Using an ethical framework helps in pre-determining negative impacts on a portfolio’s overall value and performance, according to AMP Capital.
AMP Capital has announced that it would incorporate the ethical framework into its pre-existing environmental, social and governance (ESG) and responsible investment philosophy.
AMP Capital chief executive, Adam Tindall, said: “This provides greater insight into the potential risks and opportunities that may impact the value, performance and reputation of companies we invest in”.
“It is consistent with AMP’s commitment to building a sustainable future and creating long-term, shared value for our customers, shareholders, employees, the community, and the environment.”
Under the new framework, AMP Capital would divest $440 million worth of tobacco related equity and fixed income holdings, the largest in tobacco securities to date in Australia.
AMP Capital has decided that it would exclude manufacturers of tobacco, cluster munitions, landmines, and biological and chemical weapons from all of its portfolios where it is responsible for the investment management.
“AMP Capital has a long-term focus on responsible investing supported by an integrated approach to considering ESG factors across all asset classes,” Tindall said.
“We are not prepared to deliver investment returns to customers at any cost to society.”
While the new framework was in alignment with AMP Capital’s ESG philosophy, Tindall said its initiation was also based of investor preference.
“It reflects the changing attitudes of our investors, who increasingly do not want to be invested in harmful products,” he said.
“Our analysis has found that our funds can continue to be managed effectively under this new framework without compromising investment objectives.”