Screening Policy

Summary of Decisions Taken Under the Screening Policy

Since this screening policy was enacted at the inception of our firm, we have excluded 2,945 companies from our portfolios for specific reasons enumerated under this policy.

The five most common primary criteria cited for exclusions under our screening policy were:

Criteria	Percentage of Exclusion Decisions
Direct harm to living things	52%
Unacceptable emissions	25%
Human rights violations	5%

The above criteria account for roughly 82% of all decisions to exclude securities, but it’s worth mentioning that our process is currently only able to provide one reason for an exclusion, when in reality there are usually several overlapping reasons we have decided to avoid the company’s securities.

Scope of the Screening Policy

1. These guidelines apply to all mandates managed by Ethical Capital Investment Collaborative regardless of asset class.
2. Sloane Ortel is charged with executing this policy, consulting with internal and external experts nominated by her at her discretion.
3. Sole decision making authority will reside with Sloane Ortel, or her nominee in cases of illness or incapacity.
4. Recommendations and decisions on exclusions based on subsections 2 and 3 shall not include:
   • Green bonds issued by the company in question where such bonds are recognized through inclusion in specific indices for green bonds or are verified by an independent third party.
   • Shareholdings where Ethical Capital sees mission-oriented opportunities such as a shareholder activism campaign or scope for constructive long-term engagement with management.
   • Ethical Capital believes that the company has enacted changes in strategy, structure, or capital expenditure policy that will generate substantial positive impact.
5. Ethical Capital makes decisions on the observation and exclusion of companies in portfolios in accordance with the criteria in sections 2 and 3. These decisions are regularly reviewed, and may be revised at Ethical Capital’s discretion.

Criteria for Product-Based Exclusion of Companies under the Screening Policy

1. Assets entrusted to our firm shall not be invested in companies which themselves or through entities they control:
   1. Cause direct harm to living things, including through:
      1. Manufacturing meat, dairy, eggs, honey, butter, silk, and cheese,
      2. Contributing to demand for leathers, hides, and furs, or
      3. Production of fishing, hunting, and other equipment that directly harms animals.
      4. Sale of weapons, military materiel, or consulting services that support military operations,
   2. Prey on addictions to alcohol, tobacco, and gambling, 
   3. Aid and abet the fossil fuel industry through lending, oilfield services, and other related services, 
   4. Are principally and clearly engaged in extractive activities, including through mining, expropriation of public assets, or other activities which generate significant externalized costs,
   5. Enable and deepen surveillance capitalism through consumer tracking, privacy erosion, and related operations, or
   6. Operate for-profit prisons. 
2. Ethical Capital may decide to exclude or further observe companies which through themselves or entities they control:
   1. Derive 30% or more of their income from thermal coal, 
   2. Base 30% or more of their operations on thermal coal, 
   3. Extract more than 20 million tonnes of thermal coal per year, or 
   4. Have a coal power capacity of more than 10,000 MW from thermal coal. 
3. Ethical Capital will also consider forward-looking assessments pursuant to subsection (2), since company plans may change the level of extraction, capacity, income, or share of overall revenues derived from renewable energy sources.

Criteria for Conduct-Based Exclusion of Companies under the Screening Policy

Companies may be excluded or put under observation from all strategies managed by our firm if there is an unacceptable risk that the company contributes to or is responsible for: 

1. Direct harm to human and non-human animals, including through:
   1. Animal testing,
   2. Environmental practices,
   3. Hostile work environments,
   4. Neglect, or 
   5. Other outcomes of business practices. 
2. Gross abuse of water resources, 
3. Inadequate respect & deference given to indigenous communities. 
4. Failure to adequately hire, retain, include, and promote diverse staff,
5. Failure to adequately secure the company’s information resources and/or invest in suitable technology infrastructure, 
6. Failure to provide appropriate oversight of all related activities (including failure to provide safe working conditions or protect consumers),
7. Human rights violations, including murder, torture, deprivation of liberty, forced labor, and child labor,
8. Serious violations of the rights of individuals in situations of war or conflict,
9. Severe environmental damage,
10. Acts or omissions that on an aggregate company level lead to unacceptable greenhouse gas emissions,
11. Providing financial support to politicians or political parties that enact targeted restrictions on access to healthcare, employment, or other goods and services that might reasonably be considered essential. 
12. Engagement in schemes and other chicanery to avoid taxes in a manner that significantly departs from industry practices,
13. Gross corruption,
14. Anti-union behavior,
15. Contravention of law, 
16. Predatory lending, or
17. Other serious violations of fundamental ethical norms. 

Revision History

Date	Notes
8/10/2021	First enacted and published
9/28/2021	Revised to cover use of corporate funds for lobbying activities.
11/26/2023	Added summary of decisions taken under this policy to date, harmonized policy language to specifically enumerate all decisions taken to date under “catch-all” clauses, renamed document “screening policy” to conform with CFA Institute definitions for responsible investment approaches, and moved document from PDF to Webpage for easier external review.
3/11/2024	Updated policy to reflect new branding, streamlined product-based exclusion policy, and updated summary tables characterizing decisions taken to date.
5/11/2024	Added creative commons licensing to our screening policy to allow others to build upon it in their own work.

Screening Policy © 2021 by Ethical Capital Investment Collaborative is licensed under Creative Commons Attribution-ShareAlike 4.0 International 

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