This is often the next step from ESG Awareness - whether by choice or regulatory requirements - like the KiwiSaver default funds required exclusions of fossil fuel investments as defined in the legislation.
Negative Screening - excluding investments (for things like fossil fuels, armaments, nuclear weapons, alcohol, gambling, animal welfare). Although this seems like a straight forward first step, it isn't always as easy as it seems.
There are different definitions for each category and the extent to which a fund manager chooses to apply a definition will depend on how they score on our Ethical Investment Analysis process. For example, if we use weapons, a fund manager may choose to negatively screen for nuclear weapons and cluster munitions, but be happy to invest in companies that make tactical missile drones and weapons.
Another complicating factor is the materiality of the exposure. Some fund manager say 'NO' exposure, while others say 'we will exclude this investment if there is more than 10% (or 20%) of this activity contributing to the revenue of the company.
Comparing approaches is difficult, which is why Moneyworks created our unique and proprietary Ethical Investment Analysis in conjunction with Mindful Money to show what is actually happening.