In practice, the majority of investments are in companies that are considered to be neutral in terms of the positive and negative screens. Such investments are made on the basis of fundamental investment criteria, assisting U Ethical to exercise good stewardship, and provide a reliable source of income and capital growth.
We apply a materiality threshold of 5% exposure across our exclusion criteria, as we recognise it can be challenging to screen all negative activity with 100% conviction. In addition, where companies have an insignificant exposure to an excluded activity, this may be outweighed by other positive aspects of their business.
We also work with peers and industry bodies to promote the ethical approach with participation in working groups, media releases and sponsorships. We are currently involved in numerous collaboration efforts with peers and industry groups to collectively lobby companies.
Our advocacy is applied in recognition of our limited resources. We have traditonally lobbied and sought explanation from industry around two or three critical issues. It is our conscious effort to make a difference.
We actively vote our proxies (See Voting Policy) and incorporate strong gender diversity targets and remuneration caps. We also seek to actively engage with companies on ethical issues and look to effect positive change via direct engagement and collaboration. We have a documented set of principles stipulating when and how we engage with companies.