The Responsible Investment Association Australasia (RIAA) has deemed investments in nuclear weapons manufacture and the manufacture of e-cigarettes and other nicotine alternatives as being incompatible with its Responsible Investment Standard.
RIAA's Responsible Investment Standard - which underpins the body's Responsible Investment Certification Program - specifies that a responsible investment product must, at a minimum, avoid significant harm. This means investors must exclude producers of tobacco, manufacture of nicotine alternatives and tobacco-based products, controversial weapons and nuclear weapons from their portfolio, RIAA said.
As of 1 January 2022, investors seeking Responsible Investment Certification will not be able to invest in companies which derive revenue from the development, production and maintenance of nuclear weapons. The addition of nuclear weapons is the result of a changing international norm, with the Treaty on the Prohibition of Nuclear Weapons entering into force in January 2021, RIAA said.
"With the adoption of this landmark global agreement to ban nuclear weapons, it is now incumbent on responsible investors to follow suit with their investment decision-making and portfolio construction" said RIAA CEO Simon O'Connor. "The majority of leading practice responsible investors already exclude nuclear weapons, however some investors will need to divest from particular companies in order to comply with the standard.
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"We warmly welcome the role that RIAA's updated requirements will play in putting the nuclear weapons industry on notice and assisting more of the superannuation landscape to be nuclear weapons free" said Gem Romuld, Director of the International Campaign to Abolish Nuclear Weapons, Australia.
The minimum requirements of the Standard now also prescribe that in addition to avoiding tobacco products, responsible investors must avoid nicotine alternatives including e-cigarettes and delivery products such as vaping devices.
"E-cigarettes and other electronic nicotine delivery systems contain nicotine, which is addictive, and other toxic substances that are harmful to both users, and non-users who are exposed to aerosols second-hand," O'Connor said. "The addition of nicotine alternatives to the minimum requirements of the standard follows the recommendation by the World Health Organization to broaden consideration of 'harms' from these new forms of nicotine delivery," said O'Connor.
RIAA's Responsible Investment Certification Program is based on eight broad categories: 1. RI Strategies - formal, disclosed, consistent, auditable and fit for purpose 2. Product labels - clear, honest and not misleading 3. Avoids significant harm - as a minimum requirement 4. Accounts for Environmental, Social and Governance (ESG) issues 5. Mandatory disclosures - holdings, performance, benchmark, investable universe, sustainability outcomes and engagement and voting practices 6. Active stewards - stewardship practices, such as engagement and voting and the improved outcomes of these practices 7. Organisation has a demonstrated, formal commitment to RI 8. Organisation educates consumers, financial advisors and the general public on why RI is important (Source: RIAA)