Any negative screening is driven by specific client requirements. These operate on the basis of specific sector exclusions (directed by the client) which vary by client and can change over time depending on the requirements of the clients. The most common exclusions are no involvement in tobacco products, alcohol, armaments, nuclear or contraception. The wording of client mandates varies but generally the exclusion will be based upon either the core activity of the company or a specific percentage of sales. For these restrictions we operate a negative screening process to exclude companies from the investable universe based on these particular criteria. In most cases external service providers are used to identify companies to be excluded / included. These external providers offer the ability to set the detailed criteria in a manner suitable to each different client requirement. These providers are subject to regular due diligence overseen by David Sheasby, Head of Stewardship and ESG. This includes looking at the methodology for screening and the frequency of updates and reviews. The processes in place are comprehensive, provide the opportunity for companies to correct any inaccuracies, are subject to audit, are overseen by an independent committee and are periodically reviewed for quality assurance purposes.
Where a client portfolio is subject to restrictions these are then coded into the portfolio management and dealing systems to ensure ongoing compliance with client requirements. There is a daily feed to ensure that the universe exclusions remain consistent with client requirements.