Millions more dollars have been invested by a Government superannuation fund in an international palm oil company embroiled in allegations of labour abuse on some of its Indonesian plantations.

The Green Party has called on the New Zealand Superannuation Fund and Government Superannuation Fund - two of the Government's three largest investment funds - to cut ties with Wilmar International after receiving information showing around $7 million is currently invested.

As at June last year, the Government Super Fund had a total $1,966,662 invested in the Singapore-based company; last month its holdings totalled $4,569,984.

The NZ Super Fund's holdings changed from $2,416,645 to $2,395,662 over the same period, bringing the total invested by both funds from $4,385,723 to $6,965,646.

In November, human rights organisation Amnesty International released findings of an investigation based on interviews with 120 workers of two Wilmar subsidiaries, alleging women were being forced to work long hours under the threat of having their pay cut, paid below minimum wage and kept in insecure employment without pensions or health insurance.

Its investigation further found children as young as eight were doing hazardous, hard physical work, and labourers having to work long hours to meet "ridiculously high" targets, some of which involved highly physically demanding tasks such as operating heavy manual equipment to cut fruit from trees 20 metres tall.

The investigation also linked many major multinational companies to the firms exposed in the report, among them Unilever, Nestle and Procter and Gamble.

Wilmar has been working through the claims and has challenged some of them, including allegations the company profits from child labour.

But Wilmar acknowledged that some of the identified issues were "common challenges" shared by the industry and it was seeking to address and improve labour practices.

In New Zealand, the use of palm kernel extract (PKE) - a waste product from palm oil production - as supplementary feed on dairy farms has become increasingly controversial because of the palm oil industry's association with rainforest destruction in Indonesia and habitat loss.

In October, the NZ Herald reported how the three big Government funds had a combined $21 million tied up in four palm oil companies that were dropped by the world's biggest state pension fund after a report found an unacceptable risk of "severe environmental damage".

Separately, an NZ Herald investigation last year revealed how millions of Kiwis had unwittingly invested in tobacco and controversial weapons companies through KiwiSaver.

In the latest case, Green MP Mojo Mathers said it was "completely unethical" for taxpayer funds to be invested in a company facing "hugely concerning" allegations.

While the managers of both funds told the Herald they had approached Wilmar over the claims, Mathers felt this wasn't good enough.

"Tiptoeing around behind the scenes in the faint hope that things will improve is neither an accountable nor transparent way of managing publicly-owned funds," she said.

"It wasn't too long ago that these same fund managers thought it was okay to invest in companies making nuclear weapons, cluster bombs, and land mines.

"Until palm oil can be produced sustainably and certified independently, we shouldn't have a bar of it."

Government Superannuation Fund Authority chief executive Simon Tyler said the fund's global equities portfolio was managed by external managers who determined what shares to own based on their relative attractiveness as investments.

All were aware of the fund's responsible investment policies, and one of the managers acquired shares in Wilmar as the company was not currently on the fund's excluded list.

Tyler said the shareholding in Wilmar was accumulated throughout last year and had not been added to since October 17, before questions about Wilmar were raised in Parliament.

"The manager was aware of concerns surrounding Wilmar about palm oil-related deforestation and labour practices prior to making the investment but, after discussing these with the company, considered it to be actively addressing those concerns."

Anne-Maree O'Connor, head of responsible investment at the NZ Super Fund, said the fund had also responded to the Amnesty International report directly with companies through its engagement programme, for which palm oil and human rights "continue to be high priorities".

"We are committed to engagement as the best means of encouraging companies to improve their policies and practices."

Around palm oil, the fund had actively encouraged the Roundtable on Sustainable Palm Oil, of which Wilmar was a member, to lift its standards further by including human rights assessments.

The $30 billion ACC Investment Fund does not invest in Wilmar.

Meanwhile, dairy giant Fonterra has confirmed that it still sources PKE through INL, which imports it solely from Wilmar.

A Fonterra spokesperson said staff met "face to face" with Wilmar in December to discuss the Amnesty International report.

"We continue to engage with Wilmar and will track this as we ensure compliance with our Group Palm Product Standard and Social Responsibility programme."

It comes as New Zealand and Australia is next month expected to vote on whether to make it mandatory for products containing palm oil to be clearly labelled, although this was on nutritional grounds and also applied to other vegetable oils.

- NZ Herald