Sparinvest have signed up to an initiative aimed at getting global index providers to exclude controversial weapon manufacturers from their mainstream indices.
“We would like to see index providers being held more accountable for what the majority of index-tracking funds invest in – especially where it concerns companies making products that are deemed illegal by many governments," Nichola Marshall, head of responsible investment at Sparinvest tells Danish AMWatch.
Nichola Marshall says, that a successful outcome would have the dual benefit of putting pressure on companies to stop manufacturing illegal weapons whilst removing tracking error pressure from responsible passive funds. Index providers do offer the option of ESG indices, but these are more expensive, which also seems wrong somehow," Marshall says.
From the moment a company name appears in a major index, its shares are automatically purchased by all passively-investing index funds aiming to replicate that index.
Marshall points to the difficulties responsible investors have with larger tracking errors to mainstream indices.
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