Investors want weapons manufacturers out of indices

Over 140 asset managers, asset owners, wealth managers and service providers from across the globe representing $6.8trin investor funds have come together to demand Index providers to remove controversial weapons from mainstream indices.

Controversial weapons include such examples as cluster munitions, anti-personnel mines, biological and chemical weapons, as well as nuclear weapons which are produced for countries that have not signed the Treaty on Non-Proliferation of Nuclear Weapons.

An open letter has been sent to representatives from FTSE Russell, Morningstar, MSCI, S&P Dow Jones Indices and STOXX, calling on providers to act.

Investment in companies linked to controversial weapons is already against some national regulations and international conventions. However, mainstream indices continue to include them. For active investors, implementing the exclusions means subjecting portfolios to extra tracking error against standard benchmarks and additional cost. For passive investors, meanwhile, there is often no choice as the vast majority of the strategies replicate traditional, exclusion-free indices.

The initiative, which began in Switzerland, co-ordinated by Swiss Sustainable Finance, has gathered international momentum also thanks to a presence on the PRI Collaboration Platform.

List of signatories.

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