This is where the fund sets a number of negative criteria and any company that fails these is excluded from their investable universe and therefore the portfolio. An involvement in the arms or tobacco businesses for example.
Where a fund sets a number of positive criteria and companies that meet these can be included. For example companies with strong positive environmental impacts.
Where a fund would invest in the company or companies that have the best track record on the combination of financial, social and environmental performance in a sector – as opposed to just the best financial performance
Where attempts are made through dialogue, shareholder resolutions and voting rights to influence companies policies and to encourage positive change. Often relationships develop between companies and investment houses and fund managers where the former seek consultation on a range of corporate governance matters.
Include funds that have a particular narrow focus e.g. healthcare or the environment and investments that have very positive social and or environmental impacts such as the ethical property company, fair traded goods companies and forestry. The latter tend to represent what most people have in mind when they think about investing ethically, that is being able to invest in companies and projects that are having some obvious very beneficial impact on the environment and/or socially, and that might not go ahead without investors. These would form part of the Alternative and Specialist Fund portion of a portfolio.