Ethical investing: Positive and negative screening criteria

Ethical investing includes eliciting from the client both positive criteria and negative issues.  The screening criterion cover a broad range of social, human welfare, environmental and animal welfare concerns. Below are the ethical investing criteria - both positive and negative, if you would like to take a look.

Ethical investing: Negative screening criteria

  • Alcohol/Tobacco Retailing - avoiding companies in these categories may exclude investment in supermarkets.

  • Animal Testing - covers the development of cosmetics, toiletries and household products which involving animal testing (Non-Medical), and the development of drugs and healthcare services which involve animal testing (Medical).

  • Animal Welfare Issues - covers a range of activities including intensive farming; the processing and retailing of meat and dairy based foods; and the use of fur and animal skins.

  • Armaments - covers companies developing, manufacturing or supplying weapons, components of weapons and other military equipment; and companies with sales or service contracts with military customers.

  • Banking & Finance - covers conventional banks and financial institutions, including those involved in socially or environmentally irresponsible practices.

  • Corporate Governance - covers issues such as bribery, corruption, and anti-competitive and socially irresponsible practices.

  • Environment - covers environmental impacts, such as biodiversity, pollution, and ozone depleting chemicals. Negative Impacts Only covers funds with basic statements to "avoid environmental damage" and avoiding specific impacts without reference to positive analysis. Negative/Positive Balance covers funds with a balanced consideration of impacts and positive mitigation measures. Climate Change & Fossil Fuels covers funds with policies targeting these specific issues.

  • Gambling - covers issues such as involvement in casinos, betting shops, online gaming and the National Lottery.

  • Genetic Modification - covers the development of products involving the genetic modification if animals or plants, or the use of genetically modified ingredients in areas such as food products.

  • Human Rights - covers the effect of companies on their workforce and the communities in which they operate, either by reference to whether the countries in which they operate have oppressive regimes (Countries of Operation), or by reference to evidence that a company’s operations have negatively affected human rights (Evidence of Violations).

  • Nuclear - covers companies involved in nuclear power for electricity generation, and provision of products and services to the nuclear industry.

  • Pornography - covers the production, distribution and retailing of pornographic or “adult” items such as films or magazines.

  • Product Stewardship - covers the ways in which companies promote and market products with potentially negative social impacts such as alcohol, tobacco, and breast milk substitutes.

  • Shariah Law - covers companies that do not comply with the principles of Islamic (Sharia) law.

Ethical investing: Positive screening criteria

  • Animal welfare - funds which favour companies improving the welfare of animals in a range of situations, including animal used in medical and non-medical testing, and farm animals.

  • Corporate Governance - funds which favour companies with good corporate governance and environmentally and socially responsible business practices.

  • Engagement - funds which engage directly with the companies in which they invest on matters of social, environmental, and ethical concern.

  • Environment - funds which favour companies contributing to tackling the problems associated with climate change; companies improving their management of environmental risks and impacts, or with management systems that reach a defined standard; and companies that produce products with inherent environmental benefits.

  • Product Stewardship - funds which favour companies providing products or services that make positive contributions to society.

  • Society - Funds which favour companies with policies and practices directed at the community or other social causes; companies involved in education or providing educational products; companies with good employment policies and practices; and companies operating in the health sector, or that provide products with direct benefits to human health and/or quality of life.

Source: Ethical Screening

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