Vague investment policy, real legal risk: High Court decision on the NZ Super Fund

What went wrong?

A judicial review of the NZ Super Fund is a timely warning for the public sector: vague responsible investment policies can create legal exposure, undermine certification and review obligations and invite court supervision. The NZ Super Fund just had parts of its responsible investment framework declared unlawful. Not because of what it invested in, but because its policies lacked the specificity the law requires. In this article our experts look at what went wrong, and how to make sure your organisation isn't next.

In the recent case of Nazzal v Guardians of New Zealand Superannuation [2026] NZHC 681, Mount J declared key parts of the New Zealand Superannuation Fund’s (NZ Super Fund) responsible and sustainable investment framework as being unlawful. The NZ Super Fund is managed by the Guardians of New Zealand Superannuation (the Guardians). The Court’s focus was not on telling the Guardians what to invest in, but on whether their policy documents are detailed enough to meet what the governing legislation requires.

What was unlawful: Parts of the Guardians’ Statement of Investment Policies, Standards and Procedures and their Sustainable Investment Framework (together, investment policies).
Why: The investment policies did not clearly set out the standards and procedures for avoiding harm to New Zealand’s reputation as a responsible member of the world community, as required by the New Zealand Superannuation and Retirement Income Act 2001 (the Act).
No “light touch” on legislative compliance: the courts will play a proactive supervisory role when assessing compliance with overarching legislation. They won’t rewrite investment policies, but they will check whether any required investment policies actually meet the legislative requirements.
What this means for you: large investors that are subject to governing legislation must ensure that any policies, standards and procedures are specific enough to meet the requirements of the legislation, to be applied consistently and to be independently reviewed.
Why the decision matters: This case should be a warning for those public investment bodies and for regulators who rely on internal policy frameworks. Mount J’s message is simple: if Parliament tells you to have “policies, standards and procedures”, those documents must contain clear benchmarks and a clear decision process - not just broad aspirations about the types of investments that may be made.

Why were proceedings brought against the NZ Super Fund?

The NZ Super Fund is a Crown-owned wealth fund with approximately $86 billion in assets. It is managed by the Guardians, pursuant to the requirements of the Act.

The Act requires the Guardians to invest on a prudent, commercial basis, and to manage the Fund in a way that avoids prejudice to New Zealand’s reputation as a responsible member of the world community (s 58(2)(c)). It requires the investment policies to cover ethical investment - including policies, standards or procedures for avoiding that reputational prejudice (s 61(d)) – and then reinforces accountability. The Chair and Chief Executive of the Guardians must certify each year whether the NZ Super Fund complied with its policies.

This judicial review was brought by two Palestinian New Zealanders, and the co chair of the Palestinian Solidarity Network Aotearoa, against the Guardians. The applicants challenged whether the Guardians had lawfully complied with their statutory duties on ethical investment, arguing that the Guardians’ investment policies failed to give proper effect to the requirement to avoid prejudicing New Zealand’s reputation as a responsible member of the world community.

The case arose from the Guardians’ continued investment in Airbnb, Booking Holdings (Booking.com), Expedia Group and Motorola Solutions, which the applicants said were connected to activities in the occupied Palestinian territories and raised human rights concerns. In substance, the challenge was not aimed at mandating divestment, but at the lawfulness of an investment framework said to be vague, lacking clear standards and procedures and incapable of consistent application.

What the Court decided

The Guardians argued the Court should take a deferential, light touch to supervising the Guardians’ approach because responsible investment involves expert, commercial judgement. Mount J disagreed. Whether the Guardians’ policy documents meet the Act’s requirements is a legal question for the Court to decide.

Ultimately, the Court decided that:

The Act requires intelligible benchmarks or criteria as to compliance with the relevant standards. They can involve judgement, but they cannot be so vague that they are meaningless.
References to procedures requires a defined process - in plain terms: who decides, what steps they should follow and what criteria/thresholds they apply.
This clarity matters because the Act requires annual certification and independent review of the investment documents. The policies must be clear enough to test whether they were followed.
In evidence in the current claim, the relevant correspondence and affidavits from the Guardians referred to different “thresholds” and to ratings from MSCI (an investment research provider), without those tests being clearly set out in the written policies.

The Court granted judicial review and declared that parts of the investment documents do not comply with ss 58(2)(c) and 61(d) of the Act, and that they are unreasonable and unlawful.

The Court did not order divestment from any particular company (including those linked to the occupied Palestinian territories and listed in a database maintained by the Office of the United Nations High Commissioner for Human Rights). It also did not need to make an order forcing the Guardians to rewrite the documents - although the Guardians will need to ensure compliance moving forward.

How public bodies can guard against similar risks

For each statutory duty, point to the exact clause in your investment documents (and any supporting framework) that implements it.
If you rely on international standards (eg UN Global Compact; UN Guiding Principles on Business and Human Rights), say which ones and how they guide decisions.
Set out the steps for review/engagement/exclusion, including who decides and what thresholds or criteria are applied.
Don’t “simplify” away the content needed for consistent decisions, annual certification, independent review processes, etc.