AMP Capital has announced it will screen out companies with a material exposure to fossil fuels in its Responsible Investment Leaders (RIL) range of funds, in response to client demand.
AMP currently has about $3 billion under management in the affected funds and in total manages funds of about $128 billion.
AMP Capital has said the RIL Charter of Operation will now screen out companies that have more than a 20 per cent exposure to a range of fossil fuel activities.
These will include mining thermal coal, exploration and development of oil sands, brown-coal or lignite, coal-fired power generation, transportation of oil from oil sands or conversion of coal to liquid fuels/feedstock.
The new policy will impact RIL diversified funds, the RIL Australian Share Fund, the RIL Diversified Fixed Income Fund and the RIL International Share Fund.
The AMP Capital move will exclude 56 companies from the Responsible Investment Leaders’ investible universe.
AMP Capital Head of Environmental, Social and Governance Research Dr Ian Woods said: “The Charter of Operation requires the RIL funds to avoid investing in companies with a material exposure to activities that have a high negative social impact.
Dr Woods said these included the production and manufacture of tobacco, nuclear power including uranium, armaments, alcohol, pornography and gambling.
“Increasingly, responsible investors also want their portfolios to mirror their views on the need to address climate change.
“Under the terms of the charter, most companies with material fossil fuel exposure are already excluded.
“However, we feel having a formal limit on fossil fuels more clearly reflects investors’ growing interest and concern regarding these investments,” Dr Woods added.
While many funds talk about responsible investing and environmental, social and governance factors, very few have taken the step of actively screening companies with material exposure to fossil fuels.
Generally a ‘best of sector’ approach is taken.
AMP Capital is a signatory to the United Nations’ Principles for Responsible Investment and a member of the Investor Group on Climate Change (Australia/New Zealand).
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