AMP Capital, the Sydney-based asset manager with US$131bn (€96bn) under management, has “formally excluded” companies with a material exposure to the most intensive fossil fuels from its Responsible Investment Leaders (RIL) fund range.
The move – in “response to client demand” – has seen AMP amend the funds’ charter to ensure they avoid firms with a more than 20% exposure to a range of fossil fuel factors.
These include: mining thermal coal; oil sands exploration, development and transportation; brown-coal (or lignite) coal-fired power generation; and the conversion of coal to liquid fuels/feedstock.
The funds involved include AMP’s four RIL diversified funds as well as the series’ Australian Share Fund, Diversified Fixed Income Fund and International Share Fund. The range has been performing well lately; to take one example, the A$862.95m RIL Balanced Fund returned +1.3% for the March quarter, outperforming its strategic benchmark by +0.2%.
The fossil fuel exclusion builds on existing bans on tobacco, nuclear power, armaments, alcohol, pornography and gambling.“Increasingly, responsible investors also want their portfolios to mirror their views on the need to address climate change,” said Ian Woods, the firm’s Head of Environmental, Social and Governance Research.
He went on: “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.” It means that 56 companies are excluded from the funds’ investment universe.
AMP has been a signatory to the Principles for Responsible Investment since 2007. In the same year it launched its AMP Capital ESG Index, which has outperformed the main market ASX200 on a rolling three year average by typically 0.5%.
In August last year it said it was starting to consider climate change in its strategic asset allocation in diversified funds, though it was “still early days and further work” needed to be done.
Meanwhile, US faith group the Unitarian Universalist Association is set to debate a motion calling for its $165m endowment fund to divest fossil fuels at the body’s annual General Assembly in Providence, Rhode Island on June 25-29.