KiwiSaver and cluster bombs

A few days ago I saw an article which really threw me for a loop. It turns out that most New Zealand retirement savings schemes (“KiwiSaver” funds) have shareholdings in tobacco companies, and in companies that manufacture cluster bombs, land mines, or nuclear weapons. This article quoted an executive from my bank (ASB Bank) as saying that most kiwis weren’t too concerned with where their money was invested. I wrote a grumpy open letter in response, and here it is:

To: Jonathan Beale, ASB General Manager of Wealth, dated 18 August 2016
Cc: Barbara Chapman, ASB Chief Executive
Cc: Anusha Bradley, Radio NZ Journalist
Cc: James Shaw, Member of Parliament, Green Party co-Leader
Cc: social media

Dear Jonathan Beale,

I am writing this letter to you by hand to indicate how important an issue it is for me. I was shocked to learn in the news today that my ASB Kiwisaver scheme invests in companies that manufacture cluster bombs and anti-personnel mines. I was then appalled to read your claim, quoted in a Radio NZ report, that “most people with a Kiwisaver account are not too concerned about where their money was invested”.

I believe that most New Zealanders do care. I believe that banking executives who put profits before ethics, yourself apparently included, are on the wrong side of history.

As you are hopefully aware (if not, let me educate you) New Zealand is a signatory to the 1997 Ottawa Treaty which bans the use, stockpiling, or production of land mines. In addition, New Zealand hosted 122 nations for disarmament talks in 2008, which culminated in the “Wellington Cluster Bomb Declaration”, and the 2008 Convention on Cluster Munitions, which we have also signed and adopted as law. This convention prohibits not only using or stockpiling cluster bombs, but also assisting (or financing!) their production or use. Don’t tell me that New Zealanders are unconcerned with funding the production of horrific, banned weapons!

I stopped in at an ASB branch to ask for details of how my ASB Kiwisaver money is being invested, and was told by a helpful staff member that internal communications from head office said “there’s no proof yet that ASB is caught up in this business” and “people at head office are looking into it”.

When I got back to my computer, it took me less than five minutes of internet research to discover:

  • The largest single component of my ASB ‘Balanced’ fund is invested in Vanguard International Shares Index Fund (VISIF)
  • Vanguard’s Product Disclosure Statement for this fund states “Vanguard does not take into account labour standards, environment, social or ethical considerations when selecting, retaining, or realising investments in the Fund”.
  • According to the most recent fund holding statement as of 31 July 2016, the VISIF fund includes:
    Cluster bomb manufacturers: General Dynamics ($15,667,107.09), Textron ($3,848,995.46),
    Land mine manufacturers: Northrup Grumman ($14,538,622.02),
    Nuclear weapons manufacturers: Fluor Corp ($2,847,499.19), Honeywell International ($32,400,518.43), Lockheed Martin ($26,638,317.26),
    Tobacco companies: Philip Morris ($59,768,837.18), Japan Tobacco ($16,457,325.01), British American Tobacco ($45,687,607.78)
    …and that’s just for starters!

Jonathan, you have been on the ASB Kiwisaver investment committee for two years. Would you rather claim that in all this time you never took five minutes to glance through Vanguard’s Product Disclosure Statement and Holdings Statements, or that you read them thoroughly and found no cause for concern? Even if you were oblivious to the names of companies which produce illegal, immoral weapons, surely you would have noticed Philip Morris within the top 30 shareholdings?

I presume that you received a large bonus after ASB’s recent record profits. On your LinkedIn profile you indicate that you have two children. I hope you are investing this bonus sensibly and ethically to give them a fighting chance in this world that you are helping to create. Or, you know, you could use your powers for good, and become an agent for positive change. While you make up your mind, I will look for another Kiwisaver provider with ethical investment options.

Kind regards,
Dr. Nathaniel Janke-Gilman

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