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INVESTING/PORTFOLIO STRATEGIES

Australian manager AMP Capital dumps tobacco, weapons investing

Australia's largest publicly traded money manager is ditching stock and debt investments in companies with ties to tobacco, cluster munitions and land mines, in the latest push for ethical investing in the nation.

AMP Capital Investors, the investment management arm of AMP Ltd., is dumping about A$440 million ($334 million) worth of investments in tobacco manufacturing-related companies and about A$130 million in land mine and cluster munition manufacturers. The moves come as AMP Capital rolls out a new decision-making framework across its A$165 billion investment portfolio, the manager said in a statement Thursday.

“We are not prepared to deliver investment returns to customers at any cost to society,” CEO Adam Tindall said in the statement. “AMP Capital has a long-term focus on responsible investing supported by an integrated approach to considering ESG factors across all asset classes.”

The money manager's decision comes amid burgeoning demand for ethical investments in Australia's A$2.2 trillion retirement savings pool. Assets at funds that screen out investments that don't meet ethical investing criteria grew by 16% to A$24.7 billion in 2015-16, according to the Responsible Investment Association Australasia.

AMP, which also controls insurance and banking businesses, will implement a new framework that considers harm as well as “denial of humanity” when determining investment decisions. Tobacco manufacturers were culled under the framework because their products were addictive, while cluster munitions and biological weapons would “indiscriminately kill through normal use,” the company said.

The sales of the stakes will occur progressively throughout 2017, AMP said in the statement. The company engaged the help of consulting group, The Ethics Centre, to create its ethical investing framework, according to the statement.

“AMP Capital still firmly believes in company engagement in order to effect meaningful change,” Mr. Tindall said. “In the case of tobacco, cluster munitions, land mines, biological and chemical weapons manufacturers, however, no engagement can override the inherent dangers involved with their products.”