violations throughout entire supply chains.
  • Improving the traceability of certified sustainable palm oil (CSPO) throughout companies’ supply chains in a way that supports a fully segregated supply chain.
  • Encouraging yield/land efficiency methods to support production growth with reduced need for further plantation expansion.

In addition to our participation in the UNPRI working group, our engagement service provider, BMO, has also been working to advance sustainable palm oil production practices - see: https://www.nzsuperfund.co.nz/sites/default/files/documents-sys/BMO%20ESG%20Viewpoint-%20Palm%20Oil.pdf

The NZ Super Fund is acknowledged globally as a leading responsible investor and last year was awarded an A+ rating for overall governance and strategy by the UNPRI. The NZSF provides responsible investment advice and Secretariat support to ACC and GSF under a collaborative agreement; however, each organisation ultimately makes its own decisions.

For further information about our approach to responsible investment on our website – see www.nzsuperfund.co.nz/how-we-invest/responsible-investment