Investors who seek screened portfolios often express a desire for screening in a specific area— for example, seeking to screen tobacco from a portfolio. But there are a variety of ways that a company might be involved in tobacco: for example, as a manufacturer, licensor or retailer.
Additionally, there are multiple potential thresholds for what it means to be “involved” in tobacco. Should a business that derives 1 percent of its revenue from tobacco-related products count as “involved”? What about a business that owns a significant portion of a tobacco manufacturer but does not conduct its activities directly?
There are several ways in which a company can be considered to be involved in a particular product or service. Drivers of product involvement might be described in terms of :
- Revenue thresholds What percentage of a company’s total revenue is derived from this industry, product or topic?
- Activities What part of the value chain is the company involved in?
- Significant ownership relationship with a company Is the company an owner of, or owned by, another company with involvement in this issue?