Introduction to Socially Responsible Portfolio

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Responsible Investment Framework

NEGATIVE SCREENING

A screening policy that systematically excludes specific industries, sectors, companies, regions, practices from a portfolio that are misaligned with the responsible investment goals. This approach is also referred to by some specialist asset managers as ethical screening.

ESG INTEGRATION

This approach relies on the belief that a company’s environmental, social & governance (ESG) policies can be a driver of investment value and risk. Therefore, a manager who is wishing to integrate ESG into their portfolio will review a company’s ESG policies in addition to traditional financial analysis.

POSITIVE OR BEST-IN-CLASS SCREENING

Involves screening or ranking companies within a sector based upon their positive ESG or sustainability policies. This allows a specialist asset manager to identify companies that may have superior ESG performance.

SUSTAINABILITY THEMED INVESTMENT

Involves investing in companies or assets that are within a sustainability theme. Typically, this involves investing in funds who pursue themes such as green technology, water technology, clean energy & sustainable agriculture. Many of these themes in the future are predicted to become the backbone of our economy and investment in them contributes to solutions globally.

IMPACT INVESTING

These are targeted investments that have the intention of addressing a specific environmental or social issue whilst also having the potential to create positive financial returns. Although difficult, specialist asset managers invest into companies, organisations and funds with the intention to generate social and environmental impact alongside financial return.

30 AUGUST 2019