Investment Screening & Exclusion Policy
This page is a link-only reference to the canonical Screening & Exclusion Policy. The authoritative version lives on our public site.
- Canonical policy: https://ethicic.com/process/screening-policy
- For edits, update the public site; this page remains a navigational pointer.
0.1 1.2 Core Philosophy
We seek to align with goodness and avoid preventable harm to living things. This principle guides all investment decisions through professional discretion. The systematic elimination of companies engaged in harmful activities reveals businesses that are structurally integrated into healthy social systems, demonstrating sustainable competitive advantages through reciprocal value creation rather than extractive practices.
0.2 1.3 Governance Structure
- Decision Authority: The Chief Investment Officer maintains sole discretion over all exclusion and inclusion decisions, including the authority to reverse exclusion criteria when warranted
- Discretionary Management: As a discretionary investment manager, professional judgment is exercised on a case-by-case basis within the framework of preventing harm
- Client Input: While clients cannot weaken firm-wide exclusions, they may adopt stricter parameters for their individual portfolios
- Documentation Standards: All exclusion decisions are tracked through portfolio management systems and reviewed monthly
0.3 1.4 Formal Commitments
Ethical Capital maintains the following institutional commitments:
- Apartheid-Free Pledge: Formal commitment to exclude companies complicit in systematic oppression
- PetChem Investor Declaration: Commitment to address petrochemical risks and plastic pollution
- Plant-Based Treaty: Commitment to support a transition towards a plant-based society.
- Additional commitments may be adopted as they align with our core mission
1 2. Product‑Based Exclusions
Assets entrusted to our firm shall not be invested in companies which engage in any of the below activities directly or through entities they control.
1.1 2.1 Harm to Living Beings
1.1.1 2.1.1 Animal Testing
Use of animals for product testing or R&D, including contracted services.
1.1.2 2.1.2 Animal Products
Production of animal‑derived products (meat, dairy, eggs, honey) or materials (leather, fur, silk).
1.2 2.2 Weapons and Military Operations
1.2.1 2.2.1 Defense Contractors
Defense services that enable military operations (logistics, targeting, consultancy, maintenance).
1.2.2 2.2.2 Weapons Manufacturing
Manufacture/assembly of weapons, munitions, or critical weapons components.
1.3 2.3 Addictive and Exploitative Products
1.3.1 2.3.1 Tobacco
Cultivation, manufacturing, or branded distribution of tobacco and nicotine products.
1.3.2 2.3.2 Alcohol
Production and distillation of alcoholic beverages.
1.3.3 2.3.3 Gambling
Casinos, online betting, lotteries; core revenues from gambling activities.
1.3.4 2.3.4 Misinformation
Systematic propagation or monetization of false content.
1.3.5 2.3.5 Fake News
Networks publishing knowingly false or misleading content for profit or political ends.
1.3.6 2.3.6 Multi‑Level Marketing
MLM/pyramid‑like distribution models with high participant loss rates.
1.4 2.4 Fossil Fuels and Extractive Industries
1.4.1 2.4.1 Fossil Fuels: Production/Financing
Upstream/downstream oil & gas operations or material financing of fossil fuel expansion.
1.4.2 2.4.2 Unacceptable Emissions
Products or production processes with outlier lifecycle emissions intensity.
1.4.3 2.4.3 Mining / Extractive Practices
Mining and extractive operations with significant externalized harms.
1.4.4 2.4.4 Single‑Use Plastics
Manufacture of virgin polymer single‑use plastics and packaging reliance.
1.4.5 2.4.5 Fertilizers with Significant Environmental Harms
Synthetic fertilizers with outsized, well‑documented environmental impacts (eutrophication, N₂O).
1.5 2.5 Surveillance and Incarceration Systems
1.5.1 2.5.1 Surveillance Capitalism
Business models built on invasive tracking, data brokerage, and systemic privacy erosion.
1.5.2 2.5.2 Prison Industrial Complex Enablement
For‑profit prisons, monetization of incarceration, or reliance on prison labor.
2 3. Conduct‑Based Exclusions
Companies may be excluded or placed under observation if there is unacceptable risk that the company contributes to or is responsible for the following.
2.1 3.1 Direct Harm and Rights Violations
2.1.1 3.1.1 Forced Labor
Any use, complicity, or inadequate controls against forced labor.
2.1.2 3.1.2 Child Labor
Any use, complicity, or inadequate controls against child labor.
2.1.3 3.1.3 Anti‑Union Practices / Interference with FOA
Interference with freedom of association and collective bargaining.
2.1.4 3.1.4 Working Conditions / Occupational Safety
Serious, systemic failures in workplace safety or conditions.
2.1.5 3.1.5 Indigenous Rights Violations
Violations of FPIC, land rights abuses, or cultural harms.
2.1.6 3.1.6 War/Conflict: Serious Violations
Grave breaches of human rights in conflict zones.
2.1.7 3.1.7 Israel/Palestine: Settlement/Occupation Involvement
Operations supporting settlement expansion or occupation (infrastructure, services, supply).
2.2 3.2 Environmental and Climate Misconduct
2.2.1 3.2.1 Severe Environmental Damage
Major incidents, pollution, or resource abuse causing lasting harm.
2.2.2 3.2.2 Unacceptable Greenhouse Gas Emissions
Outlier company‑level GHG intensity without credible mitigation.
2.2.3 3.2.3 Failure to Develop Credible Transition Plans
No science‑based targets, capex misalignment, or misleading claims.
2.3 3.3 Governance and Operational Failures
2.3.1 3.3.1 Failure of Oversight
Board/management oversight failures leading to safety or consumer harm.
2.3.2 3.3.2 Regulatory Risk
Active or pending regulatory scrutiny indicating material governance or compliance risk.
2.3.3 3.3.3 Corruption / Bribery
Established patterns of bribery, kickbacks, or state capture.
2.3.4 3.3.4 Tax Chicanery / Abusive Tax Schemes
Aggressive tax avoidance significantly beyond industry norms.
2.3.5 3.3.5 Data Security / Systemic Privacy Failures
Repeated breaches or misuse of personal data at scale.
3 4. Implementation and Discretion
3.1 4.1 Exclusion Framework
- Binary Decisions: Exclusions are binary determinations subject to overruling at the Chief Investment Officer’s discretion
- Industry Context: Companies presenting outstanding opportunities on all criteria except a narrow issue consistent with industry practices may warrant reconsideration
- Holistic Assessment: All securities evaluated based on products and conduct
- Professional Judgment: All decisions involve professional discretion within the framework of preventing harm
- Information Basis: We make the best decisions we can with the information we have
3.2 4.2 No Exceptions or Appeals
- No formal appeals process exists, as companies are not notified of their exclusion status.
- Clients are encouraged to request a rationale for any exclusion decision.
- No temporary exceptions are granted
- Reversal authority rests solely with the Chief Investment Officer, and will be granted at their sole discretion.
3.3 4.3 Engagement with Companies
- Upon discovery of a prohibited practice at a current holding, The Chief Investment Officer may choose to engage with companies instead of immediately disposing of the position.
4 5. Strategy-Specific Implementation
4.1 5.1 Growth Strategy - Full Implementation
- Target: Full policy alignment.
- Positive Impact Requirement: Companies must generate positive outcomes through their primary business lines (i.e., the same way they generate revenue, not through unrelated programs)
4.2 5.2 Income Strategy - Flexible Implementation
- Target: As close to 100% policy alignment as possible while fulfilling strategy objectives
- Implementation Limitations: This strategy may hold as much as 100% direct securities or 100% funds.
- Direct Holdings: Individual securities will always be selected with full exclusion criteria.
- Fund Component: Managers that align with our screening policy will be selected.
4.3 5.3 Diversification Strategy - Aligned Implementation
- Target: As close to 100% policy alignment as possible while fulfilling strategy objectives
- Implementation Limitations: This strategy is invested through external managers, 100% funds.
- Through selection of aligned managers and vehicles
- Fund Selection: Values-screened funds preferred; broad market funds accepted where necessary
- Structural Limitations: Acknowledges constraints inherent in external fund management
4.4 5.4 Portfolio Management
- Review Frequency: All holdings rebalanced on the last trading day before or first trading day after the new moon
- Composition Changes: All strategies evolve to align with opportunities - clients should expect this
- Client Communication: Chief Investment Officer retains discretion regarding issue notification
5 6. Research and Monitoring Framework
5.1 6.1 Data Sources
Primary Sources:
- Company disclosures and direct communications
- Proprietary research
Secondary Sources:
- Activist reports and NGO investigations
- Credible media reporting
- AI-enhanced analysis for filing review
Note: We do not rely on third-party ethical ratings services, conducting all screening through internal analysis.
5.2 6.2 Process
- Preemptive Screening: Exclusions occur before purchase consideration
- Continuous Monitoring: Living framework refined through ongoing research
- Corporate Actions: Evaluated the same way as any other investment decision
- Documentation: Portfolio management spreadsheet tracks exclusion decisions and rationale
6 7. Risk Management Integration
6.1 7.1 Preventable Harm as Investment Risk
Companies engaged in activities causing preventable harm face material risks including:
- Regulatory sanctions and legal liabilities
- Reputational damage affecting brand value
- Stranded assets from changing regulations or social norms
- Operational disruptions from stakeholder opposition
- Reduced access to capital markets
6.2 7.2 Portfolio Risk Mitigation
Systematic exclusion of companies engaged in harmful activities serves to:
- Reduce exposure to contingent liabilities
- Avoid assets at risk of becoming stranded
- Minimize reputational risk to investors
- Align portfolios with long-term sustainability trends
7 8. Client Relations & Communications
7.1 8.1 Customization Parameters
- Clients may adopt stricter exclusion parameters than firm policy
- Clients cannot weaken or reverse firm-wide exclusions
- Individual position exclusions permitted at client request
7.2 8.2 Transparency
- Clients are asked not to share details on our engagements with companies to maximize the likelihood of positive outcomes.
- Full explanation of exclusion rationale available to clients upon request.
- Open-source methodology available on GitHub (exclusion policy, data structure, policies and procedures manual)
8 9. Key Performance Indicator
Primary Metric: Do portfolio companies align with goodness and avoid preventable harm to living things?
This singular focus reflects our conviction that long-term value creation requires integration between business operations and societal wellbeing.
9 10. Revision History
| Date | Version | Summary of Changes | Approved By |
|---|---|---|---|
| 8/10/2021 | 1.0 | Initial policy adoption | SO |
| 9/28/2021 | 1.1 | Corporate lobbying provisions added | SO |
| 11/26/2023 | 1.2 | Language harmonization | SO |
| 3/11/2024 | 1.3 | Organizational rebranding | SO |
| 5/11/2024 | 1.4 | Creative Commons licensing | SO |
| 8/20/2025 | 2.0 | Comprehensive update | SO |
| 8/22/2025 | 2.1 | Fiduciary framework integration | SO |
| 8/23/2025 | 2.2 | Discretionary management clarification | SO |
| 8/29/2025 | 2.3 | Final implementation with clarifications | SO |
| 8/29/2025 | 3.0 | Consolidated final version | SO |
| 9/23/2025 | 3.1 | Update Sections 2 & 3 taxonomy, tags, and UNGC cues | SO |
| 9/23/2025 | 3.1.1 | Move UNGC alignment to Appendix C | SO |
| 9/23/2025 | 3.1.2 | Remove public shortcodes; rename 3.3.2 to Regulatory Risk | SO |
10 11. Licensing
This policy is licensed under Creative Commons Attribution-ShareAlike 4.0 International (CC BY-SA 4.0). Organizations may adapt this framework with appropriate attribution to Invest Vegan LLC DBA Ethical Capital.
11 Appendix A: Implications of our public pledges
As signatories to the Apartheid-Free Pledge, we commit to:
- Exclude companies complicit in systematic oppression
- Divest from entities operating in occupied territories in ways that entrench oppression
- Support economic pressure for justice and human rights
- Regular review of operations in contested regions
Companies are assessed against apartheid criteria including:
- Operating in occupied territories
- Providing services/infrastructure that entrench occupation
- Supplying military/security equipment used in oppression
- Benefiting from systematic discrimination
As signatories to the petchem investor statement, we formalize the expectation that companies:
- Transparently disclose, define strategies and set clear targets to transition to production of safe, environmentally sound and sustainable plastic
- Address polymers and chemicals of concern in their products
- Build suitable infrastructure for production of sustainable materials
- Establish dedicated governance
- Publicly support an ambitious international legally binding instrument for ending plastic pollution
12 Appendix B: Core Harm Assessment Questions
When evaluating a company, we ask:
- Does this company’s existence cause net harm to living beings?
- Is the harm preventable through different business practices?
- Is the company taking meaningful action to eliminate harm?
- Would excluding this company reduce harm in the world?
- Are there alternatives that achieve similar ends without harm?
13 Appendix C: UNGC Alignment (Summary Cues)
- Human Rights (P1–P2): Misinformation and false news; direct harm and rights violations; surveillance and incarceration systems; data privacy and security
- Labour (P3–P6): Anti‑union practices; forced labor; child labor; working conditions and safety
- Environment (P7–P9): Fossil fuels and extractive industries; environmental and climate misconduct
- Anti‑Corruption (P10): Corruption and bribery; abusive tax schemes; failures of oversight; objectionable and predatory lending