“It’s not surprising that investors are confused…“

One of our readers points out that while CGI is excluded from the Janzi Social Index because of its military contracts, the same company is included in no less than four other SRI/ESG/Sustainable indices or funds (TSX 60 ESG, NEI Ethical, Desjardins Environment, PH&N Community Values) that supposedly also exclude companies based on military involvement.

This is not a unique example; there are understandable differences in the ways that evaluations are made. I suspect that the principal reason for this discrepency is that while Sustainalytics (the agency behind the Jantzi social index) has a revenue tolerance threshold screen for defense contracting, other funds have developed military screens that reflect international law in the area. The later tend to ban companies manufacturing weapons deemed illegal under international convention (like cluster munitions and land mines).

There are no laws around what exclusion means, and no transparency requirements to explain exactly why one company is excluded (or not). Many funds, however, will be willing to discuss their choices with you if you ask directly.

Ethiquette is requesting details on the exclusionary screening criteria from all of the responsible investment funds that use this strategy. We will make this information available to you as soon as we can. And don’t forget, exclusion is only one of the multiple RI strategies!

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