Exclusionary screening can be applied to portfolios as a standalone ESG approach, or in combination with other styles, such as thematic investing or integrating ESG into the investment process.
Screening may sound simple, but the process involves a significant amount of judgment on the part of asset managers or the third party data providers with whom they partner to conduct exclusionary screens.
At State Street Global Advisors, we believe it important to offer our clients our own perspective on how to conduct exclusionary screening, and to approach this process with the same rigor that guides all of our work.
We have developed a recommended approach to exclusionary screening in ESG portfolios. This approach represents the shared perspectives of our investment teams across active and index investment styles in equity, fixed income, and alternatives.
Our Guiding Principles
Systematic and transparent approach
We follow a well-defined methodology that can be flexibly applied to different use cases.
Leverage best-in-class available data
We use inputs from multiple data providers where accessible to us. This broadens our overall coverage universe, and reduces the potential biases of a single data provider.
Awareness of impact on tracking error
Our point of view is attentive to the impact on tracking error of excluded securities.
Strive for firm-wide consistency while accommodating for differences
Deviations from firm-wide consistency are made where appropriate to adapt to investment styles, national legislation, and/or market-specific norms prevalent in certain regions.
Investing involves risk including the risk of loss of principal. The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without SSGA’s express written consent.
The information provided does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. You should consult your tax and financial advisor. All material has been obtained from sources believed to be reliable. There is no representation or warranty as to the accuracy of the information and State Street shall have no liability for decisions based on such information.
Disclosure related to each of the State Street Institutional Liquid Reserves Fund and the State Street ESG Liquid Reserves Fund: You could lose money by investing in the Fund. Because the share price of the Fund is expected to fluctuate, when you sell your shares they may be worth more or less than what you originally paid for them. The Fund may impose a fee upon the sale of your shares or may temporarily suspend your ability to sell shares if the Fund's liquidity falls below required minimums because of market conditions or other factors. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund's sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.
Distributor: State Street Global Advisors Funds Distributors, LLC, member FINRA, SIPC, a wholly owned subsidiary of State Street Global Advisors, Inc.. The Fund pays State Street Bank and Trust Company for its services as custodian, transfer agent and shareholder servicing agent and pays SSGA Funds Management, Inc., an affiliate of State Street Bank and Trust Company, for investment advisory services.
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