Ethical and Social Investments

Ethical Grade A - Responsible Leaders

Overview

The Responsible Leaders portfolio invests in a wide range of funds which take a forward-looking and responsible approach to environmental, social and governance (ESG) issues.

Funds are expected to demonstrate that they are contributing towards more responsible business practices through their investment strategies.

Eligible Funds

Managers of funds that are available for selection within this portfolio are required to demonstrate that ESG issues are at the heart of their investment processes and are clearly integrated into their stock selection, retention and/or realisation strategies.

Funds where ESG integration, engagement or other related responsible investment strategies exist are also potentially eligible at the discretion of the Ethical Oversight Committee.

Areas of Avoidance

There are no explicit or absolute exclusions for this portfolio. However, it is likely to be significantly underweight in traditional areas of avoidance as a result of its positive theme and aims.

In particular, the portfolio managers are required to limit exposure to armaments (strategic), pornography (production), animal testing (nonmedical), tobacco (production) and companies with poor environmental and/or human rights practices in line with our previously published 50% Target Adherence criteria.

Summary Guidance

This portfolio is likely to suit clients who want the widest possible range of ethical and socially responsible investment (SRI) options. They are likely to be more interested in governance and responsible business practices than areas of avoidance common with the fiduciary requirements of charities and trusts.

Ethical Grade B - Sustainability Leaders

Overview

The Sustainability Leaders portfolio invests in a wide range of funds that place significant emphasis on selecting stocks which effectively manage sustainability-related issues.

Funds are expected to demonstrate that they are aiding the transition towards more sustainable lifestyles through their consideration of environmental and social issues.

Eligible Funds

Managers of funds available for selection within this portfolio are required to demonstrate that researching sustainability-related issues form a significant part of their investment analysis and stock selection processes.

Funds where ESG integration, engagement or other related responsible investment strategies exist are also potentially eligible at the discretion of the Ethical Oversight Committee.

Areas of Avoidance

There are no explicit or absolute exclusions for this portfolio, however, it is likely to be significantly underweight in traditional areas of avoidance as a result of its positive theme and aims.

In particular, the portfolio managers are required to limit exposure to armaments (strategic), pornography (production), animal testing (nonmedical), tobacco (production) and companies with poor environmental and/or human rights practices in line with our previously published 75% Target Adherence criteria.

Summary Guidance

The sustainability theme and its exposure to some green technology holdings may make this portfolio attractive to clients more interested in environmental issues than social or ethical matters. The portfolio also reflects a broad socially responsible approach.

Ethical Grade C - Ethical Leaders

Overview

The Ethical Leaders portfolio invests in a wide range of fund options where ethical — as well as social and environmental considerations — are at the heart of the stock selection process.

Funds are expected to demonstrate that they have a positive investment philosophy and select companies in line with published ethical criteria.

Eligible Funds

Managers of funds available for selection within this portfolio are required to show that their fund is intended for ethically minded investors. They are expected to apply positive and/or negative ethical screening criteria (or equivalent) and are required to avoid certain areas.

Funds that set the bar high when they balance ethical pros and cons may also be available at the discretion of the Ethical Oversight Committee.

Areas of Avoidance

Funds are required to have exclusion criteria that cover the following areas: armaments (strategic), tobacco production, gambling, pornography, animal testing (nonmedical), poor human rights practices and companies with poor management of environmental practices and impacts.

Note: ‘avoidance criteria’ does not always mean ‘zero involvement’ as most ethical funds have de minimus limits which allow for limited (normally non-manufacturing or wholesale related) exposure to excluded areas. This allows funds to be manageable and support otherwise positive larger companies.

Summary Guidance

This portfolio is likely to appeal to clients who are looking for a pragmatic ethical approach with a strong values base. Such clients may also be interested in positive approaches to investment rather than simple avoidance. They will accept the notion of making choices that balance different factors.

Ethical Grade D - Traditional Ethical Leaders

Overview

The Traditional Ethical Leaders portfolio invests in funds where there are clear negative avoidance criteria which relate to a wide range of ethical, social and environmental issues.

Funds must demonstrate that they select and/or avoid stocks in line with a comprehensive range of values based on ethical screening criteria, which set out unacceptable areas of business involvement.

Eligible Funds

Managers of funds that are available for selection within this portfolio must demonstrate that they apply extensive positive and/or negative ethical screening criteria and are clearly intended for investors with ethical concerns. The fund must also avoid a number of areas as detailed below.

Funds that set the bar high when they balance ethical pros and cons may also be available at the discretion of the Ethical Oversight Committee.

Areas of Avoidance

Funds are required to have exclusion criteria that cover the following areas: armaments (strategic), tobacco production, gambling, nuclear power, pornography, alcohol production, animal testing (nonmedical), poor human rights practices and companies with poor management of environmental practices and impacts.

Note: ‘avoidance criteria’ does not always mean ‘zero involvement’ as most ethical funds have de minimis limits which allow for limited (normally non-manufacturing or wholesale related) exposure to excluded areas. This allows funds to be manageable and support otherwise positive larger companies.

Summary Guidance

This is a strictly screened ethical portfolio which is likely to appeal to clients with strongly held beliefs and values. These values may reflect faith-based concerns or relate to corporate activity. Clients should, however, be made aware that this portfolio invests via ethical funds which invest in traditional capital markets, not smaller scale projects.

Financial Guides

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The information contained within this site is subject to the UK regulatory regime and is therefore targeted primarily at consumers based in the UK. This website is designed to provide you with general information only and does not attempt to give you advice on any particular investment or to recommend any particular investment to you. If you have any doubt as to whether a particular investment is suitable for you, you should contact Advanced Asset Consultants Limited on 0141 331 2434.

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