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Ethical screening policies

THERE are three main types of ethical screen that investment managers can apply.

In practice, many managers apply a combination.

Negative screening excludes companies involved in specified activities like tobacco, alcohol, gambling, uranium or armaments.

Positive screening targets companies with ‘positive’ social and environmental policies. This favours companies in industries like renewable energy, recycling and water engineering, as well as companies in mainstream industries but with a strong commitment to corporate philanthropy, environmental management, corporate governance and so on.

Best of sector invests in all industry sectors but gives preference to those companies with superior environmental performance within their sector. Focuses on relative performance of companies rather than absolute standards.

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