OeKB Sustainability Fund Index
OeSFX Criteria of fund eligibility
Funds are eligible for inclusion in the index if, based on their investment policy, they invest in companies whose environmental or ethical/social practices are particularly responsible.
Socially oriented funds without a strong environmental agenda are included if their investment selection policies or practices incorporate at least some environmental criteria.
Individual holdings of the funds are not evaluated. However, if a fund is found to violate its own investment criteria, or to become unavailable for purchase and sale for a period of two quarters or more, it is removed from the index.
Funds are assessed on the basis of their investment policy, reflected in the composition of their portfolio. The screening also takes into account whether a fund has a process that ensures sufficient research to permit the monitoring of compliance with the fund’s exclusion or inclusion criteria.
Investment in the nuclear and other arms industries and in the arms trade must be excluded.
In the case of participating interests in companies, the activities in these industries must not constitute more than 5% of the total assets of the respective company.
Funds must rule out investment in the generation of nuclear energy and in nuclear power plants, as well as in the production of essential components that clearly can be used only for these purposes.
Where companies in a fund own equity interests in such companies, the activities in these industries must constitute at most 5% of the total assets of the respective company.
Funds are excluded if they do not require their holdings to respect internationally recognised social responsibility standards such as the labour and human rights declarations of the International Labour Organisation or the United Nations.
Although it is not practicable to scrutinize the activities of the individual holdings in funds’ portfolios, one of the relevant social standards must at least be stipulated in a fund’s investment policy.
In the case of pure environmental technology funds, the need to assess their incorporation of social standards depends on the production locations of their holdings.
Funds with investments that have a significant portion of their production in countries with doubtful social standards must incorporate social criteria in their investment policy. Where such criteria are not explicitly stated, the case is reviewed individually.
Other exclusion criteria dependent on fund composition
The OeSFX does not specify as exclusion criteria other activities – such as animal testing, gambling or prostitution – that represent exclusion criteria in the investment policies of ethical and sustainability funds specialising in addressing those particular issues. The purpose is to avoid excluding funds that specialise in, for example, renewable energy sources simply for not explicitly stating other exclusion criteria.
The advisory committee is aware that large banks, as lenders, also finance companies in sectors such as armaments and nuclear energy, but it is not practicable for the advisory committee to ascertain such relationships for funds’ individual holdings.
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