Investment Group Calls on Indexes to Remove Makers of Controversial Weapons

    By Maitane Sardon 
 

More than 140 asset managers, asset owners, wealth managers and service providers representing $6.9 trillion in assets have called on index providers to remove the manufacturers of certain types of "excessively harmful" weapons from major indexes.

In an open letter, investment association Swiss Sustainable Finance highlights the problems for investors focused on social issues of including the makers of controversial weapons, such as anti-personnel mines, in indexes. The letter was sent to representatives of the FTSE Russell (FTSI), Morningstar (MORN), MSCI (MSCI) and S&P Dow Jones (SPGI) indexes.

Swiss Sustainable Finance defines controversial weapons as those that are most frequently identified by responsible investors as weapons that have been subject to widespread bans or restrictions by international agreements.

"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," the investors said.

Investing in the makers of controversial weapons--which include biological and chemical weapons, cluster munitions, anti-personnel mines or nuclear weapons--goes against some national regulations and international conventions. However, some mainstream indexes continue to include them.

This causes a problem for passive investors whose strategies typically replicate an index and can't screen out weapons makers. For active investors, implementing the exclusions means subjecting portfolios to further scrutiny at additional cost, Swiss Sustainable Finance said.

"Aligning investor portfolios to established values and norms is becoming the new normal for pension funds and other institutional investors," said Sabine Doebeli, CEO at Swiss Sustainable Finance.

As of Feb. 7, the letter had 143 signatories, including ABN Amro Bank NV (ABNBK.YY), DWS Group (DWS.XE)and Man Group plc (EMG.LN).

Write to Maitane Sardon at [e-mail]

(END) Dow Jones Newswires

February 11, 2019 11:21 ET (16:21 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.