At Simplicity, our Responsible Investment Policy guides all of our investment decisions. It sets clear exclusions for companies that breach international standards, such as the UN Global Compact, particularly where conduct amounts to complicity in human rights abuses.

In light of widespread concern about the ongoing conflict in Gaza and Israel, our Investment Committee has carefully considered the humanitarian impact. While sovereign bonds are not formally covered under the UN Global Compact, we believe the current conduct of the Israeli government in Gaza is inconsistent with these principles. International agencies and humanitarian organisations have presented clear evidence of widespread suffering, particularly through the obstruction of aid and its impact on civilians.

This step is also fully consistent with our Responsible Investment Policy, in particular its Future Exclusions provision. That provision allows us to review and divest from specific investments if credible public information indicates that an asset should be excluded. Where we take such actions, we commit to communicating them transparently to our members, as we are doing here.

For this reason, the Investment Committee has instructed our global bond fund manager, DWS, to divest from existing Israeli government bond holdings and to exclude them from all future investment until further notice. This decision is driven by humanitarian concerns, not by politics. It is based on the behaviour of the current Israeli government, not a judgment about Israel as a country or its people.

Importantly, Israeli government bonds represent only 0.29% of the global bond index. Excluding them is not expected to have a material impact on the global bond fund’s objectives, diversification, or performance.

We recognise that excluding a sovereign issuer is an exceptional step. Simplicity generally invests passively through index-tracking funds and does not take positions on geopolitical issues. However, the scale and persistence of this humanitarian crisis make these circumstances different.

Equity holdings
For the time being, Simplicity will continue to hold shares in three Israeli companies in the cyber-security, pharmaceuticals, and property development sectors through our global share funds. These investments are not excluded under the rules of the Bloomberg screened equity index we track, and we have no information to indicate that these companies are complicit in the conflict. We will continue to monitor the situation closely, including any updates from Bloomberg and its ESG data providers. If credible evidence emerges that these or any other companies are in breach of the UN Global Compact principles, we will expect them to be excluded through the index screening process.

As a KiwiSaver and fund manager that has ethics at its core, this situation and our members' concerns, matter to us. We will keep members updated about any further developments. If you have any further questions or comment, please get in touch at info@simplicity.kiwi