Sustainable investing - The journey

Exclusions and screenings

Exclusions are the oldest and likely the most well-known sustainable investment tool, and remain a very powerful one in sustainable investing – especially for those investors with a clear view on which products or behaviors are incompatible with their values, standards and beliefs.

Carrying out stewardship responsibilities is an integral part of Robeco’s sustainable investing approach. As such, we want to avoid making any investments in business practices that we or our clients believe are detrimental to society or the planet or otherwise incompatible with sustainable investment strategies. Therefore, certain exclusion criteria are applied to all portfolios, at our discretion.

Exclusion policy


Devil in the details

On the face of it, exclusions are a relatively straightforward strategy to implement. But excluding companies or entire sectors for non-financial reasons can also have a unwanted impact on the risk/return characteristics of a portfolio, and investors have to ask themselves some difficult questions. Will excluding a company lead to its products being removed from the market? Much like someone boycotting a pet store because they sell puppies, in a bid to protect animal wellbeing, won’t stop other customers buying a furry friend there. And the original customer will have missed the chance to persuade the owner to limit their range to pet food.

In other words, there are other ways to effect change. As so often in investing, the devil lies in the details when it comes to implementation. Exclusions at Robeco are therefore not as simple as a list of sin stocks, but rather a means of setting a minimum standard for what we deem to be investible as an asset manager.

Sin stocks & evolving controversies

Aside from the investor’s own ethics and values, there are products and business practices that are commonly deemed controversial (sin stocks): tobacco, weapons, alcohol, gambling, and pornography.

But what is deemed controversial evolves. In recent years it has become more common to exclude, product-wise for example, the worst climate offenders such as thermal coal and gas. On the behavioral side, the Ten Principles of the UN Global Compact are often used as a guide in deciding which areas warrant exclusion.


Exclusions in itself might not always be as impactful as we would wish, but they play an important role in the full suite of tools available to a sustainable investor. Exclusion can be especially useful when framed as potential repercussion for a company (or country) if they fail to meet the objectives set out as part of engagement.

Screenings always precede exclusions and can be divided into the type, based on controversial behavior (directly or after engagement); and the less common type, or even on country-level screening. All of these may result in exclusion.

There are further screening tools to align the investment universe with the intentions of a portfolio.

At Robeco, we make use of several types of screening depending on the intentions of the strategy that lead to exclusions. To give a few examples, we use the ‘blocks’ described below:

  • SDG screenings ensure the eligible investment universe is defined with companies meeting a threshold predefined by the SDGs

  • Stricter activity-based exclusions for fossil fuel activities apply for climate strategies

  • Negative screening is used to deselect low ESG-performing parts of the investment universe, for example for our Gender strategy

  • Screening to make sure we only capture those companies that contribute to a specific sustainable theme

On the surface exclusions may seem as the easy one of all the ESG building blocks available to a sustainable investor, but one step deeper and the view point may change. Exclusions are not ‘just’ exclusions; they require insight and research into companies operations and products as well as an integrated approach where multiple types of screening and active ownership tools may need to come together to ensure the intensions of an investor are properly addressed.