The rise of norms-based exclusions

Sector-based exclusions represent the oldest form of responsible investment. This approach involves refraining from investing in industries considered immoral — such as tobacco, gambling, arms, and fossil fuels. More recently, however, a lesser-known approach, norms-based exclusions, has expeditiously come to the fore. Instead of targeting entire industries, norms-based exclusions hone in on corporate practices that deviate from international standards of social responsibility (UN, OECD). Recent events clearly illustrate this shift. 

Amid calls for European states to bolster their defence capabilities, financial institutions are beginning to relax their investment policies on arms-related investments. Many are now opting for behavioural criteria over blanket sectoral exclusions. For example, the Swedish bank SEB recently changed its policy to allow investments in the arms industry, provided the companies involved implement robust human rights due diligence in their sales and export activities. Similarly, Mirova, a sustainable investment subsidiary of France’s Natixis, has just published a report clarifying its position on defence: ‘No sectoral exclusion as a matter of principle, but a demanding policy of minimum standards.’ More…

Source: Covalence / illuminem