The Fund EcoMarket ‘SRI Styles’ are designed to help intermediaries navigate the sustainable, responsible and ethical investment fund universe.
SRI Styles (or ‘labels’) group broadly similar fund options together – focusing on a combination of key issues and approaches.
They aim to help users to recognise the key strategic similarities and differences that are likely to matter to clients with an interest in sustainability or ethical issues.
They are however only a starting point. Many clients have specific requirements, so ‘SRI Styles’ should generally be used in conjunction with the additional filter options on the Fund EcoMarket tool.
Users should also be aware that there are wide strategy variations within each SRI Style (fund policies and strategies vary) – as well as cross-over between the Styles (eg most funds in this area consider climate change).
The following is a brief description of each style, with links to further information.
‘SRI Styles’ directory and links to individual ‘Styles’ pages
Funds which focus on a specific issue or theme – often alongside screening criteria and engagement:
- Sustainability Focused funds focus significantly on (environmental and social) sustainability issues, opportunities and themes when selecting investments. These funds tend to have forward looking strategies, favouring companies and other assets that show ‘sustainability leadership’, are ‘solutions companies’ , or are helping to facilitate the ‘transition’ to more sustainable lifestyles. They may also have ‘ethical’ exclusion criteria and encourage positive change through stewardship activity.
- Environmental Focused funds significantly integrate environmental issues into investment strategies. Their focus is often around longer term environmental and resource related issues, risks and opportunities. Some funds are very broad, others focus on a single issue, industry or resource. They may have ‘ethical’ exclusion criteria and also encourage positive change through stewardship activity.
- Social Focused funds focus on ‘people issues’, investing in assets that help to address social challenges such as employment, education, housing and other basic necessities of life. Strategies vary, some invest in an individual sector others invest more broadly.
Funds which focus on ‘ethical’ or ‘values based’ issues – normally by employing negative and/or positive screening criteria – typically alongside ESG considerations and engagement activity:
- Ethically Focused funds – focus on ‘values based’ issues almost always alongside considering ESG (environmental, social and governance) and sustainability related issues. These funds set out where they aim to invest and avoid in their published criteria. Some have extensive exclusions others may make more balanced decisions – balancing pros and cons. The most common exclusions are armaments and tobacco – which typically sit alongside a range of environmental and social exclusions or positive criteria. Strategies vary. Some funds exclude more than others. Fund strategies are often complemented by responsible ownership (stewardship) activity.
- Faith Based funds invest in line with specific religious principles (e.g. Shariah Law)
Strategies that significantly integrate ‘issues’ – but may invest widely across most sectors and/or rely substantially on stewardship activity:
- Sustainability Tilted funds integrate (environmental and social) sustainability considerations into their investment processes, favouring – being ‘overweight’ in – companies the managers believe have higher standards and being ‘underweight’ (invested less in) companies with lower sustainability standards. This means they are likely to invest in almost all types of companies – potentially including assets some clients will view as controversial. They may also have ‘ethical’ exclusion criteria that remove certain companies or asset types. They may also encourage positive change through stewardship activity – to a greater or lesser extent.
- ESG Plus funds have environmental, social and governance risk mitigation strategies, often alongside other strategies which demonstrate the fund is intended for clients with an interest in ESG issues. They may have responsible ownership strategies that encourage higher standards and/or exclusion criteria. These funds may hold assets some clients review as controversial. Strategies vary. See fund entries for further information.
Limited avoidance
- Limited Exclusions is our classification for funds that exclude only a very small proportion of an index or allowable universe – and invest otherwise in a ‘conventional’ fashion. Some funds exclude companies with the worst possible ESG scores, others may avoid a single industry eg tobacco or cluster munitions manufacturers. These funds are significantly different from other SRI Styles as they have a very ‘limited’ impact on stock selection.
Fund Manager company listings
- Responsible Ownership entries on Fund EcoMarket refer to company wide strategies – listing individual authorised fund management companies (AFMs) by name. These listings are not complete, we do not list all companies. For information on ‘responsible ownership’ (Stewardship/voting/engagement) activity that applies to individual funds see the ‘Responsible Ownership’ filter information within each fund entry. Responsible ownership activity is often integral to fund strategies as many fund managers aim to encourage to raise their standards, however practices vary.
Additional SRI Styles classifications
The following are used for a small number of funds with the aim of reducing the risk of misleading users. These are not reflected in our StyleFinder fact find tool – the aim of which is to simplify the advice process.
- ‘Other’ is used to flag funds that have a policy or strategy that is aligned to the issues covered by sustainable and/or ethical funds but is substantially different from other funds (e.g. single/niche issue).
- ‘Unclassified’ funds that we have considered but are not confident are intended for clients with a keen interest in ESG, sustainability or ethical issues.
- ‘Pending’ indicates funds that are not yet classified.
Fund Strategies vary, sometimes significantly. Please see individual fund entries for fund specific information.
About Fund EcoMarket listings
The Fund EcoMarket database lists all of the regulated, retail, onshore funds (plus a few related entries) that we are aware of. The listing is therefore (as far as we are aware) ‘whole of market’ for these groups.
A listing on this database does not represent any form of endorsement, recommendation or indication of quality or appropriateness.
We do not list specialist options such as unlisted funds or individual share or bonds.
Please contact us if you have found any omissions or would like to request we alter any of the information we publish.
One of the important aspects of this area is the need to recognise that both fund managers and clients aims and opinions vary. The table below maps our SRI Styles to three common ‘motivations’ for investing in this area, to help you get started:
This service is for information only. Please speak with a qualified financial adviser for further information.
We are not regulated, do not offer advice and can not deal directly with individual investors.