Rob Stock.
Investors are indirectly supporting repressive governments as well as weapons manufacturing, writes
It’s time to talk about the human rights records of the country’s KiwiSaver schemes, says the chairman of New Zealand’s Human Rights Foundation.
The past two weeks has seen the re-emergence of concern over KiwiSaver schemes investing in land-mine and cluster-bomb makers, first covered by Fairfax in August last year.
The spotlight has been on two American companies that make versions of the controversial weapons, but it has not fallen on the countries buying them, refusing to sign conventions banning them, or accused of lobbing them around.
As well as investing in company shares, KiwiSaver schemes buy ‘‘sovereign’’ bonds that other nations issue as a way to fund their policies. Some of those countries oppress women, treat homosexuals as criminals, and even stand accused of encouraging extra-judicial killings.
Foundation chairman Peter Hosking said: ‘‘There’s an increasingly human rights approach to investment, and it is something I would support.’’
But as yet, the focus has only fallen on companies breaching human rights, not countries.
It’s not an easy conversation however, because many countries with poor human rights records are ‘‘in transition’’ towards respecting human rights, Hosking said. And some large, developed countries such as the US behave in ways that outrage many Kiwi investors.
‘‘There’s a balance to be struck here,’’ Hosking said.
The Government’s approach was to let the market work out what that balance was, said Hosking.
That was possible only if investors considered not only the companies their KiwiSaver scheme is investing in, but the countries borrowing their money through sovereign bonds.
It’s difficult, as KiwiSaver Scheme providers issue their ‘‘annual disclosure statement’’ data files, showing all their holdings, just once a year.
CLUSTER MUNITIONS
In June, a photo emerged of cluster bombs being loaded on to a Russian aircraft, leading to claims the weapons were being used in Syria.
Despite calls for US companies that produce cluster munitions to be excluded from KiwiSaver, this pressure has not been extended to Russian sovereign bonds, which are held by some KiwiSaver schemes as a result of investments in giant global bond funds that buy bonds from many nations.
One of those giant global bond managers is Pimco, which the Kiwi Wealth and Koinonia KiwiSaver schemes use. Using subfunds can make it hard to see exactly what your KiwiSaver scheme is invested in.
In 2015, the Cluster Munition Monitor report accused Russia of using cluster munitions in Ukraine. The official website for the Cluster Convention does not include Russia among the countries that have signed up to it.
New Zealand is a signatory. Israel is not, but some schemes, such as those run by ASB and ANZ, hold Israeli bonds. As always in giant KiwiSaver schemes, each investment is only a tiny part of the portfolio.
THE DEATH PENALTY
New Zealand abolished punishment 60 years ago.
Despite that, New Zealanders invested in KiwiSaver are backing governments that use the death penalty.
Human rights groups such as Amnesty International are campaigning for an end to capital punishment around the world, though Amnesty International NZ did not want to talk about KiwiSaver and the death penalty.
It’s hard to avoid sovereign bonds issued by countries that use capital the death penalty, as they include the US and Japan – two of the biggest four issuers.
China has the death penalty, but is not a big issuer of sovereign bonds.
There are plenty of others, some with less-than robust legal systems.
They include Indonesia, where many schemes, including Westpac’s KiwiSaver, have investments. Amnesty has criticised Indonesia for executing drug traffickers.
There’s also Malaysia, where the Westpac and AMP schemes have bond investments.
WOMEN’S RIGHTS
Qatar has been making global headlines for its treatment of foreign workers. But it is also a country where raping your wife is not considered a crime.
The US State Department’s 2015 human rights report on Qatar noted widespread discrimination against women, and found women imprisoned for pregnancy out of marriage.
Some KiwiSaver schemes like ASB’s have bonds from Qatar.
The US State Department reported women’s groups were harassed by Turkish authorities with audits. Turkish bonds appear in some KiwiSaver schemes, like ANZ’s.
EXTRA-JUDICIAL KILLINGS
A BBC expose on the killing of drug dealers in the Philippines accuses president Rodrigo Duterte of encouraging the killings.
‘‘Ahead of his election, he promised to kill 100,000 criminals in his first six months in office,’’ the BBC reported.
Westpac’s default KiwiSaver fund has Philippine Treasury Bills.
It’s not the only country accused of being involved in extrajudicial killings.
The ASB scheme has sold bonds to Colombia, where security forces are accused of collaborating with paramilitary groups.
GAY RIGHTS
In May, the British Independent newspaper listed 76 countries where homosexuality was illegal.
These included Qatar. In other nations, such as Russia, there are less severe anti-gay laws.
Turkey has been increasingly intolerant of its homosexual community, reports suggest.