NZ Super Fund taken to court over Western Sahara phosphate

The Polisario Front, the political arm of the Western Sahara independence movement, has filed a court action against New Zealand Super Fund over its investments in entities that source phosphate from, or operate in the disputed territory of Western Sahara.

The group has taken the action in New Zealand’s High Court against the Guardians of NZ Superannuation, the body responsible for managing the NZ$36 billion ($21.10 billion; €19.21 billion) superannuation fund.

The claim made a set of accusations surrounding the Guardians’ obligations under the New Zealand Superannuation and Retirement Income Act 2001, and the application of its Responsible Investment Framework.

A spokesman for NZ Super Fund said the Guardians deny the allegations.

Agri Investor understands that NZ Super Fund uses fertilizer on its farms that contains phosphate sourced from Western Sahara, although the spokesman did not confirm this when asked.

The territory of Western Sahara was occupied by Morocco in 1975, whose claims over the disputed area are generally not recognized by the international community.

The two companies that make up the overwhelming majority of New Zealand’s domestic fertilizer market, Balance Agri-Nutrients and Ravensdown Co-Op, both import Western Sahara phosphate and are among the only companies left in the western world that continue to do so. As a result, the issue is not unique to NZ Super Fund in New Zealand’s agricultural sector.

The Polisario Front’s accusations suggest that NZ Super Fund is in breach of its Responsible Investment Framework by holding investments in farms that use Western Sahara phosphate, as well as owning stakes in companies that import the commodity or operate in the territory, mostly through passive index funds.

The aim of the legal action is to put further pressure on New Zealand companies to cease export of the commodity.

“We take our obligations as a responsible investor very seriously. These obligations are integrated into the Guardians’ investment activities through its Responsible Investment Framework,” the spokesman said.

“The Guardians believes it has appropriately applied its Responsible Investment Framework in a manner that meets its legislative obligations to manage the fund; in a manner consistent with best practice portfolio management, and avoiding prejudice to New Zealand’s reputation as a responsible member of the world community.”

NZ Super Fund said that its activities have been graded as A or A+ by the United Nations-backed Principles for Responsible Investment in its annual assessment, and that five-year performance reviews considering whether the Guardians’ investment policies and procedures are appropriate for the fund “have been complied with in all material respects.”

“The litigation will be defended and we do not believe it is appropriate to make additional comment on the proceeding while it is front of the court,” the spokesman added.