One of Australia's largest fund managers will divest millions of dollars worth of shares in companies that make deadly landmines and cluster bombs as part of an ethical investment overhaul.
AMP Capital will also sell about $440 million worth of tobacco company shares under a new framework that uses degrees of "harm" and "denial of humanity" to determine if an investment is ethical.
The $165 billion investment manager said on Thursday it would divest about $130 million worth of shares of companies that make cluster munitions and landmines because those weapons killed indiscriminately and left a dangerous legacy for civilians.
The company said it was not invested in chemical and biological weapons manufacturers, but ruled out ever doing so under the new ethical framework, developed with the help of The Ethics Centre.
AMP Capital said it was selling out of tobacco because it was a highly addictive product that could not be safe for consumers and hurt others through passive smoking.
"We are not prepared to deliver investment returns to customers at any cost to society," AMP Capital chief executive Adam Tindall said.
AMP Capital's new ethical framework takes into account if there are international conventions that prohibit or control a company's products.
The Convention on Cluster Munitions, which bans the use and production of cluster bombs, has been signed by more than 100 states, including Australia.
Mr Tindall said AMP Capital still believed that engaging with companies was the best way to change their behaviour, but when it came to makers of tobacco, cluster munitions, landmines, biological and chemical weapons, "no engagement can override the inherent dangers involved with their products".
"Our analysis has found that our funds can continue to be managed effectively under this new framework without compromising investment objectives," he said.
Market Forces analyst Daniel Gocher said AMP Capital was ahead of many of its peers by divesting from munitions, and had been one of the first fund managers in 2014 to remove fossil fuels from its "responsible" investment products - which also out screen out tobacco, uranium, weapons, gambling and pornography.
"It's good but we'd like to see it go further, especially on coal," Mr Gocher said.
"They've previously said divestment is not the best approach on climate change, so it's interesting that they've now applied divestment across their whole portfolio for a bunch of other sectors."
The story AMP dumps cluster bombs and cigarette stocks in ethics overhaul first appeared on The Sydney Morning Herald.