Sustainable finance · responsible investment
Exclusion list
Definition
An exclusion list is the operative instrument of negative (exclusionary) screening: it enumerates the issuers, sectors, products or behaviours — such as tobacco, controversial weapons, thermal coal or severe norm violations — that are barred from a portfolio or lending book. Exclusions may be values-based (ethical screens), norms-based (breaches of international conventions) or risk-based, and are typically defined by thresholds such as percentage of revenue from the excluded activity. PRI, GSIA and CFA Institute classify exclusionary screening as one of the core responsible-investment approaches.
References
negative/exclusionary screening definition, classification among RI approaches
exclusions terminology in UK practice
Overview
What it means
The list converts a policy statement into enforceable portfolio rules: index providers build ex-sector indices around it, asset owners audit managers against it, and disclosure regimes increasingly ask funds to state what they exclude and why. Threshold choice (e. g. 0% vs 10% of revenue) materially changes what the list excludes in practice.
How it is used
Used by pension funds, asset managers, banks and faith-based or ethical funds; referenced in mandates, prospectuses and stewardship policies, and increasingly in ESG fund labelling regimes.
Why it matters
Exclusion lists are the oldest and most transparent responsible-investment tool; their scope and thresholds determine real-economy signalling and are a common flashpoint in greenwashing scrutiny when labels promise more than the list delivers.