Ethical exclusions are becoming more refined

Originally, ethical exclusions in finance were relatively straightforward. Certain industries were considered inherently immoral: alcohol, tobacco, pornography, and so on. In recent years, however, the landscape has become more complex. Exclusions within responsible investing have become more targeted and now also include behavioral filters applied at the company level (see the September 2025 column “The rise of norms-based exclusions”). Several recent developments point to a strengthening of this trend.

Gradually, practitioners in sustainable finance are moving away from an essentialist approach—one centered on the idea that there are “good” and “bad” products—and adopting a more nuanced approach. This approach also takes into account not only how a product is used but also the practices of the companies involved, which are evaluated on a case-by-case basis and within their specific context. It reflects the recognition that products and services can be used in various ways, some of which are considered legitimate, while others viewed as contrary to international standards such as human rights, international humanitarian law, or climate change. More…

Source: illuminem