AMP Capital has cut companies with high exposure to fossil fuels from its Responsible Investment Leaders (RIL) funds range.
The firm announced it has tweaked its RIL Charter to exclude companies with more than 20 per cent exposure to certain sectors.
These include mining thermal coal, exploration and development of oil sands, brown-coal (or lignite) coal-fired power generation, and transportation of oil from oil sands and conversion of coal to liquid fuel/feedstock.
The crackdown will impact RIL diversified funds, the RIL Australian Share Fund, the RIL Diversified Fixed Income Fund and the RIL International Share Fund.
AMP Capital head of environmental, social and governance research Ian Woods said 56 companies will be on the chopping block, including Peabody Coal and Coal India.
The firm also excluded a couple of Chinese companies from its emerging market funds as they exceeded the 20 per cent exposure limit to coal mining.
But they will continue investing in BHP Billiton and Rio Tinto, as about 5 per cent of their total value is associated with coal.
“Under the terms of the charter, most companies with material fossil fuel exposure are already excluded,” Woods said.
“However, we feel having a formal limit on fossil fuels more clearly reflects investors’ growing interest and concern regarding these investments.”
The RIL funds will also avoid investing in companies with a “material exposure” of 10 per cent or more to activities like tobacco, nuclear power (including uranium), pornography, gambling, alcohol and armaments.
Woods added the policy will be reviewed on a yearly basis, with intent to tighten criteria over time.
