Search this website. You can use fund codes to locate specific funds

ESG exclusions: a behind-the-screen analysis

esg-paper-thumbnail

The exclusion of certain businesses from investment portfolios – such as tobacco or weapons stocks – whose activities oppose the ethical views held by an investor, was initially practiced by a fervent few as one of the earliest forms of responsible investing.

Now the movement has a broad following. We support the rise of active ownership as an effective way for investors to exercise their responsibilities, but also recognise that exclusion lists – or screens – can help investors practise their beliefs.

Exclusion lists seem simple in principle, but can be complex in implementation: tolerance levels must be set to govern exposures to companies directly involved in one or more screened-out lines of business, as well as those forming related supply chains.

Any exclusion list should be enforced carefully. This helps to ensure that an investor’s financial objectives concerning return and volatility can be achieved while also fulfilling their long-term responsibilities.

Related articles

Go to the source: ESG integration in SMID equities
Your Questions Answered by Hermes Direct Lending
Going mainstream: how ESG investing has evolved in the past six years
Global Equity ESG marks six-year anniversary
Engagement in Asia – Overcoming obstacles
Hermes strengthens private debt platform with new hire