More NZ millions in firm under fire

Green Party urges superannuation funds to cut ties with Indonesian palm oil company accused of labour abuse

Millions more dollars have been invested by a government superannuation fund in an international palm oil company embroiled in allegations of labour abuse on some of its Indonesian plantations.

The Green Party has called on the New Zealand Superannuation Fund and Government Superannuation Fund — two of the Government’s three largest investment funds — to cut ties with Wilmar International.

The Government Super Fund last month had $4,569,984 invested in the Singapore-based company. The NZ Super Fund had $2,395,662 invested.

In November, human rights organisation Amnesty International released findings of an investigation based on interviews with 120 workers of two Wilmar subsidiaries, alleging women were being forced to work long hours, paid below minimum wage and kept in insecure jobs without pensions or health insurance.

Its investigation further found children as young as 8 were doing haz- ardous, hard physical work, and labourers having to work long hours to meet “ridiculously high” targets.

Wilmar has been working through the claims and has challenged some of them, including allegations the company profits from child labour.

But the firm acknowledged some of the identified issues were “common challenges” shared by the industry and it was seeking to address and improve labour practices.

In New Zealand, the use of palm kernel extract (PKE) — a waste product from palm oil production — as supplementary dairy feed has become increasingly controversial because of the palm oil industry’s association with rainforest destruction in Indonesia and habitat loss.

Green MP Mojo Mathers said it was “completely unethical” for taxpayer funds to be invested in a company facing “hugely concerning” claims.

While the managers of both funds told the Herald they had approached Wilmar over the claims, Mathers felt this wasn’t good enough.

“Tiptoeing around behind the scenes in the faint hope that things will improve is neither an accountable nor transparent way of managing publicly owned funds,” she said.

“It wasn’t too long ago that these same fund managers thought it was okay to invest in companies making nuclear weapons, cluster bombs, and land mines.

“Until palm oil can be produced sustainably and certified independently, we shouldn’t have a bar of it.”

Government Superannuation Fund Authority chief executive Simon Tyler said the fund’s global equities portfolio was managed by external managers who determined what shares to own based on their attractiveness as investments.

All were aware of the fund’s responsible investment policies, and one of the managers acquired shares in Wilmar as the company was not currently on the fund’s excluded list.

Tyler said the shareholding in Wilmar was accumulated throughout last year and had not been added to since October 17, before questions about it were raised in Parliament.

“The manager was aware of concerns surrounding Wilmar about palm oil-related deforestation and labour practices prior to making the investment but, after discussing these with the company, considered it to be actively addressing those concerns.”

Anne-Maree O’Connor, head of responsible investment at the NZ Super Fund, said the fund had also responded to the Amnesty International report directly with companies through its engagement programme, for which palm oil and human rights “continue to be high priorities”.

“We are committed to engagement as the best means of encouraging companies to improve their policies and practices.”

Around palm oil, the fund had actively encouraged the Roundtable on Sustainable Palm Oil, of which Wilmar was a member, to lift its standards further by including human rights assessments.

Meanwhile, dairy giant Fonterra has confirmed it still sources PKE through INL, which imports it solely from Wilmar. A Fonterra spokesperson said staff met “face to face” with Wilmar in December to discuss the Amnesty report.

“We continue to engage with Wilmar and will track this as we ensure compliance with our Group Palm Product Standard and Social Responsibility programme.”

NZ and Australia are set to vote next month on whether to make it mandatory for products containing palm and some other oils to be clearly labelled, on nutritional grounds.

Mojo Mathers, Greens MP