AMP Capital, Australia’s second largest fund manager, has embraced ethical investing by ditching $570 million in investments in tobacco and weapons.
Tobacco manufacturers are now excluded from the AMP Capital portfolio because their products are highly addictive.
Cluster munitions, landmines, biological and chemical weapons manufacturers are out because their products indiscriminately kill.
“We are not prepared to deliver investment returns to customers at any cost to society,” says AMP Capital CEO Adam Tindall.
He says AMP Capital can still deliver strong investment returns after the changes.
The new position comes after consultation with major institutional clients and engagement with retail customers.
The new ethical framework has been incorporated into AMP Capital’s existing Environmental, Social and Governance and Responsible Investment Philosophy.
AMP Capital says that manufacturers of tobacco, cluster munitions, landmines, biological and chemical weapons do not meet the minimum ethical standards and will be excluded from its investable universe.
This means about $440 million worth of tobacco manufacturing-related equity and fixed income holdings will be divested from AMP Capital’s portfolios.
This is the largest divestment of tobacco securities in Australia.
And $130 million invested in manufacturers of cluster munitions and landmines will also be divested.
There are no companies with known exposure to chemical or biological weapons in AMP Capital’s portfolios.
The excluded investments are a fraction of AMP Capital’s $165 billion in assets under management.
Tindall says AMP Capital has a long-term focus on responsible investing and the latest changes reflect the changing attitudes of investors, who increasingly do not want to be associated with harmful products.
The new framework recognises and applies degrees of “harm” or the “denial of humanity” of another person as determining factors.
“It’s important to note we are only excluding certain companies or sectors by exception,” Tindall says.
“AMP Capital still firmly believes in company engagement in order to effect meaningful change.
“In the case of tobacco, cluster munitions, landmines, biological and chemical weapons manufacturers, however, no engagement can override the inherent dangers involved with their products.”