Feature
Dirty dollars
by Matt Nippert
Continued from page 2...
Similar arguments can be made for Super Fund stakes in the gambling and alcohol sectors. Recent television advertisements warn the public about excessive alcohol consumption (“It’s not the drinking, it’s how we’re drinking”). Meanwhile, the Super Fund has a $22m stake in companies that profit from increased sales of Budweiser, Heineken, Smirnoff, Johnnie Walker and Lion Red.
The Ministry of Health manages the Gambling Problem Helpline. The Super Fund has a $37m investment in Sky City, which includes casinos.
Deciding to be a responsible investor may mean more than avoiding political embarrassment. S Prakash Sethi, distinguished professor from the City University of New York, argues that a long-term investment approach requires social and environmental impacts to be taken into account.
“Socially responsible investing practices are not merely discretionary and desirable activities, they are a necessary imperative.” In order to maintain a profitable investing climate, he writes in the Journal of Business Ethics, large investors need to “become an active agent for social change if it is to make the world safe for democracy and indeed for capitalism”.
Worldwide, socially responsible investing has grown from a little band of United Methodist Church members who founded a small fund in 1971 to avoid investing in military companies that were fuelling the war in Vietnam.
Today, the US-based Social Investment Forum estimates that the market for responsible investing reached $US265 billion in 2005, up 15-fold on the previous decade. Numerous pension funds overseas – ranging from California to Norway and Sweden – operate robust screening mechanisms that have excluded many of the stocks discussed here.
The Greens’ Russel Norman says his party will agitate further in Parliament. “There’s also scope for Parliament to change the legislative mandate. We tried to introduce some amendments when [the mandate] was first introduced, and I think that there’s really scope to amend it further.”
Norman also says that his party will be seeking legal advice on whether investing in companies involved with nuclear-weapon production has breached New Zealand’s anti-nuclear legislation.
This issue may yet split the Labour caucus. Backbench MP Maryan Street’s Ethical Investments Bill was placed in the private members’ ballot last October. If passed, this bill will require Crown Financial Institutions (including the Super Fund) to take social and environmental factors into account when investing.
Although the bill is targeting tobacco investments, many other “sin stocks” could be caught up in screening.
Norman hopes that Adrian Orr, who takes up the post of New Zealand Superannuation Fund chief executive this week, will act as a new broom.
“Having a change at the top of an organisation is the perfect opportunity for them to change direction and actually start behaving like an ethical investor.”
