Institutional investors are calling on index providers to remove controversial weapons from global indices as part of a movement towards responsible investments.
An open letter signed by 142 asset and wealth managers called on stockmarket indices to automatically exclude companies involves in the production of controversial weapons.
Representing US$6.9 trillion in assets, the investors are asking for weapons including anti-personnel mines, cluster munitions, biological and chemical weapons and nuclear weapons to be removed.
“There is a growing consensus among financial regulators, asset managers and end investors to invest responsibly. Excluding companies with any involvement in the production of controversial weapons is a key part of that,” the letter said.
Large names like Credit Suisse and Pictet Asset Management signed the letter that was sent to FTSE Russell, Morningstar, MSCI, S&P Dow Jones and Stoxx.
“The financial industry is in a position to make a huge difference to responsible investing, and that should include making funding less easily available for such companies.”
“We therefore call upon index providers to remove companies involved in controversial weapons from mainstream indices, and to engage in dialogue with asset owners and asset managers on using these indices for benchmarking and investment solutions.”
Colonial First State is one of the first Australian companies to join 142 institutional investors who are calling for the exclusion of controversial weapons.
Colonial First State’s head of investments Scott Tully said becoming a signatory on the open letter produced by investors was just another step towards responsible investing.
“Becoming a signatory to the open letter is yet another step we are taking to support global action on responsible investment issues.
“Together with other asset owners, we are in a position to make a huge difference to responsible investing, which we know is something many of our members value. We believe that active and passive investments should, by default, exclude controversial weapons,” he said.
Colonial First State remains on track to complete its own divestment from controversial weapons and is also a signatory to the United Nations’ tobacco-free finance pledge.