Court finds NZ Super exclusions policies 'unlawful'

New Zealand's High Court has ruled against the nation's super fund, finding some of its policies are "unreasonable and unlawful" in regards to how it treats companies accused of human rights breaches.

The Palestine Solidarity Network Aotearoa (PSNA) issued judicial review proceedings against NZ Super Fund for its failure to divest from Israeli companies that have been deemed by the United Nations to be complicit in the Israeli occupation of Occupied Palestinian Territory (OTP). It asked the High Court to review the fund's policies in relation to ethical investments.

The complaint related to holdings in Airbnb, Booking.com, Expedia, and Motorola. Collectively, NZ Super has about $155 million of its $75 billion invested in them.

The PSNA had been calling for NZ Super to divest the companies for some time prior to filing for judicial review, having had success against the fund in 2021 when it divested five Israeli banks due to risks they were materially contributing to human rights breaches.

In a judgment released this morning, the High Court found: "The Guardians' policies fail to meet the basic requirements of the Act (New Zealand Superannuation and Retirement Income Act 2001) so far as exclusion from the fund for alleged breach of human rights standards is concerned. They are unreasonable and unlawful."

The court called for the Guardians to reformulate the policy documents which, once in place, will require the fund to make a decision regarding the four holdings.

However, the court also found that after NZ Super divested the Israeli banks in 2021 it changed its exclusions policy to remove explicit reference to human rights standards and expectations.

The High Court said the fund's policies are now "materially less clear and specific than previous iterations and there is no practical benchmark for those applying the policy in relation to alleged breaches of human rights standards".

Further, the court said NZ Super failed in its duty to "uphold the reputation of New Zealand as a responsible member of the world community", as dictated in the New Zealand Superannuation Bill that created the fund in 2000.

In response, NZ Super Fund said it is considering the outcome.

Chief executive Jo Townsend said the fund is strongly committed to operating as transparently as possible.

"We recognise that we are investing on behalf of all New Zealanders, and that gives people a legitimate interest in how we manage the fund," she said.

"We will thoroughly evaluate today's decision and determine how best to respond to it."