AMP Capital will offload over $470 million (A$438 million) of tobacco equity and fixed income securities in a radical detox of its Australasian portfolios.
The smoke ban, which follows similar moves across in Australia’s asset management and super fund industries, reflected AMP Capital’s “new decision-making framework” for environmental, social and governance (ESG) issues, a spokesperson for the group said.
“Under the new ethical framework, in exceptional circumstances, AMP Capital may exclude companies or sectors on moral or ethical grounds,” the spokesperson said.
In conjunction with the smoke sell-down, AMP Capital Australia would catch up with its NZ sister firm by cleansing all “manufacturers of cluster munitions, landmines, biological and chemical weapons” from its investment universe.
The group’s NZ arm cleared portfolios of any remaining exposure to ‘controversial weapons’ last year following an uproar over potential KiwiSaver scheme investments in cluster munitions firms.
In a statement, AMP Capital CEO, Adam Tindall, said the tobacco and munitions divestment move would complement the fund manager’s existing engagement approach to environmental, social and governance (ESG) issues.
“[The divestment policy] reflects the changing attitudes of our investors, who increasingly do not want to be invested in harmful products,” Tindall said.
“It’s important to note we are only excluding certain companies or sectors by exception. AMP Capital still firmly believes in company engagement in order to effect meaningful change. In the case of tobacco, however, no engagement can override the inherent dangers involved with these products.”
He said the divestments – to be implemented over the next 12 months across the group’s external managers operating under the AMP Capital Multi-Asset umbrella – would not clash with fiduciary obligations.
“Our analysis has found that our funds can continue to be managed effectively under this new framework without compromising investment objectives,” Tindall said.
AMP would progressively update affected fund product disclosure statements under the portfolio smoke-free plan, the spokesperson said, with investors to be notified prior to any changes.
“The managers of impacted portfolios will be instructed to progressively sell down their holdings of excluded securities in a reasonable manner,” the spokesperson said. “This may take up to 12 months from time of formal notification.”
However, AMP Capital had yet to decide which index the tobacco-less range of funds would be measured against.
“We’re still working out the appropriate implementation approach, including fund benchmarks, with the impacted managers,” the spokesperson said.