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Our position on harmful and
controversial products and services

Stewart Investors invests in the shares of high quality companies that are well positioned to contribute to, and benefit from, sustainable development.

We believe that fully incorporating sustainability considerations into our investment process is the best way to protect and grow capital for clients. As an output of our bottom-up investment process, we do not invest in companies with material exposure to harmful products and services, or that fail to discharge their environmental stewardship and human rights responsibilities.

All members of Stewart Investor’s investment team sign our Hippocratic Oath, which includes the commitment that we will not pursue risk-adjusted returns to the extent that our actions will knowingly harm others. In accordance with our investment philosophy and strategy, the investment team is responsible for avoiding the allocation of client capital to harmful activities.


We do not use quantitative thresholds in the quality assessment of companies in our investment process. For example, we prefer companies to manage their balance sheets conservatively but do not set specific debt thresholds. Our analysts and portfolio managers must be able to justify, and are accountable for, the decisions they make.

However, for harmful products and controversial industries, we appreciate that our clients reasonably expect clarity on what exposures they may have to negative activities. The table below includes information on the activities and practices we find inconsistent with our investment philosophy. We have set a materiality threshold for direct involvement in the relevant activities of 5% of revenue, and for tobacco production and controversial weapons 0%. Where we cross this threshold we will report the investment to clients.

Transparency and exceptions

We will be transparent about our portfolio holdings. In rare instances, we may make investments where exposure is above the stated threshold, but in those cases we will disclose our reasoning for maintaining that holding.

As our focus is on companies well-positioned for sustainable development, the reasons for such holdings could include indirect involvement, for example, a company which provides safety products or technology solutions to a wide range of industries also providing those products/solutions to the fossil fuel industry to improve energy efficiencies and reduce environmental impact. Exceptions may also relate to legacy activities which are being wound down or where the company is not increasing capital expenditure. In these cases we must determine the company is making a meaningful contribution to sustainable development. Where we believe necessary, we will encourage and support the company in exiting these business activities.


We employ the services of an external environmental, social and corporate governance (ESG) research provider that reviews our portfolios and provides quarterly reporting on company involvement in harmful industries and breaches of social norms, like those found in the UN Global Compact. These reports are reviewed by the investment team. We also receive regular updates from controversy monitoring service RepRisk.

While for some of these activities revenue thresholds are possible, in others like environmental stewardship, ethical conduct and tax practices, judgement and knowledge of the company are required. We believe that in many cases engagement can be an effective lever for change. Where we agree with issues raised by our external ESG research providers, we will endeavour to engage with the company in question. However if the issue is verified and engagement shows no prospect of change, we will divest to ensure the portfolio continues to meet the principles which sit at the heart of our investment philosophy.

Material exposure disclosures

We believe transparency is vital for the credibility of sustainable investment approaches. For activities and practices we find inconsistent with our investment philosophy we have set a materiality threshold for direct involvement in the relevant activities of 5% of revenue (unless otherwise stated). The full list of activities is shown above. In the instances, we may make investments where exposure is above the 5% threshold, we are happy to disclose our reasoning for maintaining that holding.

See below for instances of companies held across the Stewart Investors strategies which were above the materiality threshold in any of the relevant activities, as at 30 September 2022.

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Investment terms

View our list of investment terms to help you understand the terminology within this document.

Further information

Normative screening

Through the services of an external environmental, social and corporate governance (ESG) research provider, we monitor investee companies compliance with the United Nations Global Compact (UNGC), the Organisation for Economic Co-operation and Development Guidelines for Multinational Enterprises (OECD MNE Guidelines) and the United Nations Guiding Principles on Business and Human Rights (UNGPs), as well as their underlying International Labour Organization (ILO) conventions and treaties.

Environmental issues

Environmental stewardship

Sustainable sourcing and environmental stewardship are critical considerations in our company analysis. We consider a range of factors (including but not limited to) when assessing a company’s environmental stewardship such as: upstream and downstream pollution; waste management; resource consumption; water use and scarcity; emissions reduction; use of renewable energy; recycling successes; product lifecycles and their circularity; as well as attitudes and actions towards the protection, conservation, and sustainable use of biologically diverse ecosystems and habitats within operations and supply chains.

Forward contracts

While some of our funds have the ability to invest in forward contracts, we not do invest in these and would not purchase forward contracts on agricultural commodities for the funds.

Fossil fuels

We define fossil fuels as: coal, unconventional oil & gas (artic drilling, oil sands, shale energy), and conventional oil & gas. We consider the following related/supporting products/services: exploration, extraction, power generation, transportation, distribution, refining or providing dedicated equipment or services as part of the value chain.


  1. The Ottawa Convention, also know as the Mine Ban Treaty is the Convention on the Prohibition of the Use, Stockpiling, Production and Transfer of Anti-Personnel Mines and on Their Destruction. It was adopted in 1997 and it entered into force on 1 March 1999.

    The Oslo Convention is the Convention on Cluster Munitions. It was adopted in 2008 and came into force on 1 August 2010.

Important Information

This material is for general information purposes only. It does not constitute investment or financial advice and does not take into account any specific investment objectives, financial situation or needs. This is not an offer to provide asset management services, is not a recommendation or an offer or solicitation to buy, hold or sell any security or to execute any agreement for portfolio management or investment advisory services and this material has not been prepared in connection with any such offer. Before making any investment decision you should consider, with the assistance of a financial advisor, your individual investment needs, objectives and financial situation.

We have taken reasonable care to ensure that this material is accurate, current, and complete and fit for its intended purpose and audience as at the date of publication. No assurance is given or liability accepted regarding the accuracy, validity or completeness of this material and we do not undertake to update it in future if circumstances change.

To the extent this material contains any expression of opinion or forward-looking statements, such opinions and statements are based on assumptions, matters and sources believed to be true and reliable at the time of publication only. This material reflects the views of the individual writers only. Those views may change, may not prove to be valid and may not reflect the views of everyone at First Sentier Investors.

About First Sentier Investors

References to ‘we’, ‘us’ or ‘our’ are references to First Sentier Investors, a global asset management business which is ultimately owned by Mitsubishi UFJ Financial Group, Inc (MUFG). Our investment teams operate under the trading name of Stewart Investors which is part of the First Sentier Investors Group.

We communicate and conduct business through different legal entities in different locations. This material is communicated:

  • in Australia and New Zealand by First Sentier Investors (Australia) IM Ltd, authorised and regulated in Australia by the Australian Securities and Investments Commission (AFSL 289017; ABN 89 114 194311)
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  • in Japan by First Sentier Investors (Japan) Limited, authorised and regulated by the Financial Service Agency (Director of Kanto Local Finance Bureau (Registered Financial Institutions) No.2611).
  • in the United Kingdom by First Sentier Investors (UK) Funds Limited, authorised and regulated by the Financial Conduct Authority (FCA ref no. 143359; Registered office: Finsbury Circus House, 15 Finsbury Circus, London EC2M 7EB; Company no. 2294743).
  • in the United States by First Sentier Investors (US) LLC, authorised and regulated by the Securities Exchange Commission (RIA 801-93167).
  • in other jurisdictions, where this document may lawfully be issued, by First Sentier Investors International IM Limited, authorised and regulated in the UK by the Financial Conduct Authority (FCA ref no. 122512; Registered office: 23 St. Andrew Square, Edinburgh, EH2 1BB; Company no. SC079063).

To the extent permitted by law, MUFG and its subsidiaries are not liable for any loss or damage as a result of reliance on any statement or information contained in this document. Neither MUFG nor any of its subsidiaries guarantee the performance of any investment products referred to in this document or the repayment of capital. Any investments referred to are not deposits or other liabilities of MUFG or its subsidiaries, and are subject to investment risk, including loss of income and capital invested.

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