Exclusion policy

We define ourselves as long-term, quality-focused investors. We will not make investment decisions which will knowingly harm others. This means that there are certain people we would not invest with and some businesses that we would not own. In particular, this includes people with histories of corporate misdemeanours, or businesses significantly exposed to harmful products and services, which we discuss below.


A key part of our approach to responsible investment includes commitments to:

  • Support and uphold the fundamental principles of human rights. These are rights belonging to all human beings regardless of race, sex, nationality, ethnicity, language, religion or any other status;
  • Support international norms and standards enshrined in widely adopted treaties, conventions and codes of practice; and
  • Uphold the highest standards of environmental stewardship¹


We use a holistic view of a company’s quality to determine whether we should invest. The first step in our process is to assess whether the company has a social licence to operate, weighing if its business model and its products or services are fundamentally purposeful to society. We also consider if the consumption of one unit of the product or use of the service provided by the company is harmful to human health or society. Effectively, this rules out two areas entirely, including companies that manufacture certain types of controversial weapons2 (cluster munitions, anti-personnel mines, small arms, biological and chemical weapons, depleted uranium, nuclear weapons and white phosphorus munitions), and companies with that derive any revenue directly from the manufacture of cigarettes or tobacco products.3

Apart from these two hard exclusions, there are countless grey areas where our clients expect further clarity on what exposure we might permit. This is a delicate topic and one we discuss at length among the team. Tobacco, defence, and gambling are easy sectors to exclude, but it is harder to validate and exclude all natural resource companies, especially in cases where a company might play an important role in the transition to renewable energy.


Over and above these exclusions, we assess the quality of management and their ways of addressing environmental, social and governance (ESG) issues. In our research, we look for evidence that the management operates the business effectively and in the interests of all stakeholders, including their customers, employees, suppliers and the larger community, both now and for the longer term. We believe that companies that do not look after their stakeholders are unlikely to be rewarding long-term investments.

For companies that do not meet our quality criteria, there is no obligation for us to invest in them. This same consideration applies for companies we own but where the quality has declined over time. We monitor companies and engage with management teams on a regular basis to evaluate whether their direction of travel on ESG matters remains positive.

Environmental issues

Coal

We do not invest in companies where ownership of coal mines is a key part of the business. We impose a 10% revenue threshold measured on a rolling three-year average. We will continue to encourage the ceasing of coal related financing in our investments in banks.

Additionally, we will not invest in companies pursuing new: 

  • thermal coal extraction or generation projects; 
  • oil sands (tar sands) extraction projects; or
  • arctic oil and gas exploration or extraction projects

Deforestation⁴ and biodiversity⁵

We expect companies that source or use palm oil to follow the policies of the Roundtable on Sustainable Palm Oil (RSPO) and have No Deforestation, No Peat, No Exploitation (NDPE) policies in place. Where this is not the case, we strongly encourage consumer companies to follow these policies or to consider aligning aspects of their operations to these policies.

Social issues

Tobacco

We do not invest in companies involved in the production of tobacco products⁶. As an extension of our responsibility, we will continue to encourage the ceasing of tobacco industry relations in our investments in banks and retail.

Gambling

We do not invest in companies directly generating revenue from gambling.  

Weapons

We do not invest in companies involved in the production or development of cluster munitions, anti-personnel mines, small arms, biological and chemical weapons, depleted uranium, nuclear weapons and white phosphorus munitions.

Pornography

We do not invest in companies involved in the production or material distribution of pornography.

Governance issues

Bribery 

We do not invest in companies where systemic bribery is believed to be taking place. We expect companies to follow Principle 10 of the UN Global Compact.

Tax

We believe all companies should follow local tax legislation in both the letter and the spirit of those laws. Those that do not are likely to face a regulatory or consumer backlash, or both. We will not invest in companies that persistently violate local tax legislation.

1 The use of investor rights and influence to protect and enhance overall long-term value for clients and beneficiaries, including the common economic, social and environmental assets on which their interests depend.

2 This includes all companies that manufacture controversial weapons and entities that own more than 50% of controversial weapons manufacturers, with an effective 0% revenue threshold. This does not extend to minority investments, where a parent company owns less than 50% of a company.

3 This includes all companies involved in the production of traditional cigarettes and other tobacco products (including cigars and chewing tobacco), but not including vaping or e-cigarette products, with an effective 0% revenue threshold. This does not extend to minority investments, where a parent company owns less than 50% of a company.

4 The purposeful clearing of forested land

5 Every living thing, including plants, bacteria, animals, and humans.

Disclaimer

The commitments and targets set out on this website are current as of today’s date. They have been formulated by the relevant First Sentier Investors (FSI) investment team in accordance with either internally developed proprietary frameworks or are otherwise, based on the Institutional Investors Group on Climate Change’s (IIGCC) Paris Aligned Investment Initiative framework. The commitments and targets are based on information and representations made to the relevant investment teams by portfolio companies (which may ultimately prove not be accurate), together with assumptions made by the relevant investment team in relation to future matters such as government policy implementation in ESG and other climate-related areas, enhanced future technology and the actions of portfolio companies (all of which are subject to change over time). As such, achievement of these commitments and targets set out on this website depend on the ongoing accuracy of such information and representations as well as the realisation of such future matters. FSI will report on progress made towards achieving these targets on an annual basis in its Climate Change Action Plan. The commitments and targets set out on this website are continuously reviewed by the relevant investment teams and subject to change without notice.