Negative/exclusionary screening has long been a part of our investment process, for both client-directed and UCITS compliance-based screens (e.g., for the Convention on Cluster Munitions.) More recently, SKY Harbor has applied a screen on companies that we have determined to have dominant risks related to ESG factors such as coal miners, private prison operators, companies with increasing ESG-related legal liabilities and, increasingly, energy companies with impaired access to capital due to increasingly negative investor and lender sentiment.
We have recently launched a sustainability-focused fund that prohibits investment in the energy sector, thermal coal mining, utilities that use thermal coal as a major input, gaming, alcohol and tobacco-related companies.
Positive/best-in-class and norms-based screening are somewhat newer in our investment process, and have been directed by our increased awareness of how international frameworks, like the UN Global Compact, can guide how investment managers can align their investment processes with asset owner values, particularly with European-based clients. Our recently launched sustainability fund emphasizes through higher concentrations within the portfolio issuers that show increased transparency and reporting, increased stakeholder awareness and engagement and strong and diverse governance structures.